Microsoft in the People's Republic of China
Introduction: Making a Buck in the PRC
The PRC is in the throes of making the transition from a command economy to an economy more driven by consumer needs. In the meantime the tendency for government ministries to make managerial and marketing decisions rather than letting private industry make these decisions continues (Khannna, 1995, 3 4).
In order for Microsoft to make a profit in this situation, they must strip their marketing and service aspects to the bare bones. Within Porter's Five Forces Model the entry point for a competitive market is the perceived customer base, followed closely by the suppliers. In the PRC there is a continued tendency for governmental bodies, like the Ministry of Machines and Electronics Industry (MEI), to act somewhat as quasi private suppliers (Khannna, 1995, 3 4). This creates a roadblock in presenting product options to manufacturers and end users. In order for Microsoft to profit in the PRC, they must follow the example of Lotus, which has wasted little time trying to accommodate the PRC service sector. Lotus has relied on the ability of the Chinese to adapt their product (Khannna, 1995, 12 13).
Within an industry, bench marking or standardization of processes and procedures are necessary for competition and therefore for profit to be derived. The largest difficulty for Microsoft to overcome in the PRC, was how to address not one, but two rather large standardization issues.
The first issue deals with Chinese language and culture, not generally having been part of the word processing usage common in the West. This has created difficulty in adapting software (information entry and retrieval) to applications traditionally done in a more laborious style (Khannna, 1995, 2 4). This ties in with the problem of a written language, which is not so standardized in China as in Western Countries. This is entirely a service related problem....