Problem No. 1 Group Z The best entry mode

Flow of the Presentation 1.General Comparison of CJV, EJV and WOS 2.Analysis in Management Aspect 3.Analysis in Marketing Aspect 4.Case Study 5.Conclusion

CapitalProfitRiskEJV - According to proportion to equity - In forms of cash, buildings, equipments, materials etc. - At least 25% of total equity -shared proportion to amount invested -Relatively lower (proportion to amt invested) CJV -According to terms in contract -Shared with partner -Shared according to terms in contract -High / Low (according to terms in contract) WOS -Wholly invested -All collected -Highest (without share loss) General Comparison of Capital, Profit &Risk

Management Aspect

Conflicting Objectives in Chinese Joint Ventures Foreign PartnerChinese Partner PlanningRetain business flexibility Maintain congruency between the venture and the state economic plan Contracts Unambiguous, detailed and enforceable Ambiguous, brief and adaptable Staffing Maximize productivity; fewest people per given output level Employ maximum number of local people Technology Match technical sophistication to the organization and its environment Gain access to the most advanced technology as quickly as possible

Inputs Minimize unpredictability and poor quality of supplies Promote domestic sourcing Process Stress high quality Stress high quantity Outputs Access and develop domestic market Export to generate foreign currency Control Reduce political and economic controls on decision-making Accept technology and capital but preclude foreign authority infringement on sovereignty and ideology Conflicting Objectives in Chinese Joint Ventures

Human Resources Management Contractual Joint-Venture Equity Joint- Venture Wholly- Owned Staffing The quality of the staff depends on the venture party (It maybe /  ) Staff quality can be ensured Training  Working style maybe different which may lead to conflicts.  Take longer time to train Less time consuming

Marketing Aspect

Target Customer Our Target Customer : HK firms who want to move their office to Shanghai Do not provide any service for local firm »»» do not need any local customer base »»» prevent the threat of losing customer to the partner Wholly-owned > Equity JV, Contractual JV

Competitor After we investigated 111 local removal companies We found that: 11 firms had provided removal service form HK to Shanghai only a few number of company had set up their office in China So, the competition is Low »»» it is better to entering this market as soon as possible »»» to enjoy first-mover advantage Wholly-owned > Equity JV, Contractual JV

Market Potential The number of new established HK-oriented firm in Shanghai : In 2000, 419 HK firms In 2001, 479 HK firms No.1- Total investment - Number of firms »»» The market size is Huge So, it is better to established our own office in Shanghai as soon as possible Wholly-owned > Equity JV, Contractual JV

Supplier Our Service: Provide a ‘package deal’ for our customer We need: Local property knowledge Shipment team Decorator

Supplier Our Service: Provide a ‘package deal’ for our customer We need: Local property knowledge employ a local staff or local property firm Shipment team still using the existing supplier Decorator employ a local decorator Wholly-owned > Equity JV, Contractual JV

Cultural Difference The cultural difference between HK and Mainland is small Do not need any local customer base The Legal system has become more comprehensive and mature after entering WTO »»» ‘Guanxi’ and local network is not so important Wholly-owned = Equity JV = Contractual JV

Case Study

iNFOiSLIVE Corporation Limited (iiL) Interviewee: Josephine Yim Position: Assistant General Manager of Beijing iiL Office Office Address in Beijing: Rm 521, zhouji building no.16, ande lu, dongcheng, Beijing , China Date of Interview: 11/11/2002 Format of Interview: Through Telephone Interview

Case - iNFOiSLIVE Corporation Limited (iiL) iNFOiSLIVE Corporation Limited (iiL), Leading mobile entertainment application developer in the Asia- Pacific Region Established in 1999 in Hong Kong. Established in 1999 in Hong Kong. Dedicated to the development of mobile entertainment applications Dedicated to the development of mobile entertainment applications and platforms with SMS/EMS, WAP/GPRS, KJava, i-mode and and platforms with SMS/EMS, WAP/GPRS, KJava, i-mode and embedded systems. embedded systems.

Case - iNFOiSLIVE Corporation Limited (iiL) Small medium enterprise – about 30 employees in HK office Have not much capital Similar industry – service industry Have joint venture experience in foreign market, only choose China be their first WOS Why choose this company?

Why don’t choose EJV or CJV? Concerning Problems:  Finding right partners  Chinese enterprise still not well-developed  Time for negotiation  Managing problems  Stolen of Customer Base  Share of Profit

Why don’t choose EJV or CJV?  Risk sharing – Foreseeable market demand  Not familiar with the market –  china now is easy to find market information and  have well gov’t regulations on foreign investment.

Benefits:Profit Easy to manage Protect the customer base Easy to establish in now china regulations for foreign investment Why choose WOS?

Conclusion  Analysis of management and marketing  Experience of a successful company  Wholly-owned Subsidiary is preferred for establishing a company in Shanghai

Reference Beamish, P.W. and Killing, J.P. (eds) cooperative Strategies: Asian Pacific Perspectives, SF: The New Lexington Press – Various articles under part two: Formation of Cooperative Alliances Beamish, P.W. and Killing, J.P. (eds) cooperative Strategies: Asian Pacific Perspectives, SF: The New Lexington Press – Various articles under part two: Formation of Cooperative Alliances Tsang, Eric W.K Foreign Direct Investment in China Journal of General Management. 24, 1, Tsang, Eric W.K Foreign Direct Investment in China Journal of General Management. 24, 1, Vanhonacker, Wilfried Entering China: An unconventional approach. Harvard Business Review (March/April): Vanhonacker, Wilfried Entering China: An unconventional approach. Harvard Business Review (March/April): Child, J. & Faulkner, D. Strategies of Cooperation. Oxford: Oxford University Press, Child, J. & Faulkner, D. Strategies of Cooperation. Oxford: Oxford University Press,

The End DIvy Tse DAily Lam DDavis Heung DMing Fan DKim Wong DMichelle Hui