NRI Papers
No.98 December 1, 2005
  Responses by Japanese Companies to Business Risks in China  
Shingo KONOMOTO
      Currently, the Chinese economy is strong and its growth mechanism from the perspectives of five to ten years is still functioning soundly. While the economy continues to grow, the severity of the environment surrounding business operations in China is increasing more rapidly than anticipated. Examples are competition involving three parties, i.e., foreign capital, state-owned and private companies, constant oversupply and strong pressure for price reduction, shortening of product life cycles and zealous competition in acquiring skilled personnel.
      The issue of feelings regarding Japan has emerged as a new business risk. Because this issue has a complicated background, it is expected that this problem will persist for a long time.
      In dealing with these risks, it is essential to study new China strategies that are totally different from those that were adopted for past business operations. The suggested new strategies include: (1) strengthening organizational ability to respond to change, (2) reviewing business structure by selection and concentration, (3) establishing a crisis management structure and (4) strengthening strategic public relations activities.
Contents
I Strong Economy and Megatrend of Growth
  1 Steadily Growing Chinese Economy
  2 No Changes in Megatrends in Mid- and Long-Term Perspectives
II Delays in Responding to a Shift from Factories to Markets
III Decreasing Country Risks and Increasing Business Risks
IV Feelings about Japan Emerged as New Risks
  1 Young Chinese People's Complicated Feelings about Japan
  2 The Prolonged Issue of the Feelings about Japan
  3 Impact on Japanese Companies
V Management Directed toward Avoiding Risks
  1 Strengthening Organizational Ability to Respond to Changes
  2 Reviewing Business Structure by Selection and Concentration
  3 Establishing a Crisis Management Structure
  4 Strengthening Strategic Public Relations Activities

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