The Chinese Tao of Business: The Logic of Successful Business Strategy

by George T. Haley, Usha C. V. Haley, Chin Tiong Tan

How can managers discover, develop and implement successful business strategies for China and our global economy? Drawing on in-depth research with top executives of successful Chinese and Western companies, this book provides a road map for profitable business strategies in our interconnected economy. In the process, the authors describe and examine both Chinese and Western strategic management, their weaknesses and strengths. Starting with an analysis of the historical, cultural and legal antecedents of Chinese strategy, the authors identify potential for synergy and dominance between companies from Western, industrialized economies and Chinese companies. The book closes with recommendations on how the managements of non-Chinese companies, now pouring into China, can most effectively compete and interact with Chinese businesspersons and governments. The Chinese Tao of Business offers guidance to compete successfully against local companies and in foreign markets

270 pages, Paperback

First published October 7, 2004

Reviews

[Bryan · Rating 4 out of 5]

This was an insightful book on the workings of business in China. The aim of the authors is to educate businesses foreign to China on the machinations of society and government there, and plan strategies that that will result in successful profit. The book was published in 2004, so China has changed somewhat in the decade since, affected by WTO and G20 membership economic responsibilities, and expansion of its middle class and domestic buying power. However much of China still operates similarly since then. There is quite a lot of insight on China's business environment and successful strategies, including discussion with top executives of successful Chinese companies (Lenovo, Acer, Haier) and Western companies operating in China (GE, Coke), as well as analysis of these companies and companies that had failures (Microsoft).

For the last few decades China's business environment has been laden with landmines for foreign businesses. Many of those that dove right in without researching the country spent up to millions of dollars of investment but left with minimal profit. To understand the hazards, the book relates China's societal and legal customs founded on historical and religious customs, based on Confucianism(the elites philosophy, including unity, order, wealth spiritual, merchant and profit prosecution), and Taoism (The ideology popular with the commoners). Additionally, family and Uprightness are huge drivers in Chinese business behaviors. It is interestingly mentioned that China's economy leans toward network-based (performance dependent on networks and networked companies), while Western economies lean toward company-based (performance dependent on the company itself). China's government is the over-bearing elephant in the room that is most critical to establish networking with, as it has a disproportionately large presence in China's business world (most large scale business and utilities are State owned enterprises (SOEs), a legacy of Communism) and can be temperamental and rule for competitors over foreigners. Therefore a strong move for foreign businesses is to team up with well-networked Chinese entities that have strong government connections, to guide them toward the government's graces. On the flip side, the majority of Chinese businesses heavily dependent on Chinese networks have failed outside of China.

Further, China's public law systems do not recognize citizens' rights independent of the authorities, unlike the unalienable citizen rights of the West. Intellectual rights have also historically rested with the authorities, not the companies. Despite copyright laws created, this custom has incentivized massive intellectual-right violations and piracy, destructive to foreign businesses exposing themselves. To add to this, national, provincial and local Chinese market data has been sparse and many times doctored (SOE businesses report bloated profits to superiors to curry favor and investment), and heavily market data dependent western businesses can be falsely lulled into the wrong business strategy.

The authors provide a hybrid of east and west strategies for foreign businesses to succeed in both competing against local companies and in the global economy. This is encapsulated in their approaches: The Roads of Knowledge, Speed, Action, Results, Relationships, Quality, Passion and Legacy. The Roads are explored in depth, and the sum appears to be a solid guide to profit in China.