Table of Contents

1.0 Introduction .......................................................................................................................... 1

1.1 One Belt, One Road (OBOR) ........................................................................................... 1
1.2 E-commerce in China ....................................................................................................... 2
1.3 Lazada Malaysia ............................................................................................................... 2
2.0 Environmental analysis ........................................................................................................ 3
2.1 Political environment ....................................................................................................... 3
2.2 Economic environment .................................................................................................... 5
2.3 Technology environment.................................................................................................. 6
3.0 Cultural differences between Malaysia and China .............................................................. 7
3.1 Hofstede ........................................................................................................................... 8
3.1.1 Power distance ......................................................................................................... 10
3.1.2 Individualism vs. collectivism ................................................................................. 10
3.1.3 Masculinity vs. feminine ......................................................................................... 11
3.1.4 Uncertainty avoidance ............................................................................................. 11
3.1.5 Long-term orientation .............................................................................................. 12
3.1.6 Indulgence vs. restrain ............................................................................................. 12
3.2 The strategy for managing across culture ...................................................................... 12
4.0 Entry mode ......................................................................................................................... 14
4.1 Strategic Alliances.......................................................................................................... 14
4.2 Joint venture ................................................................................................................... 15
5.0 Conclusion ......................................................................................................................... 16
List of Reference ...................................................................................................................... 18

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1.0 Introduction

The world is now in the middle of a dramatic transition thus businesses are in the midst of a
new transformative phase in the evolution of the global economy. In conjunction, leading
emerging markets, especially China, expected to be the key strategic hub for competitive
venture over the coming decades. In 2013, the People’s Republic of China announced the
intention to invest large sum of investment and effort in re-establishing the historic Silk
Route known as One Belt One Road (OBOR), which also called as Belt and Road Initiative
(BRI), the Silk Road Economic Belt (SREM) and informally known as the New Silk Road. In
this report, the use of OBOR reflects the most common and best-know acronym.

This report begins by identifying macro-environment as an introduction to seek opportunities

and possible risks or threat of OBOR initiatives which shape the business environment.
Section 2, deepening interactions in the areas of cross-culture diversify. Cross-cultural
management seems to be renewed interest in most of the multinational companies (MNC)
because defining, access and specify cultural diversity somehow has its difficulties which
involves the complexity of different cultures in every management levels. Section 3 then
takes a step further and considers the possible of market entry mode. The decision in market
entry mode before entering a selected market is critically important for international
investor’s profit making and sustainable growth. Indeed, this strategic plan on certain aspects
could have influence on the decision-making for Lazada Malaysia to select China for
business opportunity. Hence, the purpose of this strategic plan is to obtain greater insights
into the OBOR initiative in times of economic development, with a focus on e-commerce.

1.1 One Belt, One Road (OBOR)

One Belt One Road (OBOR) is a strategy of integration and networking tying the Chinese
economy with the rest of the world. OBOR generally refers to conflation of the “Silk Road
Economic Belt” flowing through the Eurasian landmass, and the “Maritime Silk Road” that
links China to Europe bypassing ASEAN, South Asia and Africa (Incalcaterra and Das,
2017). The mega-investment and infrastructure brought by OBOR will have significant
impact on the nations though which it traverses, especially ASEAN. In fact, the importance
of ASEAN in OBOR are clear, especially South-East Asia including Vietnam, Singapore,
Thailand and Malaysia are among China’s largest trading partners in the group. OBOR is
expected to open new market for China, especially bringing new investment to

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underdeveloped areas, at the same time strengthening China’s regional political and
economic influence.

1.2 E-commerce in China

China has dominated the leading position in global internet industry impacting the world with
great influence by displaying distinctive market characteristic and broad perspective for users
and competition. According to a report, China’s is the largest number in the internet economy,
having 710 million internet users in 2016, consumption of internet has reached $976 billion
(Zhu, 2017). Based on China’s National Bureau Statistics, Chinese consumers spend $750
billion online in 2016. The jaw dropping number indicates that Chinese consumer spend more
time in online shopping and eager in spending. China’s consumer has spent estimate 30
minutes a day on the online shopping portals. The consumers are brand conscious but not
usually brand loyalty. The research also stated that 42 % of the China’s young consumer feel
just need to buy more. Thus, the competition is intense within the brands, thus, continuously
to find more channels to engage consumers. Moreover, Chinese consumer rarely visit
company or brand websites to seek for information, instead going straight to the shopping
portal to search for the products. The transaction process is quick and convenient with the use
of applications which allows the consumer to pay with no hassle. These apps also provide
wide variety of services, such as consumer can send money, order food, call a taxi, paying
bills and more to come (Biggs, 2017).

