What is a back-to-back agreement in International Business?

A back-to-back agreement is an easy to conclude form of partnership, mostly used if you work together on one specific project. The parties remain independent, no new legal entity is created.

The client has an agreement or project contract with the main contractor, who purchases part of the activities from the subcontractor. Specific for a back-to-back agreement is that the subcontractor complies to the scope, planning and other conditions in the project contract between the client and the main contractor.


Option in the contract

You will have to describe what is the responsibility of each party alone, and which responsibilities are shared. Shared responsibilities could be in overall project planning, interfaces, finetuning etc. For those tasks you can even share bonuses or penalties that the client wants to put into the project contract. Also you have to see whether you use back-to-back terms and conditions, which is mostly preferred.
Back-to-back payment

Back-to-back payments are used to arrange that the subcontractor is only paid directly after the client has paid the main contractor. With these back-to-back payments the subcontractor does not only feel responsible for his task, but also for the project as a whole.

This structure requires however a clear description of each others tasks, and also a procedure how the subcontractor can enforce payment if the reason that the client does not pay lies with the main contractor.

When to use this type of contract?

A back-to-back contract works best if there is one main contractor and only one or two subcontractors and responsibilities can not (all) be separated clearly. With too many parties the structure may become too complex. With responsibilities that can all be clearly defined and that are not interdependent you can stick to normal agreements.
Back-to-back agreement in an international setting

First of all you will have to look at where the client, main contractor and subcontractor are based. What law does apply and how easy it is to enforce payments or lay claims? This may require some market research. When working for clients abroad, depending on your export strategy, you may want to look for either a local partner or distributor, or a trusted party from your home country. Then decide who will be the main contractor. This party will do the formal representation towards the client, although it is advised to have project meetings with all partners involved.

Why India is favorable for Western companies but they struggle in China?

Amazon CEO Jeff Bezos in Bangalore, India. Photo credit: Manjunath Kiran AFP for Getty Images.

In this article, you can learn a comparative analysis between China and India for Western companies (Precisely-US Tech giants).

1. Consumers: How much love can money buy?
2. Local competition: How much market share can your money buy?
3. Government: How much sacrifice does it take to appease the higher powers?
4. What will the rise of US tech companies in India mean for domestic startups?

Some of the world’s most successful companies – Google, Facebook, Amazon, and Uber – have turned their backs on the Middle Kingdom and its 1.4 billion people, raising the question: Why have US tech companies consistently failed in China, yet enjoyed relative success in India? What will this mean for India’s startups?

There are three parties that have caused US tech companies to succeed in India whilst failing in China: the consumers (the guys the companies fight for), the local competition (the guys they fight against), the government (the guys that decide whether they get to fight at all).

1. Consumers: How much love can money buy?

As Yi Shi, CEO of Chinese startup Avazu has said, “For a large market like China, you will need 100 percent localization to compete with local players.” Chinese consumers are so distinctly different from their American counterparts that localizing in China has either been too difficult or too costly for American companies.

For instance, when eBay and Amazon entered China, Chinese users, like American users, could only view seller reviews. The problem was that Chinese users wanted to talk to the seller, develop a relationship, and haggle – similar to an in-person shopping experience.

eBay and Amazon failed to meet this need, perhaps because they wanted consistency with their American product, while Alibaba understood the Chinese consumer and incorporated a chat feature in their product, Taobao marketplace.

Amazon’s failure in China and Alibaba’s success are rooted in their underlying philosophy.

Jeff Bezos has long claimed he wishes to build the most customer-centric company in the world. Jack Ma, instead, says “Our proposition is simple: we want to help small businesses grow by solving their problems through Internet technology. We fight for the little guy.” Amazon provides a great buyer experience via centralized control akin to the Chinese government. Alibaba provides a great seller experience and then lets the free market run as wild as the Wild West.

Amazon has only two million sellers worldwide. Alibaba has 8.5 million sellers.

As a result, seller competition is fierce on Taobao – with small businesses differentiating themselves by service quality, delivery speeds, price, etc. As anyone who has used Taobao will tell you, there is the usual risk of fakes and scams that one often won’t find on TMall or even Amazon Marketplace – but that’s the point: Price-sensitive Chinese consumers are willing to invest the time to find the right product in exchange for a wider range of potential consumer experiences.

Companies have less to do and less to spend to wow and woo the Indian consumer than the Chinese consumer.

