Establishment Processes in the Traditional, Complex and Fast Developing Emerging Economy: The Case of Swedish Firms in China

Abraha Gebrekidan, DesalegnHögskolan i Skövde,Institutionen för teknik och samhälle (författare)

Establishment Processes in the Traditional, Complex and Fast Developing Emerging Economy : The Case of Swedish Firms in China

Applying a qualitative case-study method this article examines the establishment processes of IKEA and HELDING Share Company (HSC). The findings show that establishment in China is a complex, time and resources consuming process. This is because the Chinese culture makes it a pre-requisite to build social networks of harmonious interpersonal relationships, i.e. guanxi_to achieve success. The rules are changing continuously and there is an excessive involvement of the authorities in the economic activities in the market. It thus takes time and consumes enormous resources to understand the problems and to develop strategies to achieve success in establishments. IKEA and HSC developed interpersonal networks (guanxi) with the JV partners and the various influential people (facilitators) in the different phases of establishments. The developed guanxi enabled the two firms to understand and to handle; the cultural constraint, the complicated and continuously changing legal system, the bottlenecks in authorities relationships, the most complex and time consuming bureaucratic structures, the unique style of negotiations, to get operations and import license, license for the land for running the business and to get various types of assistance in the network development.

Ingår i:Proceedings of the 2012 International Conference on Marketing Studies (ICMS2012): academic-journal.org

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