Chapter One Introduction

 

1.1. Background

1.1.1 Understanding China today

China is the world’s most populous country and has a written story of more than 4000years. Chinese ancient history, just like its contemporary counterpart, is both complex andindispensable to understand if one aims at analyzing any issue related to its current cultureor society.However, in terms of economic development, it was not until the market reforms 1978that the country began to shift to a less centrally planned economy and with this came arapid growth that turned the country in one of the fastest growing economies in the world.Mao Zedong died in 1976, and economic growth became the Party’s key priority.Deng Xiaoping took the leadership of the Communist Party and was set to carry out “theFour Modernizations”: industry, agriculture, technology and science and defense. In hisview, the collapse of the Soviet Union had occurred due to the fact that the system did notbring about economic growth and productivity, and his main goal was to turn China into aprosperous country, be it by implementing capitalist or socialist policies.Deng Xiaoping policies created a rapid growth within the country and the economygrew more than 10% a year. According to the World Bank’s statistics, the number of peopleliving under the poverty line decreased from 250 million in 1978 to 27 million in 2007.

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1.2. Current status

 

1.2.1 Foreigners in Shanghai

Having been a foreigner myself in China for almost three years, the effects of thecultural shock, the questions and needs that represent the biggest challenges for expatriatesin this country become very evident.In addition to my own personal experience, several surveys have been conducted to show which are the main concerns for expatriates in Shanghai, and most of them show howthe lack of a personal network, understanding Chinese and the living conditions of thefamily are a constant struggle in the life of a foreigner.Other than networking and family stability, practical, everyday issues such as findingthe right school for their children or choosing the most suitable nanny or housekeeper alsorank among the top concerns for foreign nationals.The flow of expatriates, although slightly sluggish in the past couple of years, hasbeen non-stop. With different purposes in their mind, from getting jobs they would not beable to get in their home countries, to teach, to follow their expatriate husband or wife.In an article published in the website China Development Gateway①, the director ofthe Pudong Office of Community Central Shanghai explains that the loneliness is usuallythe most negative factor of being an expatriate in China, especially because of the languageand cultural barriers that create the need to reach out to fellow expatriates.

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Chapter Two Literature Review

 

2.1. Literature review

The scope of the studies carried out in regards to the expatriate phenomenon is wideand, in general, focused on the experiences of foreign nationals in a particular country. Thismakes absolute sense if we take into consideration that one cannot analyze the expatriatesituation in the world without acknowledging that substantial differences between nationsare to be examined in depth beforehand. That is, the adaptation process of foreign nationalsin the United States will, without any doubt, not be the same as that experienced byexpatriates in Asia, for instance.One of the first studies to establish a framework in which these differences were setforth was Geert Hofstede, with the publication of National Cultures in Four Dimensions, aResearch-based Theory of Cultural Differences Among Nations. Dr. Hofstede consideredfour dimensions that were fundamental problems to all cultures and examined the ways inwhich different societies react to them (Hofstede, 1983).Smith and Schwartz (1997) explained the difference between culture-level andindividual dimensions, and if we were to study individualistic, personal differences, awhole different framework should be used.As Shweder (1973) concluded, “valid indicators of a theoretical variable may bediscovered across a representative sample of cultures without being discoverable withinany of them, or may be discovered within each of all cultures without being discoverableacross them” (p. 543). This made us consider the possibility of making misleadingassumptions when basing our study on culture as being static. However, as we mentionedabove, it is the society as a group that needs to be analyzed, rather than the individuals.