The Chinese value for variety manifests itself in WeChat, China’s most popular message app with 570 million daily active users. The app is stuffed to the brim with ride-hailing features, personal QR codes, video messaging, voice messaging, payments, location reporting, finding nearby users, and much more.

If WeChat is feature-rich, WhatsApp is a feature-pauper. In truth, WhatsApp follows the American school of user interface design: a few, perfected features that meet the majority of user needs, over many, mediocre features that clutter the experience. Unfortunately, the American preference for interface simplicity is directly opposed to the Chinese preference for interface expressiveness.

Localization is easier and cheaper in India. At the outset, the prevalence of English in urban India means that often the American version of a company’s online product is already viable – which is not true for China.

Unlike Chinese consumers, Indians are yet to be pampered to ordering a book and having it delivered to your door in two hours, or the joys of personal QR codes, or an infinitude of impossibly cheap products on Taobao.

Which is to say, unlike Chinese consumers, Indians haven’t been spoilt enough to know what they want, and develop a truly distinct consumer identity in terms of both user experience and user interface. Amazon or Uber or WhatsApp in many ways has less to do and less to spend to wow and woo the Indian consumer than the Chinese consumer.

2. Local competition: How much market share can your money buy?

While Uber China’s deal with Didi Chuxing, which controls over four-fifths of the Chinese ride-sharing market, has been interpreted by many as an acceptance of defeat, the deal brings an amicable end to an unsustainable, two-year price war.

The burn-cash-till-the-competition-burns-out strategy that Amazon and Uber have taken in India couldn’t work in China. Uber is reported to have lost US$1 billion per year subsidizing rides – sometimes discounting at 90 percent, or offering free rides. The casualties were high for Didi as well, which means both sides had a lot of pawns (i.e. cash) to kill before the armistice. Uber China had US$1.2 billion in its wallet, Didi had US$10 billion – which means Uber was fated to lose the price war.

Uber China’s resources paled next to Didi’s, Amazon China’s paled next to Alibaba.

Indian startups are still too small to fight as long and as hard as Chinese startups.

But Indian startups, even the unicorns, are still too small to fight as long and as hard as Chinese startups. In June of this year, Jeff Bezos announced that Amazon plans to invest an additional US$3 billion in India, which brings Amazon’s total investment to US$5 billion in the last 2 years.

Snapdeal has raised a total of US$1.54 billion in 5 years, and Flipkart has raised US$3.15 billion in 7 years. In absolute terms, Amazon has more financial resources, and an incomparable technology infrastructure (while Flipkart has shown us that flowerpots and bombs are not the only things that blow up during Diwali).

Uber and Amazon entered India with perfect timing. The local competitors have already done the hard work of building the understanding of market challenges, paving the infrastructure for logistics, and priming the consumer for product acceptance.

But unlike Chinese companies, they have not surmounted the final challenge of establishing stable market dominance by refining their product and brand to perfection.

3. Government: How much sacrifice does it take to appease the higher powers?

Public security officers in China. 

The mythology of many great civilizations has taught us that the Gods can be fickle, irrational, and angry – and when they are, lowly mortals that wish to come out alive better have someone willing to hold up a mountain with his pinky.

So it goes with the Chinese Communist Party. Whether the company is Chinese or foreign, part of a business is performing the necessary rituals to appease the right powers (in China this is known as “building networks of influence” or guanxi or 关系). Throwing Google-esque tantrums about such fine morals as anti-censorship means getting thrown out.

The Great Firewall has provided protection to many large Chinese tech companies by keeping out the likes of Google, Facebook, and Twitter.

India has no Baidu or Weibo or Renren of its own because American companies filled the spot before local startups could grow enough to compete. Tech in China is like the highly regulated retail space in India – where IKEA, Walmart, Starbucks, and many other foreign brands struggled for over a decade to enter while they grew in China).

While Indian regulators have on the rare occasion stood their ground against foreign tech companies (e.g. Facebook’s Free Basics) – they have been far more hospitable, welcoming – and most crucially – detached.

China Investment Corp, China’s sovereign wealth fund, is an investor in Didi – as well as in Alibaba, which is also an investor in Didi. The Chinese government had big stakes in Didi’s success. To substantiate this, the Chinese government announced last week that it would legalize ride-hailing in November, but would prevent setting rates artificially low “to push out competitors” – and that’s a finger pointing at Uber’s subsidized rides.

