•  To develop students’ ability to apply theoretical frameworks and models to the analysis of opportunities and challenges of managing international business in China;
•  To enhance students’ understanding of current business and management practices of multinational companies operating in China;
•  To foster students’ awareness and appreciation of the unique historical and current contexts in China.

This course aims to enable students to better identify, understand, analyze, and critically assess the strategic and operational challenges facing multinational firms that seek to succeed in the Chinese market as the fast-growing emerging economy in the world. It will allow students to better engage in managerial and decision-making processes related to the operations by foreign firms in China, especially the specific opportunities and challenges of doing business in China and overall strategy and business model in China.

The topics to be covered in this course include the business context in China, entry mode selection, alliance management, negotiation with Chinese partners, human resource management, marketing, and protection of intellectual property rights. These issues and topics are discussed in the light of the relevant theoretical frameworks and models of international business and management, with reference to current business and management practices of multinational companies in the special context of China. In particular, one new phenomenon is the salience of China, as one of leading emerging economies, as a fertile context for developing disruptive innovations from the bottom of the pyramid.  

Further, this course will emphasize the critical implications of second-home strategy in the global context.

The course will be based on a mix of lectures, discussions, and group case studies in class. The course literature is challenging and students are encouraged to form reading groups.

The course’s development of personal competences: The course facilitates students’ further development of analytical, theoretical, presentational and teamwork skills.

Session 1: The Unique Context of China: History and Culture [Week 38]

Discussion Questions

1. Comment on China’s unique history
2. Comment on China’s unique culture
3. How and why is Chinese philosophy distinctive from that from the West?
4. What are the impacts of history and culture on business practices in China?

Essential Reading

Li, P.P. (1998). Toward a Geocentric Framework of Organizational Form: A Holistic, Dynamic and Paradoxical Approach. Organization Studies, 19 (5): 829-861.

Li, P.P. (2014). The Frame of Yin-Yang Balancing as the Root of Chinese Traditional Culture: The Indigenous Sources and Geocentric Implications. The Psychological and Cultural Foundations of Dialectical Thinking. Peng, K-P. & Spencer-Rodgers, J. (Eds.).

Li, P.P. (2012). Exploring the unique roles of trust and play in private creativity: From the complexity-ambiguity-metaphor link to the trust-play-creativity Link. Journal of Trust Research, 2: 71-97.

Session 2: Opening Up and Reform in China [Week 39]

Discussion Questions

1. Comment on China’s gradual approach to opening up.
2. Why does China continue to limit foreign direct investment in certain sectors of the economy?
3. Why does China continue to maintain control over its foreign exchange rates than move to a floating exchange rate system?
4. What are the business implications for MNEs of the Chinese government’s policy of gradualism?

Essential Reading

Wang, Y. (2006). China in the WTO: A Chinese View. China Business Review, Sep/Oct, pp. 42-48

Overmyer, M. (2006). WTO: Year Five. China Business Review, Jan/Feb, pp. 26-31

Li, P.P. (2005). The Puzzle of China’s Township-Village Enterprises: The Paradox of Local Corporatism in a Dual-track Economic Transition. Management and Organization Review, 1 (2): 197-224.

Williamson, P. and Zeng, M. (2004). Strategies for Competing in a Changed China, MIT Sloan Management Review, 45 (4): 84-91.

Hanauer, N., & Beinhocker, E. (2014). Capitalism redefined. Democracy: A Journal of Ideas, 31: 30-44.

Session 3: The Importance of China: Second-Home Strategy [Week 40]

Discussion Questions

1. What are the key characteristics of the Second-Home Model?
2. Why do most MNEs need the Second-Home Model as their new business model or strategy?
3. Why is China the best “Second-Home” for the established MNEs?
4. How should different MNEs address the distinctive challenges in the process?

Essential Reading

Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. Harvard Business Review, 79 (8): 137–147.

Hoover, W.E. (Jr.) (2006). Making China your second home market: An interview with the CEO of Danfoss, McKinsey Quarterly, January: 84-93.

Galvin, J., Hexter, J. & Hirt, M. (2010). Building a second home in China. McKinsey Quarterly, June: 1-18.

Li, P.P. 2012. Second-home strategy for both global incumbents and local challengers. Copenhagen Business School Working Paper.

Li, P.P. (2012). Entrepreneurial leapfrogging in the context of ISE: The Salience of Disruptive Innovation by Emerging Multinationals. Copenhagen Business School Working Paper.

Session 4: The Importance of Guanxi as Informal Institution [Week 41]

Discussion Questions

1. Define the term ‘guanxi’.
2. What are the main theoretical explanations for guanxi?
3. How important is guanxi in business relationships between Chinese and Western companies? To what extent should MNEs consider building guanxi as part of their business strategy?
4. Suggest strategies for MNEs to create and maintain guanxi relationships.
5. Is guanxi still important today or has the importance of guanxi declining as China has reached an advanced stage of opening up and reform?

Essential Reading

Li, P.P. (2007). Guanxi as the Chinese Norm for Personalized Social Capital: Toward an Integrated Duality Framework of Informal Exchange. Handbook of Research on Asian Business, Henry W. Yeung (Ed.), London: Edward Elgar Publishing, 2007, Chapter 4, 62-83.

