Behind the Open Door: Foreign Enterprises in the Chinese Marketplace / Edition 1

by Daniel Rosen

Overview

This study describes the experiences of foreign-invested firms in the mainland Chinese economy and discusses the implications of those experiences for the foreign commercial policies of the industrial countries, including the United States. It draws on extensive interviews with expatriate managers and other professionals currently at work in China. Whereas recent books on Chinese marketplace conditions focus on a single firm or issue or lack a discussion of policy conclusions (because they are prepared for a commercial audience), this study is distinguished by the breadth of industry interviews and its concern for policy implications. Rosen makes a rare attempt to deduce the policy implications of current experiences of foreign firms in China, presenting conclusions that go beyond those found in today's usual policy debate. Behind the Open Door is a must for China specialists and should be read by anyone with general or business interests in China or the Asia-Pacific region. The book is an ideal text for MBA programs that focus on the region, and for political science and Asian studies courses on China.

Product Details

ISBN-13:	9780881322637
Publisher:	Peterson Institute for International Economics
Publication date:	09/01/1998
Edition description:	New Edition
Pages:	344
Product dimensions:	6.00(w) x 9.00(h) x (d)
Age Range:	18 Years

About the Author

Daniel H. Rosen was a visiting fellow at the Peterson Institute for International Economics. Rosen is a principal at the Rhodium Group, a New York-based research firm. He is also an adjunct professor at Columbia University's School of International and Public Affairs (2001–present). Rosen was a member of the National Economic Council staff (2000–01), where he served as senior adviser for international economic policy. His work has focused on the economic development of East Asia, particularly greater China, and US economic relations with the region. He is author or coauthor of China's Energy Evolution, The Implications of China-Taiwan Economic Relations (2011), Prospects for a US-Taiwan Free Trade Agreement (2004), Roots of Competitiveness: China's Evolving Agriculture Interests (2004), The New Economy and APEC (2002), and Powering China (1995).

Table of Contents

	Preface	xi
	Acknowledgments	xv
1	Gauging the New Chinese Marketplace	1
	Introduction	1
	Why Study the Expatriates?	3
	A Methodology for Drawing upon Expatriates' Insights	4
	Questions Needing Answers	8
	Results	15
2	Foreign Enterprise Establishment in China	17
	Introduction	17
	The Investment Regime	21
	Challenges for Foreign Investors	30
	Analysis	75
3	Foreign Enterprises and Human Resources	85
	Introduction	85
	Human Resources and Establishment: Pressures Shaping the Labor Contract	89
	Human Resources after Establishment	98
	Analysis	115
4	Running a Productive Plant	121
	Introduction	121
	Productivity	122
	The Foreign Experience	126
	Analysis	152
5	Ex-Factory China: Distribution, Marketing, and Services	159
	Distribution Rules: A Domestic Trade Policy	159
	Foreign Investors and Distribution	167
	Analysis	193
6	Of Laws and Privileges	197
	Introduction	197
	China's Legal Environment	199
	The Expatriate Experience	203
	Analysis	223
7	Conclusions and Policy Recommendations	231
	Conclusions	233
	Implications	252
	Appendices
Appendix A.	"Catalogue for the Guidance of Foreign Investment Industries"	259
Appendix B.	Methodology	279
	References	293
	Index	303
	Boxes
Box 2.1	Project finance and the approval authorities' perspective	54
Box 2.2	The incentive pendulum swings	64
Box 2.3	Technology Digestion and Acquisition	74
Box 3.1	The importance of localizing management	95
Box 5.1	Distribution feedback leading to efficient production	162
	Tables
Table 2.1	US-China trade, 1980, 1985-97	18
Table 2.2	Japan-China trade, 1985-97	19
Table 2.3	China's top trading partners, 1996	19
Table 2.4	Number of FDI contracts by enterprise form, 1979-97	27
Table 2.5	FDI in China, 1991-97 and 1979-97	34
Table 2.6	Enterprise forms, 1997	49
Table 2.7	Japanese enterprises in China	57
Table 2.8	Average capital of FIEs in China, 1979-97	59
Table 2.9	Roundup of issues: establishment	76
Table 3.1	Employment of Chinese by foreigners, 1980-96	87
Table 3.2	Unemployment estimates	90
Table 3.3	Overtime at a southern China FIE, 1997	97
Table 3.4	Local managers' salary increases, 1996-2000	99
Table 3.5	Average annual pay at FIEs, October-December 1996	101
Table 3.6	Per capita income by area, projected	103
Table 3.7	Per capita GDP by province, 1996	103
Table 3.8	Personnel overhead expenses: contribution of an FIE in Shanghai	106
Table 3.9	Roundup of issues: labor	116
Table 4.1	Total factor productivity growth in China's state and collective industries, 1980-92	124
Table 4.2	China's imports, first quarter 1998: SOEs vs. FIEs	127
Table 4.3	Exports of FIEs, 1985-96	128
Table 4.4	China's trade: comparative advantage	130
Table 4.5	DCAC: one year's forecast vs. actual demand, 1996	139
Table 4.6	Overcapacity? The case of the auto sector in 1996	142
Table 4.7	Expanding service operations of a joint venture in Tianjin, 1994-97	151
Table 4.8	Roundup of issues: productivity	154
Table 5.1	Distribution infrastructure growth: structure of freight volume by transportation type, 1978-96	176
Table 5.2	Infrastructure development under the Ninth Five-Year Plan, 1996-2000	177
Table 5.3	China's retail structure, 1980-96	178
Table 5.4	Retail structures in five selected markets	178
Table 5.5	Roundup of ex-factory issues	194
Table 6.1	Round of issues: law	227
Table 7.1	Roundup of FIE issues	233
Table 7.2	High priority, policy-related issues	253
	Figures
Figure 2.1	Foreign direct investment in China, 1991-97	18
Figure 2.2	Comparison of commercial regimes, APEC and China	26
Figure 2.3	Strategic trade-offs in the establishment process	29
Figure 2.4	FDI in China by location, 1996	40
Figure 2.5	Approvals for new FIEs by organizational form, 1990-97	48
Figure 3.1	Managers' salary increase, 1996-2000	100
Figure 3.2	Per capita GDP by province, 1996	104
Figure 4.1	FIEs in China's trade, 1980-96	135
Figure 4.2	DCAC: One year's forecast vs. actual demand, 1996	140

What People are Saying About This

Burstein

A pathbreaking study compacting two decades of American and other foreign business experience in the new and always evolving China market into one volume. It offers . . . the most detailed and cogent analysis done by any expert to date on how the process of foreign investment in China actually works and the range of challenges and outcomes. A must read for any executive heading off to run a China operation for a multinational corporation...
-- Senior Advisor, The Blackstone Group, and co-author of Big Dragon

Editorial Reviews

It offers... the most detailed and cogent analysis done by any expert to date on how the process of foreign investment in China actually works and the range of challenges and outcomes.

Daniel Burstein

Rosen explodes more than a few myths and provides rare insights into on-the-ground operating conditions...This book is particularly useful for the multinational management from which it is sourced.

South China Morning Post