The foreign media has been keen to represent Uber’s exit as yet another indication of the selectively protectionist, free market throttling of China’s authoritarian government.

 I vehemently disagree with the claim that American firms have failed because of the Chinese government.

In spite of the government’s clear preference for domestic firms, I vehemently disagree with the claim that American firms have failed because of the Chinese government.

Handwaving away every foreign failure to the Chinese government presumes that companies like Alibaba and Didi get an 80 percent market share by nepotistic means while being equal, or inferior to their foreign competitors. Sounds pretty presumptuous – but let’s face it – democracy-dwellers love sticking their noses in the air when it comes to China.

Could it be possible that Uber was late to the game in China? Could it be possible that Uber is great for America, and Europe, and India – but just not for China? Could it be possible – and get ready for some scandalousness – that America, and Europe, and India are missing out on using Didi?

Of the hundreds of articles that have whined about how Xi Jinping personally slit Uber’s throat, how many have lauded Didi?

Didi offered a far larger product line that included taxi, private cars, express travel, free rides, buses, and designated drivers – and we’ve already discussed how the Chinese consumer feels about variety. Didi enables users to pool together and provides affordable intercity rides comparable to train fares during Chinese New Year, when millions of people traverse the country to join their families. Didi’s app is easier to use under poor data conditions.

Didi can be opened through Alipay and WeChat (thanks to shareholders Alibaba and Tencent). Didi has initiated plans to extend into car sales, insurance, financing, maintenance, etc. Unfortunately for Uber, this is not the end of the list.

So while government regulation has incubated Chinese tech companies, many of these companies have earned their market dominance by providing a great product uniquely suited to the Chinese consumer. Could Uber have eclipsed Didi with a better regulatory environment? Maybe.

What will the rise of US tech companies in India mean for domestic startups?

India will continue to face the risk of foreign players entering the market to usurp reigning unicorns. Some grieve – claiming India will never be able to grow great startups without some incubation from outside players with better access to capital, and established technology.

Some speculate Ola will soon be wiped out, as will Flipkart. If we don’t want India to be a market colonized by foreign companies, what can be done without caging the free market in regulations?

 Indian startups have two options: grow bigger, grow smarter.

Indian startups have two options: grow bigger, grow smarter. Either they get a ton of money (knowing foreign companies will almost always have more); and/or they accept that free market competition is good for the consumer, they get to know the consumer better, and they meet their needs more effectively.

Needs can be met in one of two ways: spread wide or dive deep.

Spreading wide doesn’t just mean expanding services, but moving into complementary sectors. In moving towards incorporating car purchases, insurance, financing, etc. – Didi is building an ecosystem that enables it to be involved in the consumer’s full transportation life-cycle from ride-hailing to owning one’s own car, to maintain it.

Chinese companies have historically built vast ecosystems that enable them to expand rapidly into new markets to augment the core business. Think Alibaba, which is involved in sports, health, travel, entertainment, etc. as a way to utilize and improve its data on users from its e-commerce and payments businesses.

Diving deep means investing heavily in perfecting the user experience.

If you asked a Chinese user if she would prefer to buy a given product on TMall or Amazon assuming the price is the same, you would almost certainly hear TMall.

If you ask an Indian user about Flipkart or Amazon? Personally – I prefer Amazon, and I know I’m not alone. And what about Ola versus Uber? Personally – I prefer Uber, and I’m definitely not alone here. The fact is that neither Flipkart nor Ola has built the brand loyalty, the service quality, and the predictably low prices that would make Indian consumers stand by them to the battleground. They built products that functioned, not emotional attachments that would stand the test of potential infidelity with a foreign competitor.

If there’s one lesson to be learnt from Uber’s exit from China – it’s that Indian companies need to watch their backs by watching their consumer’s needs.

Source: techinasia.com

How GST can impact Imports and Exports in India

The new goods and services tax (GST), launched on July 1, 2017, will change the way of doing business in India. It is likely to have a significant impact on the international trade of goods through changes in the structure of import and export taxation, and the withdrawal of various indirect taxes and exemptions.

GST impact on imports

In the previous tax system, the imports of goods and services were subject to import duties such as custom duty, countervailing duty (equivalent to excise duty), and special additional duty (equivalent to value added tax), and the import of services was subject to service tax.

Under the reformed tax structure, the integrated goods and services tax (IGST) replaces the previous indirect taxes imposed on the import of goods and services.

