Open Systems Model In China

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As China is said to be world’s most manufacturing country where there are many small and medium enterprises (SMEs), many overseas companies have attracted to China by setting up their operations there including a joint-venture with Chinese organisation. The joint-venture approach with Chinese business can benefit the overseas entities with establishment of relations. Different types of companies can be formed in China such as state-owned enterprises (SOEs), foreign invested enterprises (FIEs), township and village enterprises (TVEs). In order to work with Chinese business well, they must understand China culture first.

Chinese management system is not just using universal business laws like Western business but the roles of culture
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It has concluded that four major models were developed including economic development model, environmental model, behavioural model and open systems model. As we have to look into Chinese business structure, open systems model which seems to be the most comprehensive of the four will be discussed here.

Open systems model, known as Negandhi and Prasad model, was developed in 1971 by Negandhi and Prasad in response to cultural and environmental factors of business practices. Prior to success of the model, it was carried out throughout the comparison among companies in the same culture to see whether they are similar to each other in term of management practices. As a result, the management process depends not only on external environmental constraints and culture but on management philosophy.
Figure 1.

According to Figure 1, management philosophy is defined as management attitudes toward employees, consumers, suppliers, stockholders, government and community. Though the management philosophy is not relevant to environment and culture, it also influences on the management process and
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These socio-cultural characteristics have been cultivating and developing within Chinese people. When it comes to dealing with the Chinese, their sensitivity to the characteristics can be noticed easily most of times.

Guanxi refers to interpersonal relationships between two persons that they can commit to each other consciously by exchanging favours even if they do not have to abide according to official policies. Because it helped many Chinese to survive the hardship of insufficient supplies during old times, it has been developed and maintained among the Chinese. It does not have to involve emotional in friendship but they are simply useful to each other. The point is that a person who fails to observe a rule of equity and refuses to return favour for favour loses face and looks untrustworthy (Min Chen,
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