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2.2 Expatriate management

Along with the internationalization of companies comes the need to developemployees and leaders with global competencies (Black et al. 1999; Connor, 2000;Kohonen, 2005). One of the most important characteristics of such leaders, we believe, isthe ability to see change as an opportunity.It would be natural to assume that the process of reallocating an employee to adifferent culture should be well studied, and intensive training programs developed in orderto help with the transition. However, if one turns to the literature, many authors report highfailing rates of adaptation (Tung, 1981; Black & Gregersen, 1999).We strongly believe that proper expatriate management is needed, and it is beneficialfor both the employee and the employer. The employee –and his or her family- have toundergo a series of drastic changes in their lives and more often than not, it is a challengedifficult to cope with. From the point of view of the company, the cost of sending anexpatriate is high, so being able to predict the adjustment of the expatriate is of a great importance.At this point, it is important to make a distinction between organizationally initiatedinternational experiences (i.e. expatriate assignments) and self-initiated foreign workexperiences (Inkson et al. 1997). Naturally, the main difference between the two is that thedecision of relocating as an expatriate depends on either the company (expatriateassignments) or the individual (self-initiated).As we have seen, most researchers focus their studies in the expatriates sent abroad bythe company; however, this self-initiated expatriates represent an alternative model of theprofessional career in this globalized world (Myers and Pringle, 2005; Scullion et al.2007).

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Chapter Three The Opportunity....... 22

3.1. The opportunity explained ........ 22

3.2. Industry analysis ......... 27

3.2.1. Current competitive situation + PEST............ 27

3.2.2. Projected strategy moves by current players ................ 28

3.2.3. Changes brought to the competitiveness of the industry by the new venture ........ 29

3.3. Innovations brought to the industry by the new venture..... 30

3.4. Strategy ......... 31

3.5. Ethics and sustainability ........... 36

Chapter Four The Company and Team .......... 38

4.1. Legal structure ............ 38

4.2 Ownership ...... 40

4.3. The advisory board ..... 41

4.4. The management team .............. 42

Chapter Five Marketing Plan ........... 46

5.1 Identification of customers ........ 46

5.2 Number of potential customers and potential sales revenues ............ 485

5.3 Requirements of various customer segments......... 51

5.4 Appropriate sales and promotion approaches ........ 53

 

Chapter Five Marketing Plan

 

5.1 Identification of customers

With the aim of creating an effective marketing strategy, we first need to identify ourpotential customers as well as their characteristics and profile.As previously discussed, China’s rapid economic growth has attracted a large numberof foreigners from countries across the world. According to the latest census of 2010–which was the first to record the number of foreign nationals-, there were at least 600,000expatriates living in the country.As we can see in the picture above, most foreigners are based in Guangdong, which isthe richest Chinese province, with 235,000 expatriates. The next most populous city interms of foreigners is Shanghai, with 209,000.In terms of nationalities, South Koreans make up the largest foreign community in thecountry (21% of the total). Americans are the largest non-Asian foreign community, most of them working for multinationals in manufacturing, exports and logistics.

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Conclusion

 

We have thoroughly researched and analyzed all information available to us in order tobring this project to reality, and it is important to summarize the main points andconclusions reached.The main objective of this research paper was to investigate and explore theopportunity of creating a service business in the form of an expatriate network in the cityof Shanghai. Pairing together previous knowledge and the latest research in terms ofexpatriate arrivals and potential market, as well as economic growth and a detailed analysisof the customers’ behavior, we move on to the financial calculations and assumptions inorder to check the viability of the project.As shown, not only has Chinese economy’s growth been constantly attracting foreigninvestment and talent, but also several governmental measures and policies are making itincreasingly easy for foreign nationals to find new opportunities in the country. Thescarcity of local talent and China’s consistent openness to foreign investment are keyelements fostering the entrance of foreigners sent in expatriate assignments as well asyoung professionals attracted by the country’s economic growth rates.It is also important to highlight the fact that Shanghai is the second city with the mostexpatriates in the country and its infrastructure and entertainment offer is varied and inconstant development, which makes it the perfect placement choice for the business.However, it is important to note that China is still one of countries ranking last in terms ofexpatriate adaptation and settlement. We believe that financial success follows valuecreation and value is created by helping people, so our commitment toward the expatriatecommunity and the integration of both communities will definitely work in our favor.

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References (abbreviated)