1.3 Lazada Malaysia

Lazada Malaysia is part of Lazada Group operating in Southeast Asia. The company has
operation in other regions, such as Indonesia, Philippines, Singapore, Thailand and Vietnam.
It has additional offices in Hong Kong, Korea, the United Kingdom, and the Russian
Federation. Lazada Malaysia provides a web platform enables seller to sell various products
in categories ranging from cosmetics, consumer electronics, household goods to fashions.
Besides that, consumer can access anytime and anywhere with mobile or web access. There
are also multiple payment methods, and services including, customer care and free returns,
retailers direct access to consumers and online platform for consumers. Furthermore, Lazada
Malaysia has surpassed other regions to become South-east Asia fastest growing e-commerce
platform, with 100 per cent growth in sales for 2016 and at least 10,000 users have
downloaded Lazada Malaysia mobile app and shopping in the platform on a weekly basis
(Malaymailonline).
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2.0 Environmental analysis

The fact that OBOR are introduced by the Chinese government aims to increase connectivity
between the Asia, European and African countries. The intention was obvious to enhance
trade flows and spur long-term economic growth, as well as development which will benefits
all countries that are involved. Certainly, both domestic and international political
environment will have major impacts on countries and multinational companies. The
political system and relationship between countries greatly influences the management and
conduct of the business to seek for opportunities through OBOR. One of the key prospect of
globalization refers to the increasing economic integration among countries. The OBOR
strategies has brought numerous of negotiation and implementation of trade and investment
agreement. The main question is how impactful does the OBOR initiative towards the
economy of the country. Foremost, technology has been improving at incredible speed not
only connecting the world but has increase the quality of product, information gathering and
R&D. Thus, the digital connectivity of the OBOR initiative is one of highlighted element to
increase the cross-border trade using e-commerce business models and the priorities are being
focused on raising trade through investments. Political, economic and technology will have
major impact from the OBOR strategies instituted throughout 65 countries involved, either it
will bring opportunity or threat likely to be questionable.

2.1 Political environment

In December 1978, China open the doors to attract foreign capital and businesses. Since then,
the advancement of transformation led China to the most fast-growing country in the world.
Currently, China is taking the lead in globalization, possibilities because of OBOR initiative
connecting 65 percent of the world’s population. The OBOR initiative is to boost
international trade and foreign economic relations by investing in transit and logistics, foster
a political community with neighboring belt and road countries. China are moving away from
communist tendencies, as OBOR is one the beginning of a more open democratic society,
especially in the economy. China Foreign Direct Investment (FDI) has reached its peak in
recent years. According to Commerce Ministry the figures shows that 4.1 percent year on
year to US$118 billion increased in 2016. FDI into China was stable in the first half of 2017,
as the government efforts to continue opens up the market and seek a fair and transparent
environment. In fact, the number of new foreign funded companies has rose form 12.3
percent to 15, 053 percent and 2,894 new foreign companies has set up in China (Xinhua,

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2017). Foreign investment certainly has a significant role in China’s OBOR strategy to
promote reasonable allocation of resources and driving market-oriented reform. Foremost, the
initiative is expected to have a major impact in China’s domestic front, as it is the key
domestic objectives to accelerate the development of China’s west and central province.

Besides other foreign companies going into China, China-based companies are going out
from China with the trading relationship. The OBOR initiative has the potential to alter the
landscape of the region, especially in ASEAN countries. The Chinese -Pakistan Economic
Corridor (CPEC) is one of the most successful example of regional facility connectivity along
the Belt and Road. The project is aimed to integrate transport and information technology
systems between China and Pakistan. There are 62 CPEC project on-going under the Chinese
Finance Projects Scheme, according to DBS group research (2017). The political
environment in China is somehow very complex, as the government tend to have desire in
balancing national, immediate needs with the challenge of free-market economy and
globalization. Through OBOR, China able to continue challenge the capabilities of coping
current international business theory as OBOR is a unique system favoring high
governmental control yet striving to unleash more dynamic market economy (Child, J., Tse,
D.K, 2010).

