With China, Business is Difficult: Root Cause Analysis
China's Impact On Us Globally
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).
Shirouzu, N. (2012 November 18). Train makers rail against China’s high-speed designs. The
Wall Street Journal, pp. A1, A20.