Doing business in China : how Australian companies make their decisions when entering the Chinese market

This report describes and analyses the experiences of Australian businesses which have established operations or conduct business in China, both successfully and unsuccessfully. The information was collected over the period from August to November in 2007. It involved interviews with 43 respondents from 40 different Australian businesses across both manufacturing and service industries. The project was motivated by the increasing significance of China to Australia’s economy (such as the demand for Australian iron and coal exports and the transfer of much of Australia’s manufacturing operations there) and its extraordinary growth and development over the past 10 years. Using the contemporary modes of international expansion as a framework, the research considered companies which had entered China through Wholly Owned Foreign Enterprises (WOFEs), Joint Ventures, exporting and other forms such as licensing and agents. Most of the participants had located their operations in China in the eastern region, including Shanghai, Beijing, Guanzhou, Shenzhen and Tianjin.

An international strategy taxonomy for entry into China

Taxonomies explaining internationalisation strategy are effective in relating connected variables to the decision-making process and entry mode strategies of organisations. The taxonomy developed in this paper from research into 40 Australian companies which had successfully and unsuccessfully internationalised into China identified resource transferability and international experience as connected variables that can categorise the factors of entry choice. High levels of resource transferability lead to joint ventures or wholly-owned foreign enterprises. Low levels led to exporting/importing or project/client based/licensing. High levels of international experience led to wholly-owned foreign enterprises or joint ventures. Low levels led to project/client based/licensing or exporting/importing.

Reflexive capability maturity assessment for firm management of multipartner international projects

This paper reports the findings of a research project which was aimed at developing and promoting a greater understanding of the uniqueness of successful Australian-Malaysian partnerships and joint ventures undertaken on complex multi-partner mega construction projects. The aim of the investigation was to identify the critical success factors specific to such partnerships. The theoretical framework was grounded in a previous empirical study on design firm internationalisation which demonstrated that long-term success in international markets is enhanced by the management of integration of transformation of social, cultural and intellectual capital within the firm. A generic adaptive performance framework mapping the key performance indicators for each of these dimensions was developed which can be modified to unique contexts related to specific geographical localities. In the Australian Malaysian Institute study the framework is tested within the context of firm and shared partnership capital. The broad interpretive framework of adaptive performance was refined as a result of the findings of the four case studies of Malaysian organisations to develop a partnerships capacity performance measurement framework for Malaysian firms working on international projects. Six in-depth interviews were conducted with ten participants across the four Malaysian firms and a thematic analysis was undertaken of the transcripts. A reflexive capability maturity assessment tool was developed from insights gained into the underlying causes of key barriers coupled with common themes emerging in relation to the successful approaches used by case study firms to overcome those barriers. Specific examples of the case study firms' demonstration of reflexive capability in the areas of market knowledge, design management and market entry are presented.

Project-oriented design-based learning: aligning students’ views with industry needs

This paper focuses on the alignment of students' views on project-oriented design-based learning (PODBL) with today's industrial needs. A Collaborative relationship between academic institutions and industrial expectations is a significant process towards analytical thinking (linking the theory and practice). Improving students' knowledge as well as the students' transition into industry, requires efficient joint ventures by both learning institutions and industry partners. Project-based learning (PBL) is well developed and implemented in most engineering schools and departments around the world. What requires closer attention is the focus on design within this project-based learning framework. Today design projects have been used to motivate and teach science in elementary, middle, and high school classrooms. They are also used to assist students with possible science and engineering careers. For these reasons, design-based learning (DBL) is intended to be an effective approach to learning that is centered on a design problem-solving structure adopted for a problem-oriented project-based education. Based on an industry design forum, which the authors conducted in Melbourne, Australia in 2012, a research study was performed to investigate the industry and academic requirements for students focusing on achieving design skills. To transform the present situation in the academic teaching and learning environment and to fulfill industry needs, this research study also investigated the students' views on design skills.

