2 An important Chinese cultural issue is the avoidance of loss of face. Discuss its implications for selling in China. For many years, China’s economy has been growing at an average of 9 per cent and this phenomenal growth rate is expected to continue. China possesses considerable strengths in mass manufacturing and is currently building large electronics and heavy industrial factories. The country is also investing heavily in education and training, especially in the development of engineers and scientists. While these advances mean that China poses new threats to Western companies, the country provides opportunities. Chinese consumers are spending their growing incomes on consumer durables such as cars, a market that has reached 3 million, and mobile phones where China has the world’s biggest subscriber base of over 350 million. Western companies such as Microsoft, Procter & Gamble, Coca-

Cola, BP and Siemens have already seen the Chinese market as an opportunity and entered, usually with the aid of local joint venture partners.

Although the Chinese economy undoubtedly possesses many strengths, it also has several weaknesses. First, it lacks major global brands. When business people around the world were asked to rank Chinese brands, Haier, a white-goods (refrigerators, washing machines, etc.) and home appliance manufacturer, was ranked first, and Lenovo, a computer company, famous for buying IBM’s personal computer division, second. Neither company is a major global player in their respective markets.

Second, China suffers from the risk of social unease – resulting from the widening gap between rich and poor, as well as corruption. Third, the country has paid a heavy ecological price for rapid industrial and population growth, with thousands of deaths attributed to air and water pollution. Fourth, while still a low labour cost economy, wage levels are rising fast, particularly in skilled areas, reducing its competitive advantage in this area. Finally, bureaucracy can make doing business in China difficult.