OBOR might face various political obstacles as currently OBOR still lacks inter-regional
political coordination. The OBOR are operating through existing political organizations, such
as Shanghai Cooperation Organization, but not European Union and India. Moreover, there
are opposition from some ASEAN countries (DEMİRYOL, 2017). The future success of the
initiative may turn out to be a failure, as there are tides of public sentiment against Chinese-
backed projects, because some countries fears that the participation will open floodgates to
influx of Chinese laborers and cheap Chinese products, which lead to unemployment rate of
local workforce increase and have an adverse impact on local manufacturers. There are public
demonstrations against the invasion of Chinese companies in Kyrgyzstan fearing that China
investors may buy up large tracts of land by permission which could lead to the
marginalization of local population. In fact, the Chinese public sentiment has happened
several times in other countries along the routes of OBOR. In some respects, the government
in democratic countries need to follow public sentiment, thus, the initiative may not
successfully implement and may lead to sensitive political issues.

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The political stability of the countries that involves in the routes of initiatives is also
questionable. One belt, one road includes many countries, some of the countries may have
undergone political transitions and have potential security issues which can have an impact
on policy and the implementation and success of projects. The most related issue raised is the
new Sri Lanka government appointed, has suspended a US$1.4billlion port project, which
had been agreed by the previous administration which excusing that there are lack of proper
permits and approvals. The Chinese developer estimate to have loose US$380,000 a day for
the shutdown cost. Therefore, this sends a warning to the Chinese investor to be aware of the
implications of political risk. The US$1.1 billion Chinese high-speed rail project suspended
in the beginning stage due to incomplete paper. The Chinese consortium only received a
permit to build 5 km of the railway which originally proposed 150 km rail line. This is a great
example relate to the different regulatory and legal systems in the countries along OBOR, as
some of the countries are still developing, the legal and regulatory may not fully developed
an incomplete foreign investment.

2.2 Economic environment

The One Belt One Road initiative is an infrastructural initiative that contributing immensely
to the economic development of China, as well as countries that are included. China has
impressive growth since 1980s. However, the development somehow has been unevenly
spread. The investments are only concentrating the eastern and southern as this coastal has
the most impressive growth rates and represent the dynamic part of the country, but does not
have much needed raw materials. The Continental China is less developed compared to the
coast and the regional inequality has economic consequence. There is serious rural-urban
migration as well as a massive inter-regional migration towards the cost of China. The
consequences are that the migrant families have suffered from low wages offerings and lack
of chance in selecting occupation. Most importantly the limited access to unemployment
insurance, high cost for education, health insurance and pension. The North and Western part
of China includes Xingjian, Tibet and Inner Mongolia is those places that are intended for
developing, due to unsuitable agriculture and far distance to the coast. This area tends to have
lower per capita income. The OBOR initiatives are to develop various regions of China,
leveraging the cooperative advantages of those regions and adopting a proactive strategy by
further opening-up strengthening interaction and cooperation with the eastern, western and
central regions. There is some initiative in OBOR has given advantage for the rural area,

5
including Yunnan Province with the geographic advantage has the develop cooperation in the
Mekong sub-region (Pop, 2016). Hence, China could assure that no imbalance development,
assessable to resources and deploy huge foreign exchange reserves productively.