Customs duty and other protective taxes, such as the anti-dumping duty and safe-guard duty will, however, continue to be levied on imports of goods – carrying over from the previous tax regime. In case of import of services, only IGST is levied.

Imports under GST are treated as inter-state supply. Since GST is a destination-based tax, IGST will be levied in the state where the imported goods are consumed and imported services are received.

IGST can be paid using input tax credit of central goods and services tax (CGST), state goods and services tax (SGST), and IGST. Input tax credit is the credit that dealers can avail for taxes paid on their purchases, at the time of paying final tax on their sales.

In case of CGST and SGST, no cross utilization of input tax credit is allowed. That means, input tax credit of CGST can only be utilized for CGST and IGST, and input tax credit of SGST can only be utilized to pay for SGST and IGST.

Under GST, the import of service is taxable if –

• The supplier of service is located outside India;
• The recipient of service is located in India;
• The place of supply of service is in India; and
• The supplier of service and the recipient of service are not merely establishments of a distinct person.

Transitional provision

Businesses must note that if the import of services is made on or after July 1, 2017, it shall be chargeable to tax under GST law even if the transaction was initiated before July 1, 2017. Furthermore, if the tax on import of services has been paid in part under the previous law, the balance tax shall be paid under the new GST law.

Tax returns

An importer is required to file monthly tax returns under GST. Under the previous law, the importer was required to file returns under state tax law for purchase of goods (import of goods) and under central tax laws for claiming countervailing duties. While filing monthly returns, importers must declare the goods imported in table-5 of the GSTR-2 form, and services imported in table-6 of the GSTR-2 form.

Exemptions

Previously, the transportation of goods by aircraft and inbound shipment was not liable to service tax. Under GST, there is no such exemption.

Impact on exports

Under GST, exports are treated as ‘zero-rated supplies’. If GST is paid at any point of supply against exports from India, a trader may either export without the payment of IGST under bond or letter of undertaking, or may pay the IGST and claim refund later. 

In both cases, an exporter must provide details of GST invoices in the shipping bill.

Introduction of GST in India and its Impact on Foreign Investors

India will soon be in the midst of its most significant tax revolution since 1947. Here is a primer as to how the coming of this new structure will transform business as usual for Indian companies and foreign firms.

A small car helped French carmaker Renault make a big impact in India. Compact hatchback Kwid became a runaway success as soon as it launched in late 2015 and helped establish Renault as one of the fastest growing automotive brands in the country. The Kwid is a result of design innovation and frugal engineering, with 97% of its parts sourced locally and supplied by 400-odd Indian vendors. But this Make in India story is a complicated one because each original component shipped to the Renault-Nissan plant in the South Indian state of Tamilnadu (TN) attracts an entry tax depending on the state it originates from. For instance, all head lamps, tail lamps, switches and horns for the Kwid are manufactured and supplied by UNO Minda located in Haryana state; TN, therefore, treats these goods as an import and levies a tax on them. Renault bears this cost paid by the component maker to TN. When the final product, the Kwid, is ready to rollout, it is taxed another time at the factory gate by the Central Government. When a consumer purchases the Kwid from a showroom in another state, say Goa, TN treats the finished good as an export and levies a Central Sales Tax on it. Sounds complicated, doesn’t it? But all this is set to change when the Goods and Services Tax or GST comes into force on 1 July 2017. India’s biggest tax reform, GST will replace most indirect taxes with one tax and make it easier to do business in the country. GST will subsume a host of taxes like excise duty, countervailing duty, service tax, state levies like octroi and entry tax, value added tax and luxury tax – and simplify India’s tax framework as a whole.

Erasing Borders Within Borders

Thanks to GST, goods can move easily throughout the country’s 29 states and 7 Union territories essentially transforming India into a unified market. GST will have an immediate positive impact on transportation and logistics and help reduce operating costs across sectors. Industry observers believe that the time and costs associated with shipping goods across the country will fall by 50% because trucks will no longer have to wait for hours or days at state borders filling out paperwork and reconciling a cascading system of taxes. This will effectively help bring down the price of manufactured products, cement, steel, consumer durables and more, benefitting the end customer and boosting domestic consumption. Analysts foresee that GST will positively impact industry sectors related to manufacturing, pharma, FMCG, automobiles, technology, warehousing and logistics.

