German Companies in China. Jian-Ping Qin

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СКАЧАТЬ contract, whereby all legal points are precisely defined. The functions, area of application and instructions for use of a product as well as the quality guarantee etc. are clearly defined in Germany and laid down by law. Responsibility for problems is also fully under legal supervision. Clear legal requirements and legal responsibilities in turn lead to extremely high demands on product quality. This is the legal basis for the high quality of German products.

      China is a developing country and the legal system needs to be improved. The legal definitions of product quality, responsibilities and obligations have not yet been clearly defined. There is no effective legal assessment method for product quality problems, so there is insufficient legal basis for quality requirements in China. Once a problem arises, it's more about how the problem can be solved quickly rather than clarifying responsibility. This in turn is due to the human factor in China, everything is regulated through personal relationships - vitamin B, as they say in Germany. In the event of a dispute in Germany, legal action is usually taken directly and the legal process usually closes the problem. For example, processing claims in Germany is comparatively easy. The judicial dunning procedure can be operated by everyone at low cost, in addition, from collection agencies to lawyers, there are numerous qualified service providers to whom the dunning process can be outsourced. In China, for example, the deterrent power is limited and the enforcement of legal claims is inadequate. Even if a lawsuit is won, the verdict is often not enforceable. Therefore, debt collection in China is dependent more on seller relationships. This is also the human factor. Personal relationships still have a big impact in China. There is a famous Chinese proverb about this: Everything is difficult, but everything is possible.

      Germany is a developed and democratic state, guarantees human rights and promotes family values. The workers strive for healthy work and adequate vacation. They don't want to work unpaid overtime and don't like to work under high pressure. Companies don't usually encourage hard work either, with some gloomy exceptions. The personal and family interests of the employees are comprehensively protected. Company interests are less taken into account than in China.

      Chinese companies see work first, employees should sacrifice themselves for the company and subordinate everything, including family, for work and career. Engagement like voluntary unpaid overtime is encouraged as a positive attitude. The 9-9-6 working hours (9: 00 a.m. to work, 9: 00 p.m. end of work and 6 days’ work a week) is normal for employees in China. Workers in private company generally work 10–12 hours a day and it is normal for them to take break only one day a week or even once a month.

      German companies have strong unions that coordinate the relationships between employers and employees. The employees also pay attention to the interests of the company and actively participate in various business processes. Good relationships between employers and employees can promote the healthy development of companies, as you can see in Germany. But unions think more about the interests of workers than about the company. An example of this is a German headquarter that had to fire employees during the 2009 financial crisis. The layoffs were coordinated with the works council and were based on humanitarian principles: older and underqualified employees who had little chance of finding a new job were retained, while a large number of good and young employees who could easily find a new employer were exempted; as a result, the company's competitiveness has been severely weakened. Chinese unions, on the other hand, are fundamentally ineffective. The unions of state-owned companies take care of the simple concerns of workers and basically have no say in company management. Foreign and private companies therefore have almost no unions in China. However, the state encourages companies to form unions. It charges two percent of the company's total labor costs as union fees; the money can be reimbursed after the unions are established. Most companies prefer to forego this two percent and set up a union. The employees' desire for a union is also not strong. Chinese companies therefore have more options in terms of employee issues, are therefore more flexible overall and have lower operating costs.

       2. Economic system and market characteristics

      Germany has a developed and stable market economy. The market and customers change little, the market development is very predictable. This enables companies to plan accurately with optimal results. German management is based on a stable market and a high degree of planning. Planning is the main characteristic of German company management.

      China is a developing country. Due to the rapid development and large fluctuations, unpredictability and uncertainty are an important feature of the Chinese market. Numerous factors of uncertainty have a negative impact on the results of the company's management. However, due to this market volatility, Chinese companies have good plasticity and flexibility. They can quickly adapt to new situations. Chinese companies operate on the basis of volatile markets, with flexibility being the biggest characteristic of Chinese companies.

      Germany has a mature market economy system and most companies adhere to the rules of the game. There is less malicious competition. As long as the market is big enough, everyone will be fine and everyone will make money. The only difference is to earn more or less. However, companies lack the pressure to exist, which leads to poorer coping ability in the event of a crisis.

      Malicious competition is much more widespread in the Chinese market. Almost all means are used to win orders. This significantly reduces companies' earnings and hinders their healthy development. Quality requirements are therefore often greatly reduced for cost reasons. From a different perspective, however, this type of competition means that good companies are strengthened and bad ones are eliminated. The tough competition is forcing companies to cut costs and innovate. That is why Chinese products are more competitive worldwide.

      As a highly developed country with good income and prosperity, Germany attaches more importance to quality and service. The main products on the German market are therefore characterized by high quality with extremely high reliability and are sometimes lifelong. However, the prices are correspondingly high and are among the highest prices in the world. The Germans have a strong awareness of quality and are relatively insensitive to high prices if the quality is right. The pursuit of quality is therefore the main goal of German companies; High-priced production models are generally recognized in Germany.

      The Chinese, on the other hand, value a favorable price-performance ratio more, so the Chinese companies tend to strive to achieve lower sales prices for their products. Chinese main products are characterized by a good price-performance ratio, whereby it is not only the price that is decisive. The pursuit of good value for money is the main goal of Chinese companies. The Chinese only accept the price that is appropriate for the respective quality, depending on the price, there is therefore a corresponding quality: If the quality is high, the correspondingly high price must be accepted, and the quality requirements of cheap products are reduced. There is a high-end, mid-end and low-end market in China. The mid-end market is the main market and much larger than the high-end market, corresponding main products are inexpensive products with acceptable quality.

      Germany is a high-income country. Due to the high labor costs in Germany, labor-intensive companies in Germany are not competitive. Many companies in the traditional machine industry in Germany have developed into technology- and capital-intensive companies through mechanization and automation. The share of wage costs in the end product is very low.

      Wage costs in China have increased very quickly in recent years. Many Chinese companies are now gradually implementing automation and mechanization measures to reduce costs. Nevertheless, labor-intensive companies still make up the majority of the Chinese manufacturing industry due to the still relatively low wage level and large population. The management of technology-intensive companies and labor-intensive companies is completely different: the technology-intensive company focuses on increasing production efficiency by improving the technology and introducing advanced systems, while the labor-intensive company focuses on how to motivate workers to increase production efficiency.

       3. Culture and custom

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