German Companies in China E-Book

Jian-Ping Qin

• Herausgeber: tredition
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2020

Beschreibung

The book "German companies in China" describes the business experience of a German company in China. The author was the general manager and founded the company and ran it for 20 years. Under his leadership, the Chinese subsidiary developed successfully and grew from small to large, from a sales company to an all-round company with around 300 employees, including almost all functional departments. There are approximately 8,000 German companies in China. Not all are successful for various reasons. The differences in the social system, economic system and market characteristics, culture and customs as well as company management between China and Germany have had a significant impact on the management of German companies in China. Most problems with different processes are due to a simple copy of the German processes in China, regardless of the difference in the living environment. The focus of this book is the adjustment of the management of German companies in China to the Chinese environment. The author personally accompanied the development of a German company in China for 20 years and experienced many good and bad things. In this book, the author wants to objectively analyse the general problems that arise in all processes and to make suggestions for improving the processes from his own experience. With this book, the author would like to offer a reference for German companies in China and open a window for those interested to understand the special features of the Chinese market.

Leseprobe

Dr.-Ing. Jian-Ping QIN

German Companiesin China

20 Years Business Experience of aGeneral Manager

Copyright: © 2020 Dr.-Ing. Jian Ping QIN

Proofreading:

Cover & Typesetting:

Cover picture: Erik Kinting

Publishing house and printing:

tredition GmbH

Halenreie 40-44

22359 Hamburg

ISBN 978-3-347-11187-5 (Paperback)

ISBN 978-3-347-11188-2 (Hardcover)

ISBN 978-3-347-11189-9 (e-Book)

The work including its parts is protected by copyright. Any use without the consent of the author is prohibited. This applies in particular to electronic or other reproduction, translation, distribution and public access.

Bibliographic information from the German National Library:

The German National Library lists this publication in the German National Bibliography; detailed bibliographical data are available on the Internet at http://dnb.d-nb.de.

content

Foreword

Existence environment analysis of German and Chinese business models

1. Social system

2. Economic system and market characteristics

3. Culture and customs

4. Company management

Conclusion

The development of German companies in China

Process management of German companies

Process of company annual planning

Sales process

Technical service

Production process

Logistics process

Product management process

Research and development Process

Purchasing process

Quality management process

Financial management process

1. Calculation of turn over

2. The Chinese Fapiao system

3. The unique tax management in China

4. Receivables management

5. Two accounts

6. Patent and Brand fees

Human resource process

General analysis ofMade in China and Made in Germany

Features Made in Germany

Features Made in China.

Foreword

The United States, Germany, Japan, and China can be considered as super-producing countries. Although the United States, a former manufacturing power, has maintained its leading position in high technology, it has abandoned it in the traditional industrial sector.

There is a saying in industry: the Americans patent the invention, the Germans make it a product, the Japanese miniaturize it and the Chinese make it cheap. Although this is somewhat exaggerated, this saying basically clarifies the characteristics of these countries: the USA is a leader in high technology, Germany is good in product development, Japan is good in product optimization, and China has the costs through mass production considerably reduced.

This book focuses on Made in Germany and Made in China.

Germany is known worldwide for its quality and reliability and has almost no competitors in Europe. The introduction of the euro makes it impossible for the European countries to protect their products from the Germany by devaluing their currencies; With the help of the euro, German products broke through the borders and occupied Europe. The world-famous German industrial standard DIN has become the European standard EN.

With regard to modern industry, we have to recognize that Germany is a teacher for China, the German quality has historical dimensions worldwide. For example, the author knew from childhood that the German company Zeiss was producing the best cameras in the world at that time. The Chinese have had respect for Made in Germany since World War II. There are often various articles in the Chinese media in which Germany and German products are presented. The reports are full of praise and recognition, the German model is almost idolized in China. German products are always a model for copies of Chinese products and German company management is always a role model for Chinese company management. Although Made in China has currently dominated the mid-end and low-end markets around the world, Made in China lags behind Made in Germany in the high-end market. The rise of the Chinese model did not mean the decline of the German model. This book does not intend to replace the German model with the Chinese one, but rather to discuss the rationality of these two models in their own existence.

Existence environment analysis of the German and Chinese business models

First of all, it must be emphasized that each of the two models has its own social, economic and cultural environment. The German philosopher Hegel said: what is reasonable is real; and what is real is reasonable.

The success of a model is inextricably linked to its respective existence environment. A model that is successful in one place may not possibly be, or may not be entirely suitable for another place if the living environment is different. In other words, we must first carry out an objective comparison of the existence environments of German and Chinese companies. By comparing the differences in social system, economic system, market characteristics, culture and company management between China and Germany, we can better understand the differences between the two business models in their respective livelihoods.

1. Social system

Germany is a constitutional state. The laws apply to everyone and must be followed. Almost all German companies make their own general Terms and conditions for the basis of the contract, whereby all legal points are precisely defined. The functions, area of application and instructions for use of a product as well as the quality guarantee etc. are clearly defined in Germany and laid down by law. Responsibility for problems is also fully under legal supervision. Clear legal requirements and legal responsibilities in turn lead to extremely high demands on product quality. This is the legal basis for the high quality of German products.

