BOOK REVIEW

Published online in Wiley InterScience (www.interscience.wiley.com). © 2009 Wiley Periodicals, Inc. • DOI: 10.1002/tie.20248

Xiaowen Tian. 2007. Managing International Business in China.Cambridge, UK: Cambridge University Press. 294 pages. ISBN:052-186-188-8.

Fuming Jiang and Bruce W. Stening. 2006. The Chinese BusinessEnvironment: An Annotated Bibliography. Cheltenham, UK: Ed-ward Elgar. 429 pages. ISBN: 184-542-925-7.

By

Yang Yu

T here is probably no need to restate the importanceof China in today’s global economy. China has beenexperiencing dramatic cultural, economic, political,

and societal changes. Given the rapid growth of China’seconomy, foreign firms are required to further intensifytheir market operations in China to ensure overall corpo-rate success (Luo, 2007). This has implications for bothpractitioners and academics. First, foreign firms must ac-quire the latest knowledge about the Chinese business en-vironment and learn to deal with specific managerial is-sues in this context. Second, for academics, it is important

to take stock of what we already know about China and toidentify “where we are” in the China research literature.

The two books selected for this review address bothof the above issues. Tian’s book, Managing InternationalBusiness in China, investigates the current Chinese busi-ness environment and discusses imperative managerialissues facing foreign-owned multinational corporations(MNCs) operating in China. Jiang and Stening’s book,The Chinese Business Environment: An Annotated Bibliogra-phy, provides a thorough review of the vast literature ofChina-related studies. It is an invaluable desk reference

Understanding theChinese Dragon:The Complexities ofDoing Business in China

Correspondence to: Yang Yu, School of Marketing and International Business, Victoria University of Wellington, PO Box 600, Wellington, 6000, New Zealand,(+64-4)463-6920 (phone), (+64-4) 463-5231 (fax), cruise.yu@vuw.ac.nz.

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and a starting point for sourcing the literature on spe-cific topics of interest.

TIAN, MANAGING INTERNATIONALBUSINESS IN CHINAThis book has 11 chapters. The introductory chapterprovides a general picture of China’s economy. Tianbriefly reviews China’s history from the fall of the QingEmpire in the late nineteenth century onward and paysparticular attention to China’s political and economicreforms since 1978, before introducing the central ques-tion of the book—how foreign firms may “achieve theirbroad strategic objectives in specific functional areasand business activities in the particular context ofChina” (p. 17).

Tian first introduces China’s macro policy environ-ment in Chapter 2 and focuses on China’s foreign trade,foreign direct investment, and foreign exchange regimes.He relies on historical data and relevant policy docu-ments to compare China’s past and present situations. Inparticular, he discusses the impact of China’s World TradeOrganization (WTO) entry in 2002 on the country’s pol-icy environment.

In Chapter 3, Tian explores China’s well-known socialphenomenon—guanxi. He introduces the concept andhighlights its characteristics, advising foreign firms tomanage guanxi strategically in the current Chinese envi-ronment to achieve organizational benefits. Empiricalcases illustrate the significance of having guanxi with bothlocal organizations and government authorities in China,and the formation, implementation, evaluation, and con-trol of guanxi-based strategies.

Tian focuses on market-entry strategy in Chapter 4.He covers the key issues in relation to this topic—for ex-ample, the choice between exporting and foreign directinvestment, establishing a joint venture and a whollyowned subsidiary, and greenfield versus acquisition strat-egy—and discusses the specifics of these choices and astrategy of combining various entry modes within theChina context. The importance of strategic alliances isfurther stressed in Chapter 5. Here Tian explains the ben-efits of forming local alliances in China and provides tipson partner selection, control issues in alliances, and con-flict management between alliance partners.

Chapter 6 is devoted to a crucial and time-consumingactivity of foreign firms in China—negotiations. Tian ex-amines multiple layers of culture—both the traditionaland contemporary Chinese cultures—in which negotia-tion activities are deeply embedded. He also outlines thespecific characteristics of Chinese negotiations and offers

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suggestions to foreign firms on how they should interactwith local partners to negotiate effectively.

