To review the importance of the Chinese cultural phenomenon, guanxi, and the marked difference in both consumer behaviour and management practices between China and the West, all from the perspective of market entry by multinational firms.
General conclusions are drawn and strategic imperatives inferred from a review of the relevant literature and a set of case histories based on personal interviews with key executives in the Chinese operations of six large overseas consumer‐goods companies.
The undoubted strategic significance of guanxi has been diluted recently among joint ventures designated as “encouraged” by the Chinese government, and is being replaced by a market‐driven paradigm of marketing operations. The guanxi‐driven paradigm remains a crucial factor in planning and managing effective working relationships when the Chinese partner is one officially classified as “restricted”. Case histories show that early success is no guarantee of continuing dominance, as indigenous competition intensifies and Chinese corporations become larger and better resourced.
Foreign multinational entrants to the Chinese market must remain sensitive to characteristically Chinese business and consumer behaviour, but can successfully adopt a more Western approach to marketing strategy in certain situations. It is essential to use marketing intelligence effectively, and to plan well beyond the short term.
The authors' expert view of the current situation fro multinationals in China adds a useful extra dimension to the received wisdom.
