China has begun to fine and punish international companies doing business on their soil. Companies like Unilever, KFC, and Gucci are some of the companies that have had issues but the majority of the problems have involved Wal-Mart and Carrefour.
According to this article these last two companies have been fined and reprimanded several times for violating Chinese laws and regulations. The Chinese government claims that they are doing what is best for their country and their people. However, the majority of international businesses in China feel that this is blatant protectionism and there really isn't and could never be an even playing field.
Our question to you is this: Is doing business in China worth the potential negative impact on a company or brand, whether it is warranted or not? Based on the information in this article, do you think China is practicing protectionism or simply making sure that all companies follow the same procedures and regulations?
We look forward to hearing your thoughts
Dan McCord & Kiana Wai
15 comments:
While the article does seem to make it pretty clear that China is ignoring the crimes of its domestic companies, I am unconvinced that what China is doing is wrong.
If WalMart is selling mislabeled pork and pricing misleadingly, it should be punished. It would be more fair for Chinese companies to be held to the same standard, but no one can force that behavior.
I think China will suffer in the long run if it continues to punish foreign companies disproportionately to domestic companies. If Chinese companies sell mislabeled pork and price misleadingly, Chinese consumers will take their business elsewhere. Foreign companies are right to apologize for their mistakes, and I think it will work in their favor as they craft a more honest public image than the Chinese companies whose crimes are being ignored.
I think it is worth it for a company to pursue a business venture in China. Even if entering the market requires a little more effort, the Chinese market contains so MANY people, that the potential for profit is worth the strife of obeying every one of China's laws regarding foreign companies.
Like Erin said, I don't think any international company can afford not to do business in China. It's clear that the Chinese government is being harsher on international companies than their domestic counterparts, but international companies really have no choice but to obey. Additionally, I agree with what Ricky said about Walmart being deserving of an admonishment. If they are selling expired food products, that's something that would be punished everywhere, not just China.
I think that the pros of the Chinese markets overweight the cons. Paying a few million dollars worth of fines does not compare to a 1.3 billion people market. As many business people will tell you, " its takes money to make money." so paying a few fines is not going to corrupt or shutdown a company.
I agree with the above comments in that the good out weigh the bad in this case. China is a HUGE market, and even with the extra loops they are making businesses jump through, it seems as if you have the means to go to China as a company it is only going to benefit you. There are so many international companies operating in China I do not feel that the negative impact it may have on a company is substantial enough to walk away from the business opportunity.
Courntey Moradipour
I think it makes sense that China would be more harsh on foreign companies. They should want the best for their citizens, and if that means being cautious with non-Chinese companies then so be it. I don't think it is wrong for China to act harshly if a company makes mistakes or can't be trusted.
As was previously stated the humongous market makes it entirely short-sighted to stay away because of local backlash for businesses that are operating in less-than-legal manners. In China's defense they do have the right to impose market restrictions to ensure that their domestic economy isn't hurt by foreign companies. On the other hand, I'm not entirely sure what trade agreements China has entered and what kind of trade associations they're part of which might make their actions illegal.
According to this article, I do believe it is worth doing business in China. The fact that these companies have been fined for blatant violations makes it perfectly acceptable and should encourage them to have more ethical practices. Selling regular pork disguised as organic is a violation of the customer's personal ethical rights. I think companies on foreign land should not be worried with protectionism, but with the employees they hire to manage their companies.
I would focus on Japan or Other countries prior to china. 1.4 billion people but that's not an accurate target market. Disposable income, demographics are all over the place. Plus you have to have a majority chinese partner. If the Chinese government doesn't want us there why fight them. The world has other areas to sell.
If you are going to make the choice to expand to a foreign market, then you need to respect their laws just as we would expect them to follow ours. However extreme some of these laws may be, others are definitely understandable. If you believe enough in your business and your product then these hiccups should not be a problem and if anything, will help you to think of creative solutions and be even more successful.
-Jessica Salomon
I feel like this is a little ridiculous for China punishing these American companies so severely for such little actions. I realize that we are on their "turf" and should abide by their rules but there becomes a tipping point. China is a huge market with a lot of potential, but I feel like their is too much risk into entering like loss of loss of intelligence, governmental regulations, and many others. I feel like it does shed a negative light globally of your company.
Some of the measures taken against foreign companies by China seem legitimate, such as fining Wal-Mart for mislabeling a non-organic product as organic, but some of the alleged offenses don't make any sense to me. For example, Unilever's move to announce a rise in prices seems more like a courtesy than an offense. I believe that the Chinese may just have a different viewpoint that we do not understand in some of these cases, but if China is only fining foreign companies and letting domestic companies get away with the same things, I can not see an excuse for it.
I think China is practicing some protectionism here, but only in that the state-controlled media turns small violations by foreign companies into national headlines. All companies are subject to the same health and safety standards so I don't think they pick on foreign companies by issuing them fines that they wouldn't issue to Chinese companies, they just punish them by scolding them on national television when they receive a fine. Whether or not it would be beneficial for a company to pursue interests in China would depend on how well it could minimize fines from violations and negative media attention.
Traditionally China has been a very reserved and ethnocentric country which comes with the communists party and i think this influences decisions today that are seen as protectionism. I do not think its healthy for China to try and pick and choose what their citizens can and cannot view. I would have to access the benefits before i would be willing to pay fines to do business in China. If they are high then yes why not do business and pay some fines, the Government will loosen up sooner or later.
I thinks there is a hint of protectionism going on. Like one of the experts said in the article "Why go to the effort of getting your own guys to raise their game when you can tear down a foreign guy instead?" Perhaps Walmart is guilty but a fine and slap on the wrist will fix everything right up for a few months.
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