1. How would you characterize the main economic, legal-political, and socio-cultural differences influencing the relationship between the partners in Shui Fabrics? What GLOBE Project dimensions would help you understand the differences in Chinese and American perspectives illustrated in the case?
Although Shui Fabrics pulled off a 5% ROI within 3 years, Rocky River Industries an American partner is ready to pull the plug on Shui. A 5% ROI is great for Chiu Wai the Chinese general manager Shui but not Ray who needs the company’s bottom line closer to 20%. Chiu is more interested in complying with legal-political standards than increasing Shui’s ROI. Since Shui is doing better than many Chinese companies, Chiu sees no need to be more competitive. Overall, China is ranked far lower on the Global Competitiveness Report 2007-2008 at 32 whereas the US ranks number 1 (Daft & Marcic, 2009). Rocky River in the US is much more economically developed than Shui Fabrics in China. According to a 2009 Gallup poll, the US was more likely to be an economic powerhouse in 20 years than China (Saad, 2009). Despite economic downfalls, the US is much more globally competitive than China.
Rocky River’s economic competitiveness is a source of friction for Chiu Wai who favors the Chinese political “status quo” over monetary growth. Chiu mistrusts Rocky River and may perceive any increased output as further “exploitation” since Chinese workers already earn far less than American employees. Both managers can agree that Shui cut labor costs for Rocky River, opened up a huge market, and overcame contentious US-Chinese textile trade negotiations (Daft & Marcic, 2009). However, with US tariffs and quota fluctuations and strict supervision by local authorities, Rocky River is starting to lose faith in continued economic progress.
Cultural differences also affects how much “say so” Ray has over Chiu at Shui. Chiu listens to Ray but does what local authorities dictate....
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