China is a developing country and the legal system needs to be improved. The legal definitions of product quality, responsibilities and obligations have not yet been clearly defined. There is no effective legal assessment method for product quality problems, so there is insufficient legal basis for quality requirements in China. Once a problem arises, it's more about how the problem can be solved quickly rather than clarifying responsibility. This in turn is due to the human factor in China, everything is regulated through personal relationships - vitamin B, as they say in Germany. In the event of a dispute in Germany, legal action is usually taken directly and the legal process usually closes the problem. For example, processing claims in Germany is comparatively easy. The judicial dunning procedure can be operated by everyone at low cost, in addition, from collection agencies to lawyers, there are numerous qualified service providers to whom the dunning process can be outsourced. In China, for example, the deterrent power is limited and the enforcement of legal claims is inadequate. Even if a lawsuit is won, the verdict is often not enforceable. Therefore, debt collection in China is dependent more on seller relationships. This is also the human factor. Personal relationships still have a big impact in China. There is a famous Chinese proverb about this: Everything is difficult, but everything is possible.

Germany is a developed and democratic state, guarantees human rights and promotes family values. The workers strive for healthy work and adequate vacation. They don't want to work unpaid overtime and don't like to work under high pressure. Companies don't usually encourage hard work either, with some gloomy exceptions. The personal and family interests of the employees are comprehensively protected. Company interests are less taken into account than in China.

Chinese companies see work first, employees should sacrifice themselves for the company and subordinate everything, including family, for work and career. Engagement like voluntary unpaid overtime is encouraged as a positive attitude. The 9-9-6 working hours (9: 00 a.m. to work, 9: 00 p.m. end of work and 6 days’ work a week) is normal for employees in China. Workers in private company generally work 10–12 hours a day and it is normal for them to take break only one day a week or even once a month.

German companies have strong unions that coordinate the relationships between employers and employees. The employees also pay attention to the interests of the company and actively participate in various business processes. Good relationships between employers and employees can promote the healthy development of companies, as you can see in Germany. But unions think more about the interests of workers than about the company. An example of this is a German headquarter that had to fire employees during the 2009 financial crisis. The layoffs were coordinated with the works council and were based on humanitarian principles: older and underqualified employees who had little chance of finding a new job were retained, while a large number of good and young employees who could easily find a new employer were exempted; as a result, the company's competitiveness has been severely weakened. Chinese unions, on the other hand, are fundamentally ineffective. The unions of state-owned companies take care of the simple concerns of workers and basically have no say in company management. Foreign and private companies therefore have almost no unions in China. However, the state encourages companies to form unions. It charges two percent of the company's total labor costs as union fees; the money can be reimbursed after the unions are established. Most companies prefer to forego this two percent and set up a union. The employees' desire for a union is also not strong. Chinese companies therefore have more options in terms of employee issues, are therefore more flexible overall and have lower operating costs.

2. Economic system and market characteristics

Germany has a developed and stable market economy. The market and customers change little, the market development is very predictable. This enables companies to plan accurately with optimal results. German management is based on a stable market and a high degree of planning. Planning is the main characteristic of German company management.

China is a developing country. Due to the rapid development and large fluctuations, unpredictability and uncertainty are an important feature of the Chinese market. Numerous factors of uncertainty have a negative impact on the results of the company's management. However, due to this market volatility, Chinese companies have good plasticity and flexibility. They can quickly adapt to new situations. Chinese companies operate on the basis of volatile markets, with flexibility being the biggest characteristic of Chinese companies.

Germany has a mature market economy system and most companies adhere to the rules of the game. There is less malicious competition. As long as the market is big enough, everyone will be fine and everyone will make money. The only difference is to earn more or less. However, companies lack the pressure to exist, which leads to poorer coping ability in the event of a crisis.

Malicious competition is much more widespread in the Chinese market. Almost all means are used to win orders. This significantly reduces companies' earnings and hinders their healthy development. Quality requirements are therefore often greatly reduced for cost reasons. From a different perspective, however, this type of competition means that good companies are strengthened and bad ones are eliminated. The tough competition is forcing companies to cut costs and innovate. That is why Chinese products are more competitive worldwide.

As a highly developed country with good income and prosperity, Germany attaches more importance to quality and service. The main products on the German market are therefore characterized by high quality with extremely high reliability and are sometimes lifelong. However, the prices are correspondingly high and are among the highest prices in the world. The Germans have a strong awareness of quality and are relatively insensitive to high prices if the quality is right. The pursuit of quality is therefore the main goal of German companies; High-priced production models are generally recognized in Germany.

The Chinese, on the other hand, value a favorable price-performance ratio more, so the Chinese companies tend to strive to achieve lower sales prices for their products. Chinese main products are characterized by a good price-performance ratio, whereby it is not only the price that is decisive. The pursuit of good value for money is