Less Paperwork = More Tax Revenue - Less Corruption

The International Monetary Fund reflects this positive sentiment and expects that the adoption of GST is likely to raise India's GDP growth rate to over 8%. An easier to follow regulatory system will also help widen the tax base, increase compliance and mean greater tax revenues for the Indian government. Not surprisingly, the passage of GST is highly anticipated by enforcement agencies, domestic players and foreign investors alike. Global firms who have so far shied away from investing in India due to its regulatory and bureaucratic tangles will be reassured to see that the Indian government has demonstrated the political consensus necessary to bring about such a significant change.

Apart from fostering efficiency and allowing for more competitive pricing of products and services, experts believe that the electronic processing of tax returns, refunds and payments through 'GSTNET' will help to reduce corruption and tax evasion. Built-checks on business transactions will make the tax framework much more transparent and reduce the scope for the generation of black money. This will go a long way in making India a more favourable destination for international players who are eager to tap into a market of 1.3 billion consumers.

Business Opportunities in Post-GST India

Global players can take their pick from any number of emerging opportunities this post-GST landscape presents. For instance, the absence of adequate cold chain facilities in the country holds enormous promise for potential investors. Improving cold storage facilities, investing in technology and increasing the network of refrigerated trucks to deliver seafood, fruits, vegetables and dairy products in less time could help investors take advantage of India’s rapid urbanisation. Many big players are vying for a share of this action. Japan’s Nippon Express Co. is looking to invest in this sector; an affiliate of global private equity firm Warburg Pincus has agreed to invest $125 million in an Indian logistics company, and French logistics company FM logistic plans to invest EUR 50 Million in India over the next four years to improve its warehousing network across the country. Stephane Descarpentries, Director-Strategic Projects and Director, operations Asia, FM Logistic drew attention to the timing of this move by saying, “India is the biggest democracy worldwide, sporting an impressive growth rate - the GST adoption will be a turning point in the logistics market. We aim to contribute to a better efficiency of the logistics in India, especially in this post-GST scenario.”

Long-term and Short-term Implications

Industry experts across the board agree that GST will improve the ease of doing business in India and prove to be beneficial in the long run, however, it remains to be seen what this ambitious move means for the Indian economy in the short term. Some strategists expect GST to disrupt consumption and growth in the near future and have a one-time inflationary effect. A report by HSBC analyses these implications and predicts that “The near-term could be messy, with adjustment costs for the private sector grappling with inter-sector implications, and the central government trying to compensate states for revenue loss.”

Let's keep eyes on govt of India periodical GST roll-out schedule in July and September 2017.

All you need know about BLOCKCHAIN

I am sure you might have heard of blockchain in Tv news, Newspaper or on the Internet. What interest me to write about it? I admit that it does not directly linked to the topics I like to write. However the impact of blockchain seems very vast and the attention paid to this technology by world's pioneer bankers, convince me to write about it. In France, BNP Paribas, Societe General, and other bankers and Govt. body are working together to make accessible and convenient for PMEs (SMEs). Not only that three different start-ups also launched in Franch around this technology, namely stratuman, Keeex, and Belem and supported by bankers to test this technology.

Here we are going to see:

1. What is block chain and how does it work
2. Video Explanation
3. Impact of Blockchain
4. French Govt regulation on Blockchain

“Bitcoin the currency, I think, is going to go nowhere … the blockchain is a technology which we’ve been studying and yes it’s real.” —Jamie Dimon on CNBC

As per Wikipedia definition " The blockchain is the main technology innovation of bitcoin, where it serves as the public ledger for bitcoin transactions. Every user is allowed to connect to the network, send new transactions to it, verify transactions and create new blocks, making it permissionless". In other word this coding breakthrough-- which consists of concatenated blocks of transactions--allows competitors to share a digital ledger across a network of computers without need for a central authority. No single party has the power to tamper with the records: the math keeps everyone honest. Forty of the world's top financial firms are experimenting with this technology.










Videos explanation from World Economic forum

Role and Impact of Blockchain

Solving the problem of IP in a digital age.
Blockchain technology provides a new platform for creators of intellectual property to get the value they create. Consider the digital registry of artwork, including the certificates of authenticity, condition, and ownership.

Creating a better sharing economy.
Sharing economy companies are really service aggregators. They aggregate the willingness of suppliers to sell their excess capacity (cars, equipment, vacant rooms, handyman skills) through a centralized platform and then resell them to users, all while collecting a cut off the top and valuable data for further commercial exploitation.