OBOR is an economic plan designed to open up and create new markets for China in
manufacturing product and enhancing whereby at the time economy are slow. But there is an
initiative received less attention and yet this component could generate significant economy
consequences. Trading through E-commerce is growing rapidly between China and other
nations. Some of the e-commerce companies in China realized that the growing business was
closely related to the Belt and Road initiative, as the initiative has made shipping across
continents easier. For instances, using the China-Europe rail world, the time of transporting
auto supplies for Germany to southwest China has shorten by half and it only takes just two
weeks to arrive (Chen and Liu, 2017). According to the Ministry of Commerce, China’s cross
border e-commerce network as covered 220 countries and regions as of 2016, hitting 5.85
trillion yuan in sales and a 28.2 percent year on year increase. Moreover, the foreign volume
via cross border e-commerce in 13 zones has hit 163.7 billion yuan in 2016 and over 400
third party platforms were set and there are 20,000 cross border e-commerce trade companies
doing business in the zones (Xu, 2017). The number are increasing tremendously, the 13th
Five-Year Plan for Development of E-commerce has announced by the Ministry of
Commerce, China’s e-commerce target to reach RMB 40 trillion of transaction value, online
retail sales value of RMB 10 trillion and workforce of 50 million people by 2020 (HKTDC
RESEARCH, 2017).

2.3 Technology environment

One belt one road initiative is not just about building infrastructures, but also incorporate
changes of other sectors. There are more and more private enterprises were getting involved
in OBOR investment, especially telecommunications and e-commerce companies. The
Chinese e-commerce giant, Alibaba group has established an e-commerce hub in Malaysia as
a significant example that private sectors are supporting the OBOR initiative, which
massively involves huge investments and development of trade routes in the Asia region. The
e-commerce hub is a part of the Digital Free Trade Zone developed by Alibaba and
Malaysian government focusing on small business for exportation. The logistics hub will
function as a central station to clear customs, warehousing and fulfillment facility for
Malaysia and the region (Toh, B., 2017). With the hub, the two countries are able to deliver

6
faster clearance for imports and exports. Not for long, Malaysia able to ships Malaysian
specialty “Musang King”, a name of durian, anywhere in the world within 72 hours
(Jaipragas, B., 2017). In fact, India have seen an influx of investment from China’s e-
commerce giant. Alibaba is going strong in India by investing a combined of $690 million in
mobile wallet Paytm and have gained over million transactions per week.

The idea of incorporating digitalizes sectors, including telecommunication, infrastructure of

wireless networks and e-commerce into OBOR is not new. Many of the concept are a natural
extension for the Chinese companies to go out of home country. However, there are much
more to utilize this initiative to development the rural areas of China. In fact, e-commerce is
helping revitalize China’s rural areas which is the new growth driver for consumer spending.
China rural residents spent 894.54 billion yuan online in 2016, is 17.4 percent of the total
spending in whole china, according to the Ministry of Commerce (China daily, 2017). The
OBOR initiative may invites companies from other countries to support a joint venture with
the business in rural areas, changing the life of people and the ways of thinking in rural China.
There are some challenges might occur when the technologies have change everyone life,
connecting borderless. The complex rules and regulations for privacy right and security risk
might vary from nation to nation. The cross borders need to incorporate higher risk with the
local regulation, such as obligations and taxes, packaging and returns, import and export laws,
frauds and breach of agreements.

3.0 Cultural differences between Malaysia and China

The cross-cultural interaction has made a significant increase, mainly because of

globalization and the changing of world economy. There is one key element that must not
neglected by the multinational companies when enters a new and overseas market, which is
the culture differences. Organizational culture is created based on basic assumptions as well
as is a pattern that discovered by individuals within an organization. These assumptions need
to cope by individual’s abilities with problems of external adaption and internal integration.
The individuals have embedded with these assumptions and transforms into value and beliefs
that no longer conscious, hence, forming a deepest level of culture (Schein, 1992).

Hofstede once wrote “There are three ethnicities in Malaysia and each of them have its own
group but has similarities. Mentioning that Chinese and Tamil both are long term oriented,
while Bumiputra are more towards short term oriented.” The bumiputras refers to the biggest

7
group of various ethnic groups in Malaysia, which is the Malays (Hofstede, 1991b:9).
Malaysia has a unique environment which have multi races in the country. Moreover, the
country has developed from an agrarian society into a globalized society in a short time. It is
to say that Malaysia are exposed to a new set of values in every change in the pace of life
(Abdullah and Pedersen, 2003). On the other hand, China has long history of rich cultural
content. Hence, there are difficulties in defining Chinese culture as it is not only wide but also
complex. In fact, the principle of Confucianism, which emphasizes hierarchical interpersonal
relationships greatly affect the Chinese culture. Moreover, the Chinese culture also
influenced by political philosophy, which is egalitarianism and communism. Somehow the
followers expected to follow the leader’s decision strictly which directs to transactional
leadership. Slowly following the footsteps of China’s growing market economy, the
competitiveness within the organization will change and override the traditional value of
equality and harmonious within the society (Dong and Liu, 2010).

