In the past, most overseas companies who set up operations in China were in the form of a joint venture (JV) with a Chinese organization. The biggest benefit from this approach is probably to establish local relations and get access to local markets. The importance of guanxi, or personal connections in China, makes JV an effective way of developing business relationships in this country. However, JV often leads to conflict between foreign and Chinese entities due to the differences inherent in management styles.
In Confucian philosophy, all relationships are deemed to be unequal and these inequalities should be respected. The older person should automatically receive respect from the younger, the senior from the subordinate, the group from the individual who belongs to it. This Confucian approach has a huge impact on the ways of management not only in China but also in many other Asian countries.
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