Opening up manufacturing.
New markets could enable buyers and sellers to contract more easily in an open market.The so-called Internet of Things will need blockchains to manage ultimately trillions of daily transactions.

Changing enterprise collaboration.
For example, if every employee had their own elaborate profile, which they owned and controlled, employees and companies would be able to keep their data, rather than give it to large social network companies

Cost-Cutting




Why world's bankers are keen for this technology?




French Regulation and Blockchain Enviroment

The French government has passed a new ruling authorizing the use of distributed ledger technology for the issuance of mini-bonds and recording of trades. The new statute not only gives a clear definition of blockchain technology in French law, it also recognizes the technology as a recording tool that can be used for the transfer and authentication of ownership titles while providing legal validity to mini-bonds issued and traded via a blockchain infrastructure.

The statute (no 2016-520, April 28, 2016) defines blockchain technology as a "shared electronic recording system allowing for authentication. The statute also mentions the requirement for a working group that would "determine the conditions for the realization of such project." The working group would also be responsible for "insuring that the [proposed infrastructure] is secure and mature enough to handle a digital distributed ledger that is reliable, secure and auditable."

BNP Paribas Securities Services, Caisse des Dépôts, Euroclear, Euronext, S2iEM, Société Générale and Paris EUROPLACE revealed that they have signed a memorandum of understanding to create the initiative. By combining their money and expertise, the group hope that they can harness the blockchain technology reducing financial costs and improving SME’s access to capital markets.

They believe that blockchain technology has the potential to significantly enhance and streamline post-trade operations by facilitating securities registration for the European market and allowing fast execution of trades with clearing and settlement in real time at T+0.

"By pooling our strengths in this ground-breaking area, we are focusing on new solutions that will give small and mid-sized companies - key actors for growth in Europe - easier access to the financing they need. With this project, we are securing the means to seize opportunities that blockchain distribution can offer: speed of execution, low cost and security," says a statement.

Some keywords to understand Blockchain

Ref : Btcmanager, Business insider, Google, WEF

Lesson from Chinese Management Approach

In general business in asia really a challange from western prospective. There are multiple reasons and I am sure you might aware of it. Due to cultural and histrorical background every country in Asia having their own style of doing business. 

Due to economic success of china I was interested in discovering their strategy of business and tried to understand how does it differ from Western countries. I learnt that China appear to have differnt management thinking compare to western management style. Its state owned enterprises are regulated giants that are experimenting with Western management pratices.

I agree that, china's best private companies are not yet pioneering new management approach like some Japanees company 50 years ago such as Toyota. Chinese strategy tought me

• Responsiveness
• Improvisation
• Flexibility
• Speed

These ability give them a critical edge. They have learned to manage the business differently in state captalism, runway growth, massive urbanization, fierce competition and endemic curruption.

Chinese manage the team differently. Culturely they see the members of their organizations as family but in return management demand lot from them. If we see the begining of all big chinese brand, they started from no or minor business background such as many of the leader was previous trader, teachers and clerks etc. although growth strategy is seems pretty clear 

• Build alliances constantly
• Develop new product prolifically
• Venture into unrelated business all the time

Businesss leader in china also having two different approach. One view that they have to create their own ecosystem and they will have to build everything such as give basic skills in recruts, suppliers, govt ties, capital sources, school for employees kids etc. Best example is Hai Di lao

Their second view is, they have to be as adept as managing the state as they are at managing operations. Because they knew that they have to tap officials to get licences to operate, lease space, find workers, import materials, and raise capital. However they learned to make the system work for them

Unique management practice
I have learnt that chinese management display trading mentality, confucian preference for simple organisational structures  with everyone reporting to top and fear within team. However most often they have high aspiration and opennes to experimenting with different technics.

Simple organisational structure: Generally leadership are notorious for controlling company from top but in the same time they are highly dicentralized not interm of heirachy but inform of autonomy and accountability. For example Midea (second largest home applince maker) and Haier (dominant home appliance maker). There are thousands of minicompanies directly reporting to Chairman of Haier unlikely to western management beleive that multiple reporting lines protect them from risks and uneven product standard.

Companies in China operates in two time frames (present and future) and appoint seperate autonomous and responsible manager for both the objectives.

1) Management insure that they are executing today business and 
2) Preparing for double in size, between 3 to 5 years


Chinese executives make decisions in an ad hoc manner and are micro managers. Employees are entrepreneurial and ready for rough and tumble which lead the companies for high employee turn over.