3.1 Hofstede

Hofstede (1993) stated that culture is a collective programming of mind that divides one
group or category of people from another so that it is distinguishable. Nowadays,
organization cultures are interrelated with management, especially in multinational
companies when cross cultural management needs to be in place. Understanding the cultural
context of a society and appropriately response and reacted to the cultural differences are
becoming increasingly important in a space that have different culture, belief and values.
Therefore, Hofstede cultural dimension is to highlight the culture differences between China
and Malaysia. The six dimensions of culture are exhibit in figure 3.1 for further discussion
and figure 3.2 shows the scores of China and Malaysia in the dimension.

Figure 3.1: Hofstede four cultural dimension

The extent to which there are less
powerful members, the power is
Power Distance distributed unequally and the
relationship between superiors and
subordinates tend to be distant and
formal
Malaysia- The workers tends to accept
the hierarchical order which everyone
have a job to do and follow accordingly.
China- Society that are believing
inequalities are acceptable.

The tendency of people looking after Malaysia- A collectivism society,

themselves and immediate family
Individualism vs. only. The collectivism on the other
committed to groups, family, extended
family or relationships.
Collectivism hand is the tendency of people favor
China- A highly collectivist culture.
to be in a group and look after each
other in exchange for loyalty Interested on group and not self-oriented.

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 Measured on a continuum ranging
Masculinity vs. from masculinity to femininity.
Feminine Success are defined in terms of
assertiveness, competition an
ambition but not caring and nurturing
The extent to which a person feels
Uncertainty threaten by ambiguous situation, the
first comes in mind is tried to avoid
Avoidance and created a belief in which it is
danger to go forward.
Also known as Confucian Work
Dynamism to deal with the society’s
search for virtue. A person who is
Long term long time orientation tends to have the
tendency to look forward in the future
orientation and focus on achieving long-tern
results
The freedom to satisfies the natural
Indulgence vs. need and wants of a person in a
society. On the other hand, restrained
Restrain cultures have control behavior that
based on social norms.
Source: Hofstede, G. (1980); Hofstede-insights
Figure 3.2: Score of Malaysia comparing with China
Source: Hofstede, G. (1980); Hofstede-insights
Malaysia- Cannot determine whether it
is Masculine or feminine.
China- A masculine society which is
driven by success that can sacrifices
most precious things to be on top
Malaysia- Has low preference in
avoiding uncertainty
China- Comfortable with ambiguity.
Malaysia- Favors to achieve quick
results, strong concern in establishing
absolute truth
China- Very dependent on situation,
context and time. Tends to look
forward of the future and achieving
results.
Malaysia- Place high degree of
importance on leisure time, desire to
enjoy life and having fun
China- A retrained society that
restrained by social norms
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 3.1.1 Power distance

Malaysia scores high in power distance, a score of hundred., which means that employees
blindly obey the orders of the superiors of high-power distance. In other words, Malaysian
employees with lower ranking do not easily approach superiors with high status, or at least
find difficulties just to approach. Even at the upper level, Malaysian managers have strict
obedience towards top management. In Malaysia, organization tends to be centralized, will
have a complicated and tall organization structure. Malaysia and China share some similarity
in power distance, but there are differences in managing. In the Chinese society, the
hierarchical structures are widely to be seen, either in the organization or families. This is
because the mind of the Chinese is ingrained with the Confucian ideas which emphasizes
stability and harmonious. Thus, the lower rank employee is unlikely to challenge authority
and offends the superiors, as such encourages and promotes inequality between people at
different levels (Lin, et al., 2016).

