Friday, May 11, 2007

HBSWK readers respond:The China Dilemma for U.S. Firms: Comply, Resist, or Leave?

Comply, resist, or leave are strong, close-ended options for an organization if we consider them in isolation and presume they are stand-alone options. But once we realize that interactions and interdependences exist within these elements we can formulate and execute a strategy that can help.
Leaving is definitely not an option. Organizations should not ignore the "dragon's might" and its economic prowess. Resisting completely is also not an advisable stand, because you should never take the dragon head-on especially when you know it breathes fire. Complying completely is also not a recommended option because it may lead to strangling the very ethics and values on which the organization survives.
What I suggest is a combination of resist and comply. This gives you ample room to bargain and negotiate.
I do not see any threat or moral hazard when the service provider makes clear to its customer the potential threat [that it may share information with] the [government] or other authorities. Forewarned is forearmed. So the organization can start with a basic product/service offering. Clearly study the politics and potential of the market and then slowly spread your wings by negotiating, bargaining, and making the authorities and customers understand the benefits of the offering.
As they say, when in Rome do as the Romans do. I would say in the East play it cool because aggressiveness can send the wrong signals to the authorities and also to people at large. As in Buddhist philosophy, follow the middle path and take baby steps in spreading business in the "Land of the Dragon." I agree with the critics of this strategy that profits will be limited and controlled, but so will losses in case the strategy or game plan fails. And it's better to fight than to attack or run and hide.

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