Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________
Doing Business in China & Shanghai Field Trip (PMBA6005)
Dr. Marcus Schuetz Hong Kong University Business School, MBA Program marcus@mcschuetz.com Field Trip Briefing Meeting: Date, Time, Venue (1hour) Field trip: Date, Time, Venue Lectures: Dates, Times, Venue China is great. No doubt that the Chinese economy will expand and that Chinese Companies and Investments will move more and more from the fringe into the centre of the world’s economy. It was never easy to do business in China, and foreign investors as well as Chinese entrepreneurs of the first hour of China’s opening have been on a way of uncertainty on the way to success or failure. However, the “China Business Model” itself has been a simple one. It was driven by a rising top line instead of a bottom line approach. But with the growing maturity of the Chinese economy also the companies face new challenges. “Doing Business in China” was a pure Market Entry and operations topic in the early days. Now it contains the full range of managerial challenges in a Chinese environment that is striving more and more for sustainability and a well run business mode which increases to competition at the bottom line.
Course Objective
The objective of this course is to gain a deep understanding of potential situations and managerial actions that can occur when doing business in China. It will provide and work with proven tools from recent projects in the Chinese Mainland and draw on these experiences. Furthermore, typical Business cases will be used for training fast and fundamental analysis of typical Chinese Business situations.
Course Format
This contains four lectures and a one week field trip to Shanghai and the industrial region around Shanghai.
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Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________
Field trip outline
The field trip will be a line up of company visits and governmental institutions in Shanghai. The final list of companies will have to be confirmed before the field trip’s week. The industries covered are planned to be • • • • • • • Auto manufacturing Car part manufacturing Real estate development Transportation Tourism and Hospitality Heavy industries Creative industries
The travel cost will be kept on a budget level. During the field trip 100 % attendance is required.
Car Plant 3 of Shanghai Volkswagen Automotive Ltd. in 2004 The most modern auto manufacturing plant in a low labor cost country
Lectures Outline
This course touches on all the phases a company can go through, from the cradle to the grave. Starting with entry strategies, followed by how to set up a company in China, Due Diligence, acquiring companies, change‐ and turn around management, crises management, bankruptcy and exit strategies. The industrial focus will be on Manufacturing, Energy, Utilities, High Tech, Retail, Real estate and the management and development of consumer brands. The course contains eight lectures covering the following content
Chapter 1: How to enter China (and why)
• Customers and competitors: Market entry strategies
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Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________ • Understanding the competitive environment: Value chain analysis • Regulated industries • Sourcing in China
“We are not (just) a taxi company” (Volkswagen on the Beijing Motor Show 2004)
Chapter 2: Setting up a company in China
• • • • • • • • • • • • • Business license Joint ventures BOT agreements (Build, operate, transfer) Due diligence in China Property laws and ownership Strengths and weaknesses of Chinese companies Brief corporate sociology Building awareness for the need to change The role of the Trade Union and the Chinese Communist Party The concept of asset productivity management Overhead cost cutting Business process re‐engineering Re‐organization
Chapter 3: Change management in China
Chapter 4: Turn around and re‐organization of Chinese companies
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Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________ • Individual staff lay off • Mass headcount reduction • Managing a massive turn around
“You are fired” (Hu Qing Ping Gong Lu, 2003)
Chapter 5: Crisis management
• • • • • • • • • • Stakeholders of a crisis Fast response team Lines of command in a crises The Chinese media Preventing and re‐acting cases of corruption and fraud Preventing industrial espionage The Chinese corporate bankruptcy law Liquidating a Chinese company Being liquidated in China Personal liabilities in corporate bankruptcy in China
Chapter 6: Bankruptcy in China
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Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________
Money for nothing? (Yangshou, 2007)