3.1.2 Individualism vs. collectivism

Hofstede (2001) described Malaysia as a collectivistic society emphasizing commitment to

group and opinions coming from a group discussion is more acceptable. Malaysians generally
likes to do things with people, likely will voice up opinions when in group rather than being
alone. In Malaysia, affiliation is more effective than power to get things done. This is because
Malaysian are influenced by the nature of the collectivistic society which tends to have a soft
heart in rejecting request that might hurt a relationship. Malaysian also shows collectivism in
terms of own groups. Malaysian will think as “them” or “us” in categorizing social. For
instance, Malaysian somehow more intact with own races, rarely see differences sitting
together at the same table in an eating place. Thus, conforming similar values within groups
are more effective way, as Malaysian are avoiding confrontation (Sumaco et al. 2014). On the
other hand, China is identified as highly collectivist society whereby Chinese usually put
more emphasis on assignments arranged in groups, willingly to respect for age and no
objections in groups. The Chinese culture of relationship, Guan Xi is a critical element in life,
most importantly building up and keeping a harmonious relationship with other and
organization (Bond and Hwan, 1986). In some respects, Guan Xi are considerations affecting
the hiring and promotions in a closer relationship group. Sometimes personal relationship has
gone beyond, neglecting the most important things to complete task and organization success.

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 3.1.3 Masculinity vs. feminine

The scores were in the middle range of the scale for Malaysia, thus is may be seen as more
towards masculinity or feminine. Malaysia culture given the perception of being kind and
strong collectivism social that keeping peace in relationship, displaying humanity and being
people oriented. There are possibilities the society will going towards masculinity as the
country in developing, and Malaysia are in the transition of changing according the pace of
life. China, on the other hand is a masculine society. Chinese are encouraged to be
independent decision makers and striving for achievement in terms of wealth and recognition.
In Chinese society, there is a value that influence all the interactions, which is Mianzi. Mianzi
actually refers to a person’s personal identity and the ideal image requirement. In other words,
Chinese particularly taking note about a person’s individual status, social value and
requirements (Lin et al., 2016). The Mianzi can influence Chinese culture to be more
masculinity because trying the very best to complete all task in order to gain sufficient
recognition There are much internal migration in China from the rural areas to the cities
causing the imbalance economy growth because most of the migrates want a better life and
leaving families behind in faraway place. However, Chinese will find an equilibrium point to
balance the complexation of society relationships. The Yin, which represents the feminine
side and Yang, which represent masculine in balancing the decision according to situation
(Lin, et al. 2016).

3.1.4 Uncertainty avoidance

The Hofstede insight shows a very low score in uncertainty avoidance for Malaysia. Hence,
Malaysian are weak in avoiding uncertainties. Malaysian tends to not willingly accept that
risks are associated with unknown, ignoring and continue to live the desire life. It is to say
that, Malaysian have the mentality to think positively and accept as it is, even when problem
occurs. In other words, Malaysian are happy with the current state, somehow not fond for
changes. If changes have been made unintentionally, the rate of adaption in changes are very
low. There is another similarity in this dimension between Malaysia and China, which China
also scores low uncertainty avoidance. The Chinese employees will pay more attention to the
results because the decision is made whether to avoid uncertainty or not are based on the
success requirements. Therefore, both Malaysian and Chinese organization has less
structuring activities, the labor turnover rate is higher and more ambitious employees. The

11
organization tends to encourage employees to take self-initiative for responsibilities are taken
by willingness.

3.1.5 Long-term orientation

Malaysia scores low in long term orientation indicates that Malaysian have a deep respect for
tradition, emphasizing on achieving quick and direct results and do not focus on future
outlook. The Malaysian employees will only complete the work in current state, believing in
absolutes and likely to approach tradition ways and feedback cycle tends to be short. China
exhibits the long-term orientation, which the Chinese culture are persistent, cautious with
wastage in terms of money and highly adaptable to surprise events. Chinese are more towards
in believing there are multiple truth that causes the consequences instead going straight to the
conclusion.

3.1.6 Indulgence vs. restrain

Malaysia has high score in this dimension indicates that Malaysia culture are free to satisfy
basic human desires and enjoying life in the moment. Malaysia employees may possess work
hard, play hard in workplace and have optimism attitude. Hence, sometimes may have less
moral discipline in time conscious, such as coming late for work. China shows adverse of
Malaysian culture. The Chinese somehow is a restrained society as the score are very low.
Chinese, the society is expressing less in happiness and believing that the destiny is beyond
own control. The society value work ethic over friendship, which may show that the Chinese
are more introverted personalities and follow the strict discipline in workplace.

