Challenges and Recommendations for UK Companies in Establishing Successful Partnerships with Chinese Companies: A Case Study of CafePod Coffee Co. and Luckin Coffee Inc.

PROJECT 2

INTRODUCTION
 In this era of globalisation of world business and economy, China is one of the most appealing
markets for people who want to globalise their businesses as it is among the best economies of the
world. Many western countries are trying to cooperate with China but face several issues related to
cross-cultural communication and management.
 In this presentation, various challenges faced by a UK company name as CafePod Coffee Co.
trying to contemplate a joint venture with a foreign company based in China name as Luckin
Coffee Inc. will be outlined. The different aspects of cultural challenges that are faced by the
British companies who are planning to expand their business in China will be discussed.

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 The challenges to establish successful communication and partnership with the new Chinese
partners will be highlighted. These will be supported by applying relevant intercultural
communication theories along with various examples. Further, recommendations and
solutions to enable better business communication to set a successful partnership in the form
of British and Chinese joint venture will be given based on the cultural difficulties and
challenges identified.

MAIN BODY
 China has risen from being one of the least developed countries to the second largest economy in the world, this in
itself is considered an economic miracle. Hence, it attracts many companies to expand their business in China and
also enormous amounts of Foreign Direct Investments are being made in the country after its economic reforms.
 This has greatly contributed in the country’s overall economic growth. These foreign companies have many
opportunities in China as it is the fastest-growing and very large domestic market, the quality of human resource is
improving, the institutional environment is ever improving, infrastructure is better, the special economic and high-
tech development zones which are centrally and regionally controlled have several policies that are quite investor
friendly and thriving digitalisation.

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 The sheer market size in the country is the part that most attracts the foreign investors. But, the
companies from western countries face many challenges and issues while expanding their business
in China. Globalisation, along with providing great opportunities for businesses also create various
problems and difficulties in effective management of partnerships with countries and companies
having different cultures.
 Cultural differences have been ranked as the biggest barrier in globalisation and businesses
expanding in the foreign markets. UKTI observed that UK has to face around £48 billion in a year
due to neglecting the cultural differences that lead to failures of cross-national companies. Hence,
people are now focusing on understanding China, its market and the ways to successfully do
business with Chinese people.

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Some of the main challenges that companies face in Chinese market are-
 Market access – The Chinese market is very difficult to access as local distribution networks, the regulatory
requirements, buying habits of the customers, etc. are difficult to predict than other economies of the world which
makes taking the first steps difficult for the businesses. The consumer preference has also changed drastically over
the past few decades and has become more diverse now. The companies have to take into account the consumer
preference in the Chinese market to survive or it can become a great challenge for them.
 Governmental and political rules and challenges – The interference of government can be a problem for many
businesses trying to set their foot in the country. There are several rules that state the procedures and requirements
related to design, manufacturing process, selling and even disposing the products which should necessarily be
followed by the companies. This can become a big challenge for many companies.