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Essay / Research Paper Abstract
This 5-page paper discusses McDonald's in Beijing during the early 1990s, and the need for guanxi to do business in China. Bibliography lists 4 sources.
Page Count:
5 pages (~225 words per page)
File: AS43_MTguanxian.rtf
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Unformatted sample text from the term paper:
at the corner of Wangfujing Street and the Avenue of Eternal Peace, the company fully expected to remain there for the duration of its 20-year lease - and beyond. However,
after just two years, the Beijing government told McDonalds it would have to vacate the location to make way for a commercial, residential and office complex to be developed by
Hong Kong company Li Ka-shing. McDonalds took the city to court, but the court refused to enforce the lease, and McDonalds had to move.
Why did McDonalds encounter difficulties in doing business in China? The case study points out that the main reason for McDonalds failure was a lack of guanxi.
This was compounded when McDonalds sued the city - companies well-versed in guanxi would have accepted the decision and gracefully moved on, but McDonalds, the typical western company, wouldnt do
that. In other words, its a clear difference between the way in which western companies do business and how eastern companies operate. Western businesses operate by the contract of common
law - in other words, entities entering into a contract are expected to honor the points of the contract. But things are different
in China - for one thing, the county doesnt have the same infrastructure as countries like the United State or the United Kingdom. Rather than deals being made through contracts
(as would happen in the United States), deals in China are conducted through personal power, relationships and personal connections. In other words, guanxi.
Such things tend to concern western businesses, however - shortly after Beijing asked McDonalds, quite politely, to vacate the premises, the Economist pointed out that the speed with which
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