With China, Business is Difficult: Root Cause Analysis

China's Impact On Us Globally

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Business with China: Joys and Pains


Root causes of a problem involving doing business with Chinese firms

Shirouzu, N. (2010, November 18) wrote about how Japanese and European companies that

pioneered high-speed rail agreed to build trains for China, thinking that they would be getting

access to a booming new market, billions of dollars worth of contracts and the hopes of helping

China to create the most ambitious rapid rail system in the history of the globe (p. A1). They did

not realize that, in only a few years later, the Chinese would be competing with them in an

effort to beat them at their own game. Shirouzu reports that only a few years ago the Chinese

rail companies that were junior partners with Kawasaki Heavy Industries Ltd., Siemens AG,

Alstom SA and Bombardier Inc. are now struggling in their completion against the Chinese in

the global market for super-fast train systems. Shirouzu says that when we look at countries

that are ready to purchase super-fast trains, such as the U.S., Saudi Arabia, Brazil, and even

China itself, there is a tendency to want to purchase the faster Chinese trains, trains that are, in

most cases, faster than those offered by Chinese rival train manufacturers.

A few years ago, when Arnold Schwarzenegger was governor of California, he visited China with

intentions of seeking help from the Chinese for the construction of a planned high-speed train

system in his state. At the time that Shirouza’s article was written (2010, November 18) he says

that Gov. Schwarzenegger’s office declined to comment about his interest in Chinese trains, but

Jeffrey Barker, a deputy executive director of the California High-Speed Rail Authority, said that

the state is years away from taking bids from manufacturers and that when it does, the

“process will certainly ensure that any technology transferred to the United States is done so

properly, in accordance with all intellectual-property laws” (A20, WSJ).

What is the problem?

Shirouzu (2010, November 18) said that by sharing technology with Chinese companies, some

of these companies have opened the door for Chinese competitors to, for lack of better words

“to steal,” their technologies (WSJ, A20). The following definitions help one to get a handle on

the root cause of this problem of doing business with the Chinese:

Idcon.com’s definition of root cause is “The cause of a problem which, if adequately addressed,

will prevent a recurrence of that problem or similar problems.”

A good definition of root cause is: "an agent, failure, or fault, from which a chain

of effects or failures originates.”

The two definitions above, as short and direct as they are, contain some thoughts that help us

to focus on finding the root cause of business problems.

The first definition brings our attention to “the cause of a problem, if adequately addressed,

will prevent a recurrence. “ We note, that in all the cases concerning the transfer of

technologies to the Chinese (especially the technologies for the building of the high-speed rail

systems), “the technologies were given to the Chinese,” without any means of keeping the

Chinese from abusing or “hijacking” the technologies. The second part of the first definition

asks the question, “How do we adequately address this problem to prevent a recurrence of that

problem or similar problems?” And obvious answer to this question, as it relates to the problem

of selling, or turning the high-speed rail technology over to the Chinese, is, “Do not turn over

this advanced technology to the Chinese in the first place.” However, this may not be a

satisfactory answer to business leaders in the high-speed rail industry because they want to sell

high speed trains to the Chinese because of the billions of potential dollars that they can earn.

The second definition, that helps us understand

our problem, involving the sales of advanced technology to the Chinese, we are able to see

where our “failure,” lies. In the case of our failure to protect our advanced technologies from

being abused by the Chinese, there is a chain of failures, according to this definition. The chain

of failures results from our inability to control how our technologies are used, that is, we are

not able to prevent our technologies from being misused or abused, once they are in the hands

of the Chinese.

Noteworthy, Shirouzu reports, China acknowledges that the trains its own companies are now

selling were developed using foreign technology (WSJ, 2010, November 16).

References

Shirouzu, N. (2012 November 18). Train makers rail against China’s high-speed designs. The

Wall Street Journal, pp. A1, A20.

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Comments 5 comments

charmike4 profile image

charmike4 4 years ago from Adelaide, South Australia

Chinese are great imitators but can struggle with innovation.When doing business in China you need to be very careful to protect IP and remember that China has immature legal systems especially around protecting IP. Interesting hub drhaddox. Cheers Michael


Dr. Haddox profile image

Dr. Haddox 4 years ago from a Franklin, Tennessee native, who travels globally. Author

Michael, thank you, so much, for your informative commit. Regards, Dr. Haddox


Deb Welch 4 years ago

Dr. Haddox a very interesting topic. Isn't Obama working in this project - trying to get fast rail trains by Chinese technology? I had never known about Schwarznegger. Their trains must be exceptional. Communists and their business sense. What next? Liked your link of business dictionary. UP - Useful & Interesting.


Dr. Haddox 4 years ago

Michael, thank you for your supportive comment. The Japanese and Europeans are the original engineers and masters of high speed trains, but the Chinese have a tendency to take technology from other countries and enhance it, making it more effective.

Again, thank you, Michael.

Regards,

Dr. Haddox


Rodric29 profile image

Rodric29 4 years ago from Phoenix, Arizona

Very informative. I am interested in China and its emergence in the world. I am also wondering why no one ever mentions the 750 million people that live in abject poverty in that nation yet it is supposed to be such a wonder mill? I guess with that many people there are many types of economies that can exist. The karate kid movie, the new one with the Will Smith kid in it is probably not the way it is all over China.

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