The next section of the book focuses on three majorfunctional areas of firms. Chapter 7 deals with produc-tion. It is true that for foreign firms local production canbe quite challenging due to China’s vast territory. Tianemphasizes the connection between a firm’s internal as-pects (product and technology attributes) and externalenvironment factors (geography, infrastructure, localgovernment autonomy, and the regional business envi-ronment); he argues that these two aspects determinehow a foreign firm will design its production facilities inChina. Tian extends this discussion to sourcing and re-search and development in China as well. In Chapter 8,Tian looks at marketing management in China. He intro-duces the theoretical debate between localization andglobalization and then discusses product differentiationversus standardization in China. He overviews the presentChinese marketing environment and utilizes a number ofChina-based cases to explain how foreign companiesmake relevant business decisions. The third functionalarea Tian looks at is human resource management. It is ofimportance because it is people who carry out all businessactivities and functions in firms. Here Tian discussesstaffing strategies from a theoretical perspective and thenemphasizes recruiting local talent. He also gives advice onretaining Chinese employees in the current highlyvolatile job market and managing expatriates.

Chinese intellectual property rights (IPRs) are inves-tigated in Chapter 10. Tian introduces China’s currentIPR regime, such as legislation and regulation, points outits weaknesses and shortcomings, and then gives somepractical recommendations about what foreign firmsshould do to protect themselves. Chapter 11 encapsulatesChina’s current financial system and Chinese corporatefinance management practices. The key topics here aretaxation, banking institutions, the securities market, andthe accounting system.

In summary, this book offers a comprehensiveoverview of the Chinese business environment up to re-cent years and covers important managerial issues thatforeign companies in China may encounter. From anoverview of the Chinese business environment to practi-cal tips for market entry to China to establishing andmanaging relationships and alliances and the more tangi-ble aspects of business, my summary of the topics only be-gins to scratch the surface of the many facets of this book.Tian discusses each of the issues not only through a theo-retical lens but also by providing many illustrative China-based examples and contextual materials. This book mayserve as an ideal textbook for business students interested

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for firms that want to enhance their understanding of thelocal environment or further adapt their managementpractices and operations in China. This perspective is alsoin line with the majority of studies in this field.

China began its open-door policy in 1976. In the lastthree decades, the nation has been through many criticalevents and changes, along with significant evolution in itsbusiness environment (Luo, 2007). In such a dynamiccontext, the time period that a reference bibliographyshould cover becomes a tricky question because, as theauthors acknowledge, outdated sources will be of littlevalue in understanding the present situation. Jiang andStening address this by drawing the line at 1990 and in-cluding references up to 2005—a year before the book’spublication. This is quite acceptable; during this 15-yearperiod we have seen a dramatic evolution in China’s busi-ness environment, while China’s political and economicpolicies have remained quite consistent and stable, partic-ularly since former President Deng Xiaoping’s SouthChina visit in 1992.

In addition, Jiang and Stening exclude books andchapters and only choose journal articles from onlinesources. They cover highly ranked academic journalssuch as the Academy Management Journal, Academy Manage-ment Review, Strategic Management Journal, Journal of Inter-national Business Studies, and practitioner-oriented jour-nals in specific disciplines. Essentially, the authorsattempt to collect all of the “heavyweight” articles everpublished that contribute to the subject.

in the management of transnational corporations inChina, as its topics follow the format of a typical interna-tional business text. But it may also be used by foreignmanagers in China as a guide to understanding China’spresent-day environment and dealing with practical is-sues. One criticism of the book is that is misses some crit-ical events in China, considering the time of its publica-tion; for example, the Chinese government’s decision todevalue its currency is not discussed. This is, however, for-givable considering the fast pace at which China is everevolving.

JIANG AND STENING, THE CHINESEBUSINESS ENVIRONMENT: ANANNOTATED BIBLIOGRAPHY

Over the past several decades, China has drawn greatattention from researchers who have produced numerouspublications exploring this rising economy from variousperspectives. However, the massive body of literaturesometimes makes it difficult or at least time-consuming tosearch for specific materials. The Chinese Business Environ-ment: An Annotated Bibliography is therefore strongly rec-ommended to anyone with a particular interest in inter-national management in China.

In their book, Jiang and Stening thoroughly examinethe literature and carefully select nearly 1,000 articleswith respect to the Chinese business environment. All ofthe articles were published in English-language journalsbetween 1990 and 2005. Key information, including au-thor(s), article title, source, and an abstract, is includedfor each reference, allowing readers to quickly identifythe main content of an article and easily find the originaldocument if they are interested.

