L.A SILKS

L.A. Silks

The central problem in this case is lack of understanding how businesses are done in China, especially establishing a factory, and the Chinese do not understand what the foreign investor expects. Considering that the company could make a net profit of 32% and return its investment in three ears, L.A. Silk should proceed with the project. The events that might be attributable to cultural misunderstanding are the need to have to go to China twice to try to get information, which L.A. Silk feels they could have gotten without having to visit China. Guanxi is a Chinese name meaning creating friendship between businesses, which has affected this case. Liscomb is forced to visit China since they prefer doing business face to face, in order to create Guanxi. George Liscomb as a communicator has not been able to communicate well, instead of asking why some information is missing, he asks for it. Gui Fen, on the other hand, gives information without considering that he is communicating with foreigners. Both do not understand what each other means, and they both assume that each person is aware of the other person’s way of business. In the correspondents between the two, it is evident that Gui Fen tries to establish friendship, since his correspondents start by inquiring the welfare of Liscomb, while Liscomb’s letters sound more official, affirming that Chinese view business in a friendly way. After reading more about doing the case in China, I feel that the Chinese are honest, except that we do not understand how they do business; hence, we feel there is a lot under the water. This has changed my view of doing business in China, where I feel that Chinese want every investor to customize their factory, at the same time, are concerned about their people and want them to benefit from lease revenues. The challenges of writing to Gui Fen will be using a friendly language in a formal letter, and writing in a way to request information he may not require to give in his view, or information he would give face to face. The challenge of writing to Helen will be getting the information she requires from Gui Fen.

Letter requesting information

1215 lake Avenue/Pasadena CA 00000

Fax: (000) 546-7890 TEL: 456-7800

January 6, 0000

Shenzhen Urban Construction bureau

445 Erlong Road

Shenzhen, Guangdong

China

Dear Fen:

RE: REQUEST FOR INFROMATION

Thank you for your kindness in providing us with your help, which we much appreciate. Considering China is growing rapidly in terms of business development, we at L.A. Silk are highly interested in putting up a factory there, and considering all the information you have provided us with in the previous requests, we are now ready to do business with you.

 

However, considering the distance, we request to have a good picture of the expense we expect to incur during initial investment. Some of this will be the leasing for every year, government fees for operating and other requirements needed to start operating. for our requested factory, we would appreciate if you consider that we are a foreign investor, and provide us with a figure for the specifications we recognize as missing, about the installations in the factory, such as sewage passage, plumbing of floor, and other installation needed in the factory according your standards. This will help us make a good estimate of our budget for the investment, so that hen we come, less time will be wasted.

 

We kindly request you to send us some detailed information that will help us understand the real requirements and standards of doing business in Shenzhen, and put into consideration that we do not know all requirements and way of business in this area, and so being, help us with as much information as you can. The sooner we can get this information, the sooner we can come to Shenzhen for commencement of the investment.

Yours sincerely

George Liscomb,

Vice President, Overseas Operations

L.A. Silk.

Recommendation memo

To: Helen Martin

From: George Liscomb

Date: January 20, 0000

Re:  Actions L.A. Silk Needs to Do About Shenzhen

In response to your request for ht actions L.A Silk should take concerning venturing in Shenzhen, this memo provides a recommendation of what our company should do in order to get all the information we need to make a decision whether to push through or withdraw from the planned investment. I recommend that we seek to get all the information that we rewire through al means possible, to be sure before making a decision that we will not be loosing a chance, or we might be taking a non-rewarding task.

To venture in Shenzhen, I recommend we have a team of experts from China and our country, in order to get all the information that we need. other than relying on information given through requests, which have proven to be unreliable. I recommend this because what is lacking is enough information, and using a team of experts would find out what we need even from other companies that have already invested there. A team of experts will be able to assess the factory, plan and site, and come up with a real budget of what we would need to make it functional. In terms of government regulations and charges, the team can find out from other companies, the figures to expect, and the cost of doing business there. In addition, we need to find out the cost of labor and providing accommodation for the workers. I recommend that use of a team will evaluate this issue from other firms.

To conclude, using a team with experts will give a clear view of what to expect if we choose to invest in Shenzhen, which is what we need, in order to make a decision.

Informative letter

1215 Lake Avenue/Pasadena CA 00000

Fax: (000) 546-7890 TEL: 456-7800

January 6, 0000

Shenzhen Urban Construction bureau

445 Erlong Road

Shenzhen, Guangdong

China

Dear Fen:

Re: INFORMATIVE LETTER

I write this letter to inform you of our intention about the investment in Shenzhen. We at L.A. Silk have decided that for us to commence our investment, we will need to send a team of experts of about three, to come and join another team of three experts from Shenzhen, for evaluation of the factory and business culture of the area. The purpose of having a team evaluate the factory and the business in general is to certify to us that it is what our company expects, so that if there are major variations, we can have an easy time adapting to the new environment.

The team we send will contain expert from our area, who are aware of our business needs, and they will give us the information that we shall use to make a budget and better decisions about our investment. We kindly request you to accord us your assistance in finding good specialists who can work with ours, in order to have a meeting of minds about doing business together. Once again, we have been grateful of your help and kindly request for it again, as we look forward to doing business with you.

Yours truly,

George Liscomb,

Vice President, Overseas Operations

L.A. Silk.