USASBE 2008 Proceedings - Page 0572
Based on literature gathered on the subject, as well as the cited accounting issues in China, the following recommendations are offered to entrepreneurs contemplating on market entry or business expansion in the country:
Understand your strengths and core competencies. The differences in accounting practices suggest that focus on key areas of competencies may be needed. Oftentimes, there is a need for globalizing enterprises to build on organizational attributes and strategies in order to be successful (Hitt et al, 1998).
Plan to be aggressive and a risk-taker. The firms entrepreneurial posture is often anchored on its propensity to be proactive, innovative, and openness to risk (Covin & Slevin, 1989).
Prepare to take proactive action. International entrepreneurs are often characterized by their ability to explore opportunities and tackle new initiatives in foreign locations. (Lumpkin & Dess, 1996). In China, proactive entrepreneurial action positively impacts the performance of private enterprises (Tan & Li, 1996).
Expect results to take time. A series of prolonged adjustments may need to be implemented to get the work finally done. In China, entrepreneurial attributes are associated with hard-work, dedication, and diligence (Wang, 2000). International entrepreneurs need to learn to persevere, adapt, and take responsibility for failure (Morris & Jones, 1999). Doing business in China requires applying practical entrepreneurship principles, common sense, luck, and a lot of patience (Kenna & Lacy, 1994). Utilizing the Accounting Implementation Time (AIT) model can help identify priorities.
Anticipate organizational disparity. Level of development, organizational culture, and perspective are different across countries. For example, investors in developed nations tend to be more proactive and long-term focused, as compared to those in emerging nations (Luo, 1998). Preparing for organizational disparities ahead of time can facilitate a smoother market entry. Actively engage in a well-planned human resource development program for employees, a study has recently found that little effort are done by Chinese firms to improve worker skills, enhance satisfaction, and provide employee feedback (China Staff, 2003).
Understand legal and contractual obligations well. Emerging economies , such as China have their unique laws and systems that need specialized understanding. Devonshire-Ellis & Baker (2006) cited the need to be aware of the implications of the US Foreign Corrupt Practices Act when doing business in China. Taxation policies require careful scrutiny. Legal frameworks for business in the country are categorized by some as underdeveloped (Xin & Pearce, 1996). However, it has been observed that many younger Chinese managers are growingly reliant to the rules of law (Forbes, 1996).
Develop strategic relationships and networks. In China, popular business development strategies are often a result of technological innovation and entrepreneurial networking. (Wang & Zhang, 2005). In the country, guanxi, or relationship building is key to successful business transactions. In international new ventures, expansion of social capital can lead to greater resource access as well as minimize the negative effects of foreignness. (Arenius, 2002).