What is critical to this bibliography is its scope andthe criteria for choosing materials from the large volumeof China-related studies that have been published. Jiangand Stening have done reasonably well in this respect. Tobegin with, they have chosen to specifically focus onMainland China, rather than the Greater China regionthat also includes Taiwan, Hong Kong, and Macau. This isa rational choice given the distinct political and economicbackgrounds of these subregions. Also, although empiri-cal research shows that foreign multinational corpora-tions (MNCs) operating in China may play a role inchanging China’s business environment (Child & Tsai,2005), Jiang and Stening chose only to focus on “thosewritings that deal fairly directly with the impact of theChinese business environment on foreign firms doingbusiness in China” (p. ix). This is of practical relevance

Understanding the Chinese Dragon: The Complexities of Doing Business in China 89

DOI: 10.1002/tie Thunderbird International Business Review Vol. 51, No. 1 January/February 2009

The Chinese Busi-ness Environment:An Annotated Bibli-ography is therefore

strongly recommended to

anyone with a particular

interest in international

management in China.

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Despite the large number of references, Jiang andStening structure their book in a very user-friendly way.All articles are arranged in alphabetical order by first au-thor and all are assigned individual classification codes. ASubject Classification Index facilitates quick retrieval ofsubject content and the classification codes of referencearticles in each subject. Articles fall under 16 subjects per-taining to the Chinese business environment: general, theinstitutional environment, the economic environment,the cultural environment, determinants and patterns ofFDI, FDI entry mode, joint venture partner selection, FDIventure and other foreign business management, FDIperformance evaluation, negotiations, human resourcemanagement, markets and marketing management, ac-counting and financial management, ethics, and gover-nance. An explanation and further description of eachsubject are also provided. Thus, readers may either di-rectly find an article if they already know the name of thefirst author or look for the codes of articles in their sub-ject of interest and then identify the articles from the bib-liography.

The overview of the China-related studies between1990 and 2005 also gives us a sense of “hot topics” or un-derresearched areas. There is quite some variance in theacademic attention given to different subjects. For exam-ple, the “Institutional Environment” subject heading andFDI-related subjects contain very large numbers of stud-

ies, whereas “Joint Venture Partner Selection,” “Gover-nance,” and “Ethics” contain many fewer articles. Whilethis may in part depend on how these subjects are de-fined, such an uneven pattern could, to a certain extent,provide an indication of areas that deserve more aca-demic effort and future research.

One thing that the authors could have done is to an-alyze whether there are any subjects for which academicattention has fluctuated over the 15-year period. Presum-ably, researchers’ knowledge on China may gradually in-crease, and their primary interests may change over timeas well. Plus, as already mentioned, China’s business envi-ronment has changed dramatically in the past twodecades. However, no study analyzing such trends in theacademic literature as yet exists.

In summary, Jiang and Stening contribute to the liter-ature with a detailed bibliography with respect to the Chi-nese business environment. They use clear criteria tochoose articles within a reasonable scope. This book hasgreat richness and can serve as a very useful tool for stu-dents and researchers who are interested in internationalmanagement in China. Users can search for articles bysubject or author. Also, this book offers a broad overviewabout what has and has not been researched on China’sbusiness environment. This may offer readers an insightinto the changing trends in the literature and directionsfor potential future research.

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Yang Yu is a PhD candidate in the School of Marketing and International Business at the Victoria University ofWellington, New Zealand. He has a master’s degree in management studies from the Victoria University ofWellington, and an undergraduate degree in international trade from East-China University, Shanghai. He alsohas four years of work experience in China at two Japanese multinational companies and a local entrepreneurialfirm, which inspired his research interests in international management in China, business relationship building inChina, and networks. In his doctoral thesis, he particularly investigates how foreign firms operating in China man-age business relationships with local partners.

References

Child, J., & Tsai, T. (2005). The dynamic between firms’ environmentalstrategies and institutional constraints in emerging economies: Evi-

dence from China and Taiwan. Journal of Management Studies, 42(1),95–125.

Luo, Y. (2007). From foreign investors to strategic insiders: Shifting pa-rameters, prescriptions and paradigms for MNCs in China. Journal ofWorld Business, 42(1), 14–34.

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