China Data Group Managing in China’s economic transformation Case Study Solution
Case Analysis
The practice of socializing and gifting was quite pervasive in China. There was a heavy reliance on personal relationships and guanxi, but this practice was completely against CDG’s founding principles that mainly relied on professionalism and providing quality service.
They believed that conducting business quality service and professionalism would one day takeover the personal relationships. Therefore it was time to abandon the ‘Middle Way’ approach and to bring the company back to its founding principles.
This however would not be a suitable decision in case of China. The line Yang is planning on drawing between the local practices and their principles would not work for them in China. Although, it may be a preferred choice when tackling the global clients.
The phone issue was also not such a big deal as it was very common in traditional Chinese business relationship to present gift and build up personal relationships. Moreover, the company succeeded till now on this traditional strategy they choose in the struggling and growth period of their company. It could further give favorable results in continuing with the same strategy.
Old Chinese ways were used to come to this position they are now, it would have deteriorating effects on the existing clients, if they suddenly change their practices of doing business with them. Chen on the other hand has been valuable asset for the company, and many competitors are trying hard to recruit him for their firms. The fact of losing the potential clients with the loss of major sales manager can’t be ignored. It commonly happens in China that clients are lost if their key manger is switched or lost.
It can although be argued that the company needs some changes in the management to incorporate more professionalism, but definitely not at the cost of losing or upsetting the previous and existing clients. The current ‘Middle Way’ strategy, where the day team built a confident image regarding the work, and the night team of Chen hanged out at dinners and drank regularly has to retain. This strategy works perfectly with the local clients since that’s the norm of china, which can’t be changed or altered just because the company wants enter the global market.
A different team for the global market has to be developed that can purely focus on the quality of work and professionalism, with no personal relationship developed. For the local market, reliance on guanxi is important as that’s how the businesses operate in China. This strategy may be exploited at some point, putting up a bad image of the company in front of clients and other competitors, but if the strategy is properly supervised, these risks can be minimized.
Exhibit 1: Types of Clients
Exhibit 2: Employees and clients
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