Assessing the practice of project-based JV between local and international contractors in the UAE

This paper is about assessing the practice of Project-Based Joint Ventures formed between local and international contractors in the UAE construction industry. This common practice nowadays, provides the means for contractors to quickly add resources to enhance project acquisition. Studies indicate that JVs are among the tools that contractors will need to get together in the face of increasing market demands. Specifically, Project-Based JVs are often used in the UAE Construction industry with an exceptional growth in an attempt to diversify from Oil and Gas. The UAE is very business friendly which makes it attractive for such kind of alliance or partnership for local contractors to get the necessary experience and for international contractors to minimize the risks associated with entering new markets. In this context, studies that evaluate this alliance phenomenon in the UAE construction industry are limited. The few industry-related studies have primarily focused on large, international JVs; yet, many JVs are formed on small and medium-sized projects within the UAE. The paper aims to assess the current practices and understand the many factors involved with forming, managing, and controlling JV partnerships. The research methodology adopted a mix of quantitative and qualitative approaches. First, a closed question survey was disseminated to construction professionals in the UAE in light of the literature findings. Second, two case studies were demonstrated and analysed, then triangulated with the literature and survey findings to remove possible bias and improve the confidence in the collected data. The paper concluded that the JV in the UAE construction industry is mostly formed on project-basis rather than continuous collaboration. The management control mostly used in the UAE construction industry is shared management of activities in a venture with the operations shared between parents. The paper addressed major factors that lead to successful JV in the construction projects of the UAE which are namely trust, correct structure, communication, and partner’s commitment. Partners’ common objectives do not affect the JV success or failure. Willingness to adapt eliminates conflicts and enhances the JV success prospect.

Interpersonal trust and control behaviour of Chinese managers

Interpersonal trust is believed to influence the management and control of organisations in China. China's importance as a host country for foreign direct investments (FDIs) through multinational company subsidiaries (MNCs) and international joint ventures (IJVs) is growing rapidly. MNCs and INs located in China often employ local Chinese managers to control their subsidiaries or ventures. This makes it essential for designers of management control systems to have an understanding of the interpersonal trust-sensitive control behaviour of Chinese managers. One of the important aspects of control behaviour is how managers control their subordinates.

This paper examines the relationship between Chinese managers' trust in subordinates and their (Chinese managers') control behaviour towards the subordinates. On the basis of a questionnaire survey of a cohort of managers from Beijing, the study explores the effects of trust on the use of social controls, formal controls, and monitoring.

The findings of this study indicate that a manager's high (low) trust in a subordinate is associated with a low (high) level of monitoring, a high (high) level of social control and a high (low) level of perceived performance. The hypothesis that a superior's high (low) level of trust is associated with a low (high) level of reliance on formal controls was not supported. These findings, while indicative of control behaviour of Chinese managers in particular, also add to the growing academic literature on trust and control in general. In a practical sense, an
understanding of the trust-sensitive control behaviour of Chinese managers is particularly useful in designing and implementing effective control systems for international organisations operating in China.

Interpersonal trust and formal controls in low systemic trust societies

This study is concerned with the role of interpersonal trust in management control. On the basis of a questionnaire survey and interviews of senior managers from business organisations in sri lanka, the study explores the control behaviour of superior managers when they trust or distrust their subordinates. Sri lanka, a society in which the dependence on interpersonal trust is high, was chosen for the study to maximise the effect of interpersonal trust.

The findings of this study indicate that a superior's high trust in a subordinate is associated with a low level of monitoring, a high level of social interactions, and a low reliance on formal controls. In contrast, a superior's low level of trust in a subordinate is associated with a high level of monitoring, a low level of social interactions, and a high reliance on formal controls. Because the data emanate from experienced senior managers, these findings are at least indicative of control behaviour of superior managers in sri lanka and possibly of similar countries in asia. An understanding of the control behaviour of managers in this region is particularly important for designing and implementing effective controls systems for firms, subsidiaries, branches or joint-ventures operating in the region.

NGOs, enterprise and rural development

Non-Government Welfare Organisations (NGOs) in rural areas have traditionally relied upon the state for a large part of their revenue which in turn provides the state with the capacity to impose strict monitoring and evaluation. However the tightening of state funding has either forced NGOs to stretch their own resource to the limit or to become more enterprising and innovative in their desire to provide people with access to an ever increasing range of community-based services and opportunities for connection with their local communities. The term that is often used for these new approaches is ‘social enterprise’ that has been defined as a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or the community, rather than being driven by the need to maximise profit for shareholders and owners’ . It is most often seen as an interface between public and private sector, being part of neither but engaging closely with both through partnerships, stakeholding and joint ventures as well as through complex trading and contracting relationships.

