Panasonic in China
It has been seen how multinational companies tend to shift their headquarters for operations in the emerging markets, where China is one such market. This welcomes the opportunity of saving a certain amount of money by shifting and producing in China or managing customers out there, especially when they make a profit by selling such items in the emerging markets.
When an established company goes to an emerging market for the advantage of cheap labor or low manufacturing cost, it usually returns as a changed company. That is what has happened to Panasonic in China for the last few decades. Panasonic faced a lot of issues while doing their business in China, one of the reasons for such issues would be a cultural gap. China proved to be a tough market to access in terms of local distribution networks, buying patterns of the locals, regulatory requirements of China, and so on. What is another concern faced by Panasonic is the market of China is completely different from most of the economies of the world which makes it market the toughest to step first. It has also been estimated that about 37% of the outside products that enter the Chinese market fails.
There has been a major shift in consumer preference in China which is noteworthy for the past couple of decades. Even at present, consumer preference is more diverse than it once was. It also completely detached from the markets of anywhere else in the world. Panasonic managed not to sink in China like most of the other markets companyit kept in account the consumer preference there. Panasonic has also struggled because of the laws and regulations in China. While expanding in the country the one issue that was faced majorly by the company is the bureaucracy which is one of the most primary concerns faced by Panasonic in expanding its business.
It faced challenges in hiring and recruiting candidates in China which is mainly faced by HR professionals. In any country but especially in China, the help of local representatives is necessary to do business and successfully grow in China. Panasonic focused on maintaining a good relationship with the public, government, employees, and customers. But Panasonic faced difficulty in employees’ Chinese employees or managers in their company. In China, they follow the seniority-based pay system which is a system where the senior citizens holding a position in the company longer than the other, gets advantages over the once who joins the company lately. Thus the seniority-based system in China leads to the outflow of many talented individuals from the company. Also, another key feature of the Chinese economic model is their long term employment. In this system, the individual candidate gets recruited from his university or college and is expected to remain as employed for all his career duration. Thus Panasonic this method of long term employment has also been proved as a disadvantage because of long term programmed, pay rates cannot be copped with shifts in the competitive international market, performance appraisal, and so on.
Thus these are the major problems faced by Panasonic while operating in China.