3.2 The strategy for managing across culture

As OBOR initiative somehow is an open door to invite others to join hand in making
economy better, but the real challenge is after going into the realism of cross-border business.
As the organization being transitional, several strategies need to be review and one most not
be neglected is the strategies implement must address the cultural similarities and differences
of varied markets. The Hofstede cultural dimension is just a guideline for the comparison of
Malaysia and China. Some of the similarities across culture of both countries have been
discovered, however far more differences than similarities have been found. To cope with
these difference, a strategy that involve effective cross-culture management needed to be
acknowledge. Understanding the Chinese in which doing business can make the process more

12
smoothly. Unfortunately, misinterpret often happens when the informing incompletely about
the cultural structure and properties of the particular business partner will cause wrong
estimation in communicating the measurement, project evaluation and decision making.

Before going into a market, the management needs to form a cultural diversity management
programmed. The programme will be focusing on human resource with aim of providing
effective management of cultural diversity when handling international operation with the
organizations in China. There is one issue that can be dissolve quickly which is the language
barrier as Malaysian are naturally bilingual. Most Malaysia understands English, and the
most important in which China has been using for the country’s main language, Chinese. The
communication is implicit, as Malaysian are taught form an early age to interpret understands
these languages accurately. The effectiveness of communication still crucial when doing
business in other countries because cultural differences can cause misinterpretation, for
instances there are many languages interpretation differences, which can be seen in
Malaysian mandarin and Chinese mandarin. Moreover, trainings need to be focus on written
communication. The reports, letters, and e-mail message are translated in one language,
preventing loss of meaning which is important. If the process continues go on with complex
Multilanguage, unlikely the problem of misinterpretation still occurs. Thus, language training
would help to sort such complicated communication problems.

The implementation of human resource in global operations is greatly affected by the

diversity of international workforce and the attitude, as well as the behavior work the
authorities of organizational hierarchy structure. There are also differences in national that
involve labor laws, as the organizations are in different country. The managers need to
possess the information and understanding about managing people that have different
cultures. The manager and subordinates can be given lecture about the background of the
organization, specific knowledge or skills and proper communication training. There are
some large multinational businesses such as IBM and Hewlett-Packard have established
training programmed that teaching the current employees in respecting ethnic, racial and
sexual differences (Daft, 2003). It is very difficult to communicate and managing
international operation without knowing the culture, unless one of the parties understands the
other’s culture. Hence, culture trainings need to be implemented on a regional or country-
specific. Failure to do so can result in communication blackout and relationship breaks up.

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4.0 Entry mode

The potential economic benefits in opening new markets, especially the e-commerce are
increasingly interest of organization that has tried to pursue a cross-border business operation
(Chang and Rosenzweig, 2001). Previously, there are some restriction of China’s law have
been the barrier of foreign companies going into China. Since the entrance of China’s World
Trade Organization (WTO) entry and China’s government relaxation of investment
regulation, foreign companies have been choosing China as the location of investment. The
OBOR initiative also has opened the doors for the foreign investor to choose China as an
important hub for market expansion. Foreign investors not only concerned about the market
share and business opportunities, but seeking ways to enter in to the China market. Thus,
selecting an appropriate entry mode can have enormous strategic consequences for the
organization. With the concerns of the environment condition of China, the organization need
to consider an alliance and international joint venture in order to successfully enters the
Chinese Market.

4.1 Strategic Alliances

Strategic alliance refers to any type of cooperative relationship between two or more parties
aiming at specific targets markets seeking for opportunities to increase yields and strengthen
business and market expansion. The prosperous of an alliance creates enormous business
opportunities and market growth by securing the market share, at the same time perceive
stronger competitive advantage and capacity enhancement. A strategic alliance helps the
organization in achieving cost effective, discovering new markets through a confident entry,
obtaining more resources and technology advancements (Zamir, et.al., 2014). Recently,
China Lodging Group, a leading hotel operation and franchisor in China has a strategic
alliance with a Hospitality firm OYO which operate in over 230 cities across India, Malaysia
and Nepal. The agreement is to invest $ 10 million as equity. The strategic alliances are
anticipated by both companies as the alliance will initiative in exploring knowledge and
technology sharing projects of common interest enabling co-learning opportunities to focus
on technology and hospitality, as well as exchange programme for employees, knowledge
sharing and intellectual property (economictimes.indiatimes, 2017). This is a great example
of incorporating a strategic alliance which helping partners to overcome the effects of local
collusion or limits that set a barrier for a foreign company going into China market.

