Bryan Pascual

BSBA-BM/11400248
PRINMAN/TH001
I COMPANY
Shui Fabrics
Rocky River Industries and Shanghai Fabric Ltd have a created a joint venture.
Chinese company that will produce, dye and coat fabric for sale to both Chinese and
international sportswear manufacturers.
Shui Fabrics employed approximately 3,000 employees in a country where the actual
unemployment rate was close to 30 percent.
II PROBLEM
1. Chinese company is bringing in five percent annual return on investment (ROI) and the
U.S. partner is expecting at least a 20 percent return on investment after 3 years of doing
business together.
III OBJECTIVES OF ANALYSIS
To characterize the main economic, legal-political, and sociocultural difference influencing the
relationship between the partners in Shui Fabrics.
IV ANALYSIS
Local Chinese authorities viewed profits made by Western companies on Chinese soil as
just one more instance of exploitation in a long history of foreign attempts at domination. As a
result, Shui Fabrics needs to watch its profit levels very carefully so that they can still make a
profit but not make so large a profit that they upset the local authorities. Shui Fabrics is
providing jobs to 3,000 people in a country where the unemployment rate was estimated to be
around 30 percent. This is a significant and positive economic and sociocultural influence.
There is also apparently pressure from the local Chinese authorities to keep the labor force at
Shui Fabrics at least at its present level. On the other hand, the companys success gives Rocky
River access to a huge Chinese market, cuts labor costs, and helps protect the firm from the
uncertainty of U.S.-Chinese textile trade negotiations in which U.S. tariffs and quotas can
change at any time.

GLOBE Project dimensions that might help in understanding the differences in Chinese and
American perspectives in this case include:

Assertiveness a high level of assertiveness in the U.S. contributes to the competitive

approach taken by Rays boss, evident in his disappointment that Shui Fabrics is not making
20 percent profits instead of five percent profits. The Chinese are likely to have a low level
of assertiveness, leading them to care less about profits (especially Western profits) and
more about keeping workers employed.

Uncertainty avoidance the Chinese have low uncertainty avoidance, suggesting that
they are less bothered by the uncertainty of textile trade negotiations, tariffs, and quotas
than their American counterparts who have high uncertainty avoidance.

Societal collectivism and individual collectivism China has collectivist values, both and
individual and societal, that compel the local authorities and employees of Shui Fabrics to
be more concerned about their members interests than they are about the Americans

profits. In contrast, Paul and, to a lesser extent Ray, as Americans, have more of an
individualism orientation that compels them to be more concerned about themselves and
their profits than they are about Shui Fabrics employees.

Performance orientation similarly, a high performance orientation in the U.S. is pushing

Rays boss to demand higher performance (i.e. more profits), while the low to medium
performance orientation in China suggests less emphasis on performance.

V RECOMMENDATION
The Company should have identified the objectives/goals and performance expectations.
If the U.S. partner is expecting twenty percent ROI by the third year of the project, then that
expectation should have been clearly communicated to the Chinese.