A Flexible Response to Guo Qing: Experience of Three MNCs Entering Restricted Sectors of the PRC Economy

Abstract

This paper examines how foreign-invested enterprises can gain significant early-entry competitive advantage within their respective sectors in China, even when the sectors are in some measure restricted to foreign entities. The paper looks at the case histories of three companies: AIG (from the US) in insurance, Carrefour (from France) in retailing and Star TV (from Hong Kong) in broadcasting. It is suggested that there are two major requirements for such success: development of an understanding of guo qing, special country (Chinese) characteristics, and flexibility of approach. It is found that even that which initially looks impossible may actually be possible with such a flexibility of approach. It is also found that firms in all three sectors must develop an awareness of the notion of necessary reciprocity in regard to their dealings with China's government machinery. The conclusion includes a contextualizing model of the Chinese business environment, as observed by a foreign-invested enterprise, within which to locate the debate.