Wilson and Brennan (2010). Doing business in China: Is the Importance of Guanxi

Diminishing? European Business Review, 22 (6): 652-665.

Vanhonacker, W. (2004). Guanxi Networks in China, China Business Review, May/June: pp. 48-53

Dunfee, T.W. and Warren, D.E. (2001). Is Guanxi Ethical? A Normative Analysis of Doing Business in China, Journal of Business Ethics, 32: 191-204.

Session 5: Entry Mode [Week 42]

Discussion Questions

1. Why have wholly foreign owned enterprises become the most popular mode of entry for MNEs into the Chinese market today?
2. Examine the pros and cons of the respective entry modes in the Chinese market.
3. What factors impact on a company’s choice of entry strategy?
4. Examine the reasons behind the failure and success of joint ventures in the automobile industry in China (e.g., the joint venture by Danone and Wahaha).

Essential Reading

Li, P.P. (2010). Toward a learning-based view of internationalization: The accelerated trajectories of cross-border learning. Journal of International Management (Special issue: 50 Years of IB Research), 16: 43-59.

Li, Y., Li, P.P., Liu, Y. & Yang, D. (2010). Learning Trajectory in Offshore OEM Cooperation: The Transaction Value for Local Suppliers in the Emerging Economies. Journal of Operations Management, 28: 269-282.

Bransfield, S. and Schlueter, D. (2004). When Joint Ventures Go Bad, China Business Review, Sept./Oct.: 24-27.

Borgonjon, J. and Hofmann, D.J. (2008). The Re-Emergence of the Joint Venture, China   Business Review, May-June: 32-35.

Session 6: Marketing Management [Week 43]

Discussion Questions

1. Examine the pricing strategies that foreign companies use to deal with and survive the Chinese competition.
2. Suggest promotion strategies for MNEs wanting to succeed in the Chinese market. What factors should MNEs take into account when advertising in the Chinese market?
3. Examine the difficulties foreign companies have faced in distributing their products within China.
4. Choose a multinational company present in the Chinese market. Analyse its marketing strategy focusing on how it prices, promotes and places its products.

Essential Reading

Bell, D.E. & Shelman, M.L. 2011. KFC’s Radical Approach to China. Harvard Business Review, November: 137-142.

Anonymous (2005). Moving Forward on Distribution, China Business Review, Nov./Dec.: 24-29

Crocker, G. and Tay, Y.C. (2004). What It Takes to Create a Successful Brand, China Business Review, July/Aug.: 10-16.

McEwen, W. Fang, X. Zhang, C. and Burkholder, R. (2006). Inside the Mind of the Chinese Consumer, Harvard Business Review, 84 (3): 68-76.

Session 7: Human Resource Management [Week 44]

Discussion Questions

1. Why has there been a recent trend for MNEs to move from an ethnocentric/expatriate to a polycentric/localised staffing strategy in China?
2. What problems might MNEs face in implementing a localised staffing strategy?
3. What strategies can be implemented by MNEs in order to improve staff commitment and retain talented local staff within their Chinese operations?
4. How important are the provision of training and development opportunities to the retention of local staff in China?

Essential Reading

Fryxell, G.E. Butler, J. and Choi, A. (2004). Successful Localization Programs in China: An Important Element in Strategy Implementation, Journal of World Business, 39: 268–282.

Huang, J. (2013). Developing Local Talent for Future Leadership. China Business Review, Jan./March: 28-30.

Leininger, J. (2007). Recent Compensation and Benefit Trends in China, July/August: 28-30.

Walsh, J and Zhu, Y. (2007). Local Complexities and Global Uncertainties: A Study of Foreign Ownership and Human Resource Management in China, The International Journal of Human Resource Management, 18 (2): 49-67.

Session 8: Intellectual Property and Negotiating with the Chinese [Week 45]

Discussion Questions

1. Why are infringements of intellectual property rights so rampant in China?
2. Suggest strategies that MNEs can pursue to protect their intellectual property in China.
3. Comment on the common tactics used by Chinese in negotiations with foreigners.
4. Examine the main differences between Chinese and Western negotiation tactics.
5. Suggest strategies to deal with Chinese negotiation tactics.

Essential Reading

Jarrett, K. and Wendholt, A. (2010). Transferring Technology to Transform China—Is It Worth It? China Business Review, March/April: 20-24.

Chapa, O. and LeMaster, J. (2007). Chinese Intellectual Property Rights? Know Before You Go, Thunderbird International Business Review, 49 (5): 567–590.

Fang, T. (2006). Negotiation: The Chinese Style, Journal of Business and Industrial Marketing, 21 (1): 50-60.

Graham, J.L. and Lam, N.M. (2003). The Chinese Negotiation, Harvard Business Review, October: 82-91.

Course Literature:

Required Textbook: None

Recommended Textbooks:

1. Li, P.P. (2013, Ed.). Disruptive Innovation in Chinese and Indian Businesses: The Strategic Implications for Local Entrepreneurs and Global Incumbents. London: Routledge

1. Tian, X.W. (2007). Managing International Business in China, Cambridge: Cambridge University Press [There are around 10 copies of this text in the library]

1. Chen, M.J. (2001). Inside Chinese Business, Boston: Harvard Business School Press,

Required Articles:

See the required readings listed under each of the eight sessions.

Examination (Individual Written Project Exam): Week 46