Executive Interviews: Interview with Fang Lee Cooke on The China Factor
November 2007 - By Dr. Nagendra V Chowdary

Dr. Fang Lee Cooke
Full Professor of HRM and Chinese Studies at Manchester Business School
University of Manchester.

1. System inefficiency:
   As Chinese outward FDI only began to take-off in earnest in the 21st Century, the development of a legal framework and administrative policies are lagging behind. Bureaucracy, government intervention and management behavior, a remnant of the state planned economy, is still playing a part in the process in ways similar to that in the inflow FDI.
2. Technical challenges:
   Insufficient technical advantage is perhaps the biggest challenge facing Chinese firms generally in their outward investment move.
3. Image problems (both technical and social):
   In spite of an increasing level of recognition from the West of the growing competitiveness of Chinese firms, they generally suffer from image problems in the Western world as being low-cost and low-quality producers.
4. Management autonomy and competence in strategic decisions:
   As I discussed earlier.

• What are your observations on China's track record on adhering to IPRs, Trademark and Copyright protection? There were many instances when Chinese companies' actions were challenged; with regard to one or all three of them?
  It is true that China has attracted much criticism on the international stage for its lax attitude towards Intellectual Property Rights (IPRs).On the one hand, the Chinese fail to give due respect to the IPRs of others. On the other hand, they are not aware of the need to protect their own IPRs. Some violations are due to ignorance, others are by deliberation.

  N Mark Lam and John L Graham, the authors of China Now: Doing Business in the world's Most Dynamic Market (New Delhi, Tata McGraw- Hill, 2007), offer some very interesting insights into the IPR issues one of the most sensitive issues in doing business with China. There are obstacles for China to adopt the Western-style IPR regulations and outlook. People's perception of IPR is shaped by the historical, cultural, economic and political environment in which they live and these may be part of the reasons why intellectual property laws imposed on China by the West may encounter difficulties. I find the following paragraphs insightful in summarizing the societal differences on creativity and IPR issues:

  "Chinese children were taught to memorize verbatim the classics and histories, and their success in the imperial examinations depended to a large degree on their abilities to recite the Confucian Four Books and the FiveClassics. Itwas smallwonder that when the Chinese grewup, theywere, by training, compilers as compared to composers" (p.326).

  "This socialist viewof the function of creative works has had a similar impact on the Chinese as the Confucian view. It represents a continuation of the centuries old notion that intellectual property is public property to be shared and enjoyed by all. Intellectual property is not private property that should benefit and enrich the authors and inventors" (p.327).

  However, there are no excuses for not showing respect to other people's IPR. The Chinese government and companies need to make more efforts regarding this.

• What about the legal infrastructure in China? Do you think it is good enough to assure the existing and potential investors?
  The legal infrastructure in China on IPR is still in the early stages of development at the moment and does not provide sufficient protection to investors. This is particularly the case when laws and regulations are not always effectively enforced in China. However, the Chinese government has recognized the need to develop an intellectual property system and is making efforts to heighten protection for intellectual property by improving the country's legal and judicial systems. This takes time and, sometimes, there are competing priorities that distract attention from these efforts.

• In the recent past, there were reports of the Chinese economy getting overheated. Are there evidences that definitely substantiate this concern?
  The concern of China's economy getting overheated has been there since the 1980s. It is a perennial topic. The Chinese government has managed the situation relatively well so far. Our inflation rate has been relatively low, the price of some products are actually becoming cheaper.We have escaped some of the economic crises that have hit our neighbors hard. I don't think there is evidence to substantiate this concern. But, clearly, we cannot afford to be complacent or do things in a radical way that may upset the balance of the Chinese economy, and indeed, that of the world.

1. Google's Problems in China Case Study
2. ICMR Case Collection
3. Case Study Volumes