Managing Business Government Relations Across China, India, and Indonesia

Topics: Economics, Economy, Gross domestic product Pages: 11 (3912 words) Published: May 27, 2011
Variation in effective mechanisms for managing business government relations across China, India, and Indonesia

The variation in mechanism of managing business in three countries China, India and Indonesia has been covered on lines of business culture, political institutions, economy and tax regimes. Business Culture

There are quite a lot of similarities in business culture in 3 different countries China, India and Indonesia. Business decisions are usually taken at the highest level and may take more time than one would have expected. Business can’t get a favourable decision unless they establish the trust with government. As the decision is taken at the highest level, absence of the any higher-position holder like Director or owner indicates that it is only the early stage of negotiation. Business development largely depends upon relationship building and business relationships are based on trust and familiarity which is earned by demonstrating strong business insight, showing honesty and respect. “Guanxi” meaning relationship is considered key characteristic of the Chinese business culture. Personal contacts and networks are important in making business deals and business people will come frequently into contact officials. Having a contact act as an intermediary is important in conducting business as they will know more about the bureaucracy, legal system and local business networks. Gifts or exchanging favours are appreciated in all societies. If businessman wish to give Indonesian official a gift, alcohol is avoided as it is forbidden in Islam. While gifts might extend to bribery in India, it is not supported in China. Chinese believe that ‘Guanxi’ should not be one sided for business to grow. In China, gift does not carry any negative implication and is always exchanged on celebrations, as thanks for assistance and even as a sweetener for future favours. However, it is important not to give gifts in the absence of a good reason or a witness. In India and Indonesia, people use polite and diplomatic language even if they disagree. Government officials do not always say exactly what they mean and therefore it is up to the businessman to pick up on communication detail by paying attention to body language and gestures. The government officials do not rush through business negotiations and often take the time to plan everything. Business is conducted usually in English in larger cities of India and Indonesia while it will be local language in China while it is wise to bring an interpreter in Indonesia and China. In Indonesia and China, person will do anything to save face even if it means avoiding argument or telling others what they want to hear rather than dealing with immediate issues. Businessman usually refrains from putting high pressure tactics while negotiating with the government. Political Institutions

China's remarkable economic success is based on a strong foundation of political reform started in 1978. This reform reflects a special type of decentralization called "Chinese federalism". This form of decentralization has three consequences in Chinese business community. Firstly, it fostered competition, not only in product markets, but also among local governments for labour and foreign capital. This competition, in turn, encouraged local government experimentation and learning with new forms of enterprises, regulation, and economic relationships. Secondly, it provided incentives for local governments to promote local economic prosperity. Finally, it provided a significant amount of protection to local governments and their enterprises from political intrusion by the central government. The Chinese government is considered very strong entity with complete power to take decisions which the central party think is good for the country. The form of government have been sometime against multinationals trying to establish business in China. For example, Google has to stop their China operations because they...
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