The adversities of doing business in China: Why western companies fail

• Autor(a) principal: Cunha, João Luís Carrilho Fortes da
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/20473
• topic: Business adversities; Cross-cultural management; Chinese market; International marketing; Gestão internacional; Empreendedorismo; Negócio; Política económica; Diferença cultural; Financiamento; China

It is commonly known that People’s Republic of China was created and ruled by several years on closed and indoor economy policies, making it extremely hard to establish a business in China. Therefore, this document aims to understand the motives behind the failure of western companies in China, focusing on the mistakes made and how can they be avoided. The literature review begins with a contextualization of the economic and culture evolution of the Chinese society. Additionally, by defining the concept of failure it was possible to improve the understanding of the withdraw of three foreign companies from the Chinese market and to analyse how funding can help avoiding failure. In order to collect data, in-depth interviews were conducted which included the participation of leading businesspeople. The combination of the Literature Review with the data collected has made possible to prove that entrepreneurs face numerous adversities and obstacles whenever dealing with Chinese companies or individuals, when compared to the western ways of doing business. Adversities such as lack of trustworthy relationships, cultural differences, unrealistic investment time and reduced time present in the country, disloyalty regarding the Chinese “catch-up effect” or even lack of support from the Chinese government, have led some businesses to flee the country. Additionally, the most surprising discovery creates a paradox between old theories and nowadays theories. According to several participants and researchers, the power of guanxi in China, may be losing its effectiveness.