Localizing value propositions: Business preferences goes locally for example Sany who build low end construction machine and acquired German Putzmeister. 

They hire the manager base on their local networking in the business sector to develop the business. Which make them stay ahead in competition and gave them economy of escale to go abroad. Another example, construction company ready to pay premium price for the cement which dries quickly rather choosing durability of cement.

Developing product quickly: Skills of chinese companies rely mainly on downstream industrial competences. They dont involve the upstream creation of technology, original designs, selection of materials and design of equipment, customer knowledge or market suvvy. 

Ability of chinese company to launch new offering with exisiting technology is impressive for example Midea, Wanxiang (making bicycle part), KFC China and Goodbaby. Goodbaby produce 100 new product on average each quarter which helps them to beat rivals.

Chinese companies generally keep engineering and manufacturing close, often colocating them(smes). They trend to acquire new technologies either throught formal licensing deal or by reverse -engineering. They keep physical work of experimentation and production in house. 

Nonmarket strategies: Building relationship with govt and its institutions is critical in china; it takes more partners to get anything done there than anywhere else in the world. Smat companies work to understand state agency charts and the underlying power structures in every provice. The trick is in knowing which officials to approach for what and where their interests lie so that mutually beneficial deal can be put together

In general its looks like bribe or curruption but in country context its not the same, it is about helping govt to achieve their goal in return getting other benefits such as market, tax solution etc. There are plenty of companies as an example, Neusoft, Wanxiang, Alibaba etc.

Asian business is all about adaptation to the context, china is one example. In contrast western management work hard to stay lean, methodical and nimble. Hence, in International business todays managers has to know how to balance top-down approach to bottom-up strategic approach.

Untold story of International Business Barrier

I have learned biggest lession about international business is "uniform management practice does not work when we cross the border". There are plenty of factors need to taken into account for cross border business. Dont worry here I am going to explain you how some key factor impact the sucess and what should be taken into consideration:-

1)Institutional character 

2)Physical geography
3)Educational norms

4)Language

5)Culture
6)Legal aspect

7)Other (Technology and skills)

Lets talk about other factors;

Technology: 

Often people take this matter unseriously and consider as a granted root of sucess due to experiencing sucess in some countries, and forgeting that best practice often does not work in cross boarder context, although company is using the same technology. Most often technology does not fit with local condition and its trun out that it need radical networking-not because technology is wrong but because everything surrounding the technology changes how it will work.

Analytical tools

This also does not fit with best practice. There is not nothing wrong with analytical tools but their application require careful thought. It require the ability to understand the limits of our knowledge and to adapt that knowledge to an enviroment different from the one in which it was developed. untill that failure rate of cross boarder business will remain high

Knowledge and strategy

Once empirical economist study the economies of OECD memeber countries and concluded that similar industry trended to have similar structures and deliver similar ROI. but when data from developing country available for research, researcher found that it does not work any more due to contextual changes.

This is pretty known fenominon of international business also its one of the most ingnoring fact. Universaly known international business barrier may not be your barrier due to context although its important to consider the over all local ambiance and their result on your strategic action.

In cross border business specialized intermediaries are lacking who help enterprises to adjudicates disputes, venture capitalists that lend money, accreditation agencythat corraborate claims and so on.

Contextual Intelligence is far more diverse such as intellectual property rights, aesthetic preferences, attitudes towards power, beliefs about free market and even religious differences.

Even the globaly sucessfull company had hard time in international business for example Oreo in China, Metro cash & carry in India, and failure of Ebay in China etc.

How we get  better at this?
There are plenty of way, I will try to highlight some uncommon points, ofcourse its not easy such as:-

1) Hiring  people fluent in more than one culture
2) Partnering with local companies
3) Developing local tallent
4) Doing more field work in local market
5) Cross disiplinary knowledge sharing within company culture
6) Modification of operating model in new market
7) Avoid to ignor simple probalems
8) Mantra: Experimental is essential 
9) Patience: Result need time to reflect the changes
10) Create your own data
 11) Awareness of self limitation is the key

Other than above there are plenty of other information need to consider particularly for those who are willing promote their business localy such as how people spend, how they react to communication & in which form of communication etc.

To conclude

I think without knowing your self limitation, local market knowledge and continous experiment its very hard to imagine sucess in cross border business particularly in south asian market however if you need any assistance at any stage of your sucess dont hasitate to write me.