Managing Risks Related to Internationalization Project in China: A Case Study of a Canadian Manufacturing Company
Companies adopting internationalization strategies involving producing and selling goods in emergent countries, such as China, can benefit from competitive advantages, especially at the cost level, as well as from important business opportunities. However, they would encounter several risks, leading to failures in achieving their strategies goals. This justifies research objectives, whish focus on identifying and analysing these risks and on exploring the business practices used to face them. Thus, authors conducted a case study on a Canadian manufacturing company that implemented a plant in China in order to produce and sell its goods in this country. Results show that cultural differences can provoke the risk of misunderstanding between Canadian managers and the Chinese partners and employees, in addition to difficulties applying quality control practices. Political and juridical risks are critical in the case of implementing a plant in China, since unpredicted events, administrative rules and special laws can cause delays and additional unexpected costs. At the level of endogenous risk factors, the interviewed manager underlined the importance of not having a business network in China, which can cause the risk of missing some useful information. He also highlighted the criticality of the managers’ lack of experience in working in emergent countries. This can provoke the risk of not being efficient in dealing with Chinese partners and in managing Chinese employees. The case study shows, however, that many of the identified risks can be controlled by using appropriate management practices, especially the ones relatives to endogenous factors and to cultural differences.