Such broad definitions however do not give much guidance to how particular NGOs can shift to a social enterprise model and still remain within their chosen missions. It is the very processes of re-imagining and reforming their enterprise that is a vital element in moving to a successful social enterprise practice. Accordingly this project focuses on two NGOs in different parts of the world (Brophy Family and Youth Services in Warrnambool. Australia and Aberdeen Foyer in Aberdeen, Scotland) that have developed (and are developing) new ways of approaching their roles as service providers and early intervention agents for youth in their local areas. Since both organisations have faced (and are facing) issues associated with depleting state allocated resources they are attempting to break new ground in the ways in which they redevelop their work with youth. Both agencies are leading the way in developing a broader approach that draws together disparate element of a social enterprise model. The project analyses the processes used by these two agencies to develop as social enterprises and how likeminded agencies can use the model for capability enhancement.

Challenges of international design chain integration and cultural diversity : organisational reflexive capability

Increasingly project teams on international mega projects are composed of multiple partners from different countries forming joint ventures to achieve a higher level of strategic flexibility. Establishing and maintaining local business networks are critical to ensure the success of exporting firms. Firms who achieve competitive advantage in international markets and long term economic sustainability constantly adapt their business practices to achieve client satisfaction by a combination of self, market and project needs assessment. Successful firms ultimately achieve this in local markets but in international market this is intensified with the complexity of barriers grounded in cross-cultural contexts. The need for flexibility, adaptability and continual reassessment is enhanced as the market evolves in various localities. Reflexivity theory was used to develop a conceptual model to explain the way in which firms develop awareness, responsiveness and adaptability for long term success in diverse international markets. This paper summarizes the initial Australian study which developed the model grounded in empirical observations of design construction firms working on projects in developing countries and a second study of Malaysian firms which validated the model. The aim of this study was to develop a performance measurement framework for capabilities assessment of international collaborative partnerships. The study explored the joint venture partnerships between Australian and Malaysian property and construction professionals. Four Malaysian organizations were examined as case studies and two key activities of design management and knowledge management were analyzed in relation to social, cultural and intellectual capital transformation within the Reflexivity Capability Maturity Assessment Framework.

The role of reflexive capability in relation to intellectual capital on multi international partnerships

This paper reports the results of an analysis of five Malaysian firms who have worked successfully on multi international partnerships and/or megaprojects. A case study methodology was employed to examine the barriers and successful strategies the firms used in decision making in various international markets. A common characteristic across the firms was the ability to self reflect and adapt their practices to different international conditions despite numerous differences between countries including cultural, social, project governance structures, regulatory, terminology and codes. A reflexive capability model developed from the social sciences theory of individual agent reflexivity was developed to explain the way in which firms as an entity can develop awareness, responsiveness and adaptability for long term success in diverse international markets. This paper builds upon an initial Australian study which developed the model grounded in empirical observations of internationalising design construction firms by presenting the results of a second study of Malaysian firms. Results indicate that the model of reflexivity capability is a useful way to interpret practices that are undertaken in multi partner relationships on larger more complex projects. Successful Malaysian firms within joint venture relationships display an ability to self reflect and adapt. This transformation process is critiqued in relation to the relationships between social, cultural and intellectual capital. Reflexive capability is a characteristic of the successful case study firms working within global models of practice. The reflexive capability model is explained in relation to common themes identified in relation to the management of intellectual capital in successful multi international partnerships and megaprojects.