Chapter 7: Exit strategies from China
• • • • • • “Coffin or suitcase?” Company evaluations Finding a buyer for a company The role of the bank Price negotiations Fictive board meeting in a distressed Chinese Joint Venture
Chapter 8: Strategic role play “Preparing for the Board Meeting”
Dealer conference in Kunming 2004
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Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________
“Brothers in arms”
Grading
The final grade will be composed of the following components: 1. Company report (25 %) 2. Case discussions (50 %) 3. Quality of participation (25 %)
Having a closer look from the fence (Shanghai Polo Cup 2004)
Cases used
ALI FARHOOMAND & ZHIGANG TAO (2005): SHANGHAI VOLKSWAGEN: TIME FOR A RADICAL SHIFT OF GEARS, ACRC, Hong Kong University PAUL Y J KIM (2007): HYUNDAI AND KIA: AUTOMOBILE BRANDING IN CHINA, ACRC, Hong Kong University _________________________________________________________________________________________ 6
Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________ ZHIGANG TAO (2007): FUTURE OF AVON CHINA: DIRECT SALES, RETAIL SALES OR BOTH, ACRC, Hong Kong University BENNETT YIM (2007): OCEAN PARK: IN THE FACE OF COMPETITION
FROM HONG KONG DISNEYLAND, ACRC, Hong Kong University CHI KIN (BENNETT) YIM (2007): SHANGHAI TANG: THE FIRST GLOBAL CHINESE LUXERY BRAND, ACRC, Hong Kong University FREDERIK PRETORIUS (2007): LAS VEGAS SANDS CORPORATION:
BETTING ON GROWTH, ACRC, Hong Kong University ZHIGANG TAO (2002): BAOSHAN IRON & STEEL CO., LTD.:
CRAFTING A THREE‐WAY CROSS‐BORDER, CROSS‐SHAREHOLDING ALLIANCE. ACRC, Hong Kong University YIGANG PAN (2005): LOUIS VUITTON MOËT HENNESSY: EXPANDING BRAND DOMINANCE IN ASIA, ACRC, Hong Kong University ZHIGANG TAO (2005): SHANGHAI GENERAL MOTORS: THE RISE OF A
LATE‐ COMER, ACRC, Hong Kong University SIMON LAM (2005): QUEEN MARY HOSPITAL: FIGHTING THE SARS CRISIS, ACRC, Hong Kong University MITSURU MISAWA (2005): TOKYO DISNEYLAND: LICENSING VS. JOINT VENTURE, ACRC, Hong Kong University ALI F. FARHOOMAND (2006): SAP’s PLATFORM STRATEGY IN 2006, ACRC, Hong Kong University ZHIGANG TAO (2006): L.ORÉAL: EXPANSION IN CHINA, ACRC, Hong Kong University ALI FARHOOMAND (2006): DELL: OVERCOMING ROADBLOCKS TO
GROWTH, ACRC, Hong Kong University KA‐FU WONG (2006): LONG LINES, LOST PROFITS: CHINA.S REGULATED FUELS MARKET, ACRC, Hong Kong University
Appendix
Grading Pattern
A+ A Better than A Exceptional performance, engaging systematically and comprehensively with all the questions‐demonstrating mastery of the subject matter; keen analytical insight and an outstanding ability to organise and express ideas and arguments; original and logically deduced conclusions.
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Dr. Marcus Schuetz (2009) _____________________________________________________________________________________________ Excellent performance, intellectually competent answers to all the A questions‐strong grasp of the subject matter; ideas stated rather than fully developed; good organisation and expression; clear and well‐ argued conclusions. B+ Very strong performance, competent answers to majority of questions‐ strong grasp of the subject matter in those questions; keen insight into the questions answered well but some answers not fully developed; good organisation and expression; clear and well‐argued conclusions Strong performance, competent answers to majority of questions‐strong grasp of the subject matter in those questions, but answers not fully developed, good organisation and expression; clear and well argued conclusions. Strong performance, competent answers to majority of questions‐good grasp of the subject matter, but not comprehensive, answers not fully developed, relatively poor expression and organisation. Satisfactory performance‐basic grasp of subject matter across all questions but somewhat lacking in focus and structure across many questions; limited development of argument and conclusions because of inadequate analysis or comprehension, relatively poor organisation and expression. Satisfactory performance across most questions, but some weak answers‐lacks focus; poor development of argument, inconclusive. Satisfactory performance across half of the questions, relatively poor performance in the other questions, inconclusive. Mediocre/barely acceptable‐superficial answers to some questions, with others very poorly addressed, basic framework of analysis poorly developed and lacking logical structure; little evidence of comprehension of subject matter. Unacceptable performance‐failure to address the questions in an adequate manner; poor display of knowledge and appreciation of analytical techniques and concepts; limited structure and poor communication of ideas.
B
B C+
C C‐ D D‐F
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