Need to know : lessons from Sino-Australian business negotiators on the importance of guanxi, emotions and generational differences in Chinese negotiation behaviour

The forces of globalisation over the last few decades have created opportunities for intemational business as never before, whilst leaving no organisation immune to competition. With the Global Financial Crisis impacting the world economy, the BRIC economies as a group - Brazil, Russia, India and China, have steadily benefited from continuing growth in 2008 and 2009 (Bhattacharya, Hemerling and Waltermann,2010). Despite China being a key international trading partner for Australia, the number of successful joint ventures and negotiations between the two countries remains limited. A closer examination of the international business interactions between Australia and China is thus urgently needed. When negotiating with the Chinese, Western managers may not always be aware of what they are really negotiating for. To be successful, they have to be equipped with the 'specialised knowledge', a form of 'tacit or implicit knowledge', which comes with experience (Nonaka, 1994, Pavesi, 2003) in communicating and negotiating with their Chinese counterparts. The Chinese way of business negotiation can challenge the logic of Western business thinking. This, coupled with possible generational differences or changes in the Chinese business counterpart's way of doing business, means we must try to understand the business communication and negotiation process from not only the Western but also the Chinese perspective. In particular, in addition to the contextual (Phatak, & Habib, 1996; Risberg, 1997), social (Ghauri, & Fang, 2001), and cognitive factors (George, Gareth, & Gonzalez, 1998) focused on by past researchers, the intangible aspects of negotiation must also be considered. These include trust, reputation, relationship quality (guanxi in the case of the Chinese), and the moods and emotions that shape the processes and outcomes of communication and negotiation (Griffith, 2002; Hartel & Ma, 2006; Ma & Hartel 2005; and Zhao & Krohmer, 2006). This paper reports on a qualitative investigation of the communication processes occurring in negotiations between Australian and Chinese managers and entrepreneurs. The examination is based on a theoretical framework looking at emotions and culture from an affective events theory (AET) perspective. Both interview and focus groups techniques were used. Findings identified guanxi, core to relationship development and maintenance in Chinese culture, together with emotions as major determining factors of negotiation outcomes. Findings also suggest there are generational differences in attitudes among Chinese managers with Gen. X and Gen. Y placing a different emphasis on guanxi in business. These findings suggest that the popular advice to people doing business in China is out of date.

FDI location at the subnational level: a study of EJVs in China

The location of FDI activities by MNEs is of interest to international business researchers, especially in light of the rapidly changing economic landscapes in many regions of the world. This paper adds to the literature on MNEs' location choices, focusing on how business characteristics are related to location, in a sample of 6430 foreign equity joint ventures (EJVs) in China during 1984–1996. The results show that the duration of the EJV agreement, the origin of the foreign investor, and the type of business activity are related to the location of the EJVs' business activities within China. Significant differences are noted in the locations of ventures in the manufacturing and service sectors, and there is evidence of an increasing preference for MNEs to locate their activities in China's large, metropolitan cities. These findings reflect the dynamic nature of government policies toward FDI in China and their impact on the location choices of MNEs.

Performance of the assessment of quality of life measure in people with hip and knee joint disease and implications for research and clinical use

Objective
To comprehensively evaluate the performance of the Assessment of Quality of Life (AQoL) instrument for measuring health-related quality of life (HRQOL) in people with hip and knee joint disease (arthritis or osteoarthritis).

Methods
Data from 237 individuals were available for analysis from a national cross-sectional, population-based study of hip and knee joint disease in Australia. AQoL-4D data were evaluated using Rasch analysis. A range of measurement properties was explored, including model and item fit, threshold ordering, differential item functioning, and targeting.

Results
Good overall fit of the AQoL with the Rasch model was demonstrated across a range of tests, supporting internal validity. Only 1 item (relating to hearing) showed evidence of misfit. Most AQoL items showed logical sequencing of response option categories, with threshold disordering evident for only 2 of the 12 items (items 4 and 9). Minor issues with potential clinical and research implications include limited options for reporting pain and some evidence of measurement bias between demographic subgroups (including age and sex). Participants' HRQOL was generally better than that represented by the AQoL items (mean ± SD for person abilities −2.15 ± 1.39, mean ± SD for item difficulties 0.00 ± 0.67), indicating ceiling effects that could impact the instrument's ability to detect HRQOL improvement in population-based studies.

Conclusion
The AQoL is a competent tool for assessing HRQOL in people with hip and knee joint disease, although researchers and clinicians should consider the caveats identified when selecting appropriate HRQOL measures for future outcome assessment involving this patient group.