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 4.2 Joint venture

A joint venture refers to specific type of alliance agreement which involves two or more
partners own or control the business. International joint venture refers to organization are
coming from different countries that is involve in the joint venture (Luthans and Doh, 2018).
JD.com, China’s second biggest e-commerce company and Top Thai retailer Central Group
establishing two joint ventures with investment of $ 500 million in Thailand covering e-
commerce and fintech service. With this joint venture, JD.com provides technology, e-
commerce and logistics as well as providing knowledge in financial technology sector to
fintech service. On the other hand, Central Group will leverage the retail resources, which
includes physical store network and provide retail behavior insights from The Card, a
company’s customer loyalty program. The joint venture has grouped both companies with the
same goals to become the leader in the market (China Daily, 2017). Another Chinese e-
commerce giant company, Alibaba Group is joining venture with Marriott International with
the aim of delivering more personal digital services for Chinese tourists. The joint venture
involves in managing and operates Nasdaq-traded Marriott’s Chinese language digital
channel, including mobile apps and SPG app. Additionally, the company able to venture
directly into Alibaba’s customer base. This would form a link between the loyalty
programmed of both company, as well as Alibaba is supporting Marriott hotel globally with
content and promotion customized for travelers from China (Perez, 2017). This joint venture
is a significant example of improvement of efficiency in which both partners helping each
other to achieve economic of scale and scope that unlikely able achieve if only one is
involved. Moreover, both parties have access to the knowledge and skills of others. Marriott
brings financial and technological resources and Alibaba brings knowledge of the customer
and market channels

There are two forms of joint ventures, which is nonequity venture and equity venture.
Nonequity venture which is refers to one of the partner are providing a service for another
(Luthans and Doh, 2018). The case of Alibaba and Marriott is an example for joining venture
to seek for business opportunity in the increasingly growing travel industry. There is another
joint venture which is equity venture, involving financial by the partners that is involved. The
case JD.com and Thai retailer Central Group is a great example which both parties has the
arrangement of adjusted agreement on the amount of money, technological expert and
managerial expertise each will have contributed to the joint venture (Luthans and Doh, 2018).

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5.0 Conclusion

A marketing plan is to assists an organization in achieving the balance of external and

internal capabilities in achieving a desired outcome. One of the primary reasons that an
organization intent to go out of borders needs a strategic planning to determine the basic
mission and long-term objective, the next step is implementing a plan of action to pursue the
decided mission and attaining the objectives set (Luthans and Doh, 2018). The beginning has
begun into strategy formulating by scanning the external environment for opportunities and
threats.

The OBOR initiatives for the organization somehow are affected by politic, economy and
technology aspect. As environment scanning provide an accurate forecast of trends, which the
political environment of China can set a barrier for foreign companies going into the Chinese
market and changes the operation of an organization. The different political systems exist
across the world; therefore, there will be difficulties for a business to take the initiative
without understanding those systems, along with current state of affairs. The organization
will face difficulties without researching politic environment and may impede expansion. The
highlights growth increase in e-commerce of China give an overview that the trend is towards
generating economic value in e-commerce. Monitoring changes in technology will also help
the organization in identifying the most modern and innovative technology trends happening
in China market. Environment is the first step for the organization to identifying the
opportunity of threat of OBOR initiative whether the organization can survive in the
particular region. Moreover, the analysis needs to be done consistently in order to access the
external dynamics that could bolster or hinder future productivity.

The cultural difference can be defined by using Hofstede cultural dimension. There are six
dimensions to compare between Malaysia and China. Understanding the cultural context of a
society is very crucial. The further step is to be able to respect and react appropriately
towards the cultural differences. After highlighting the differences and similarities of both
countries, there is a need to provide strategies to manage the cross-culture diversity. The
suggested strategy is to conduct human resource programs such trainings in communication
and learning the culture to overcome the problem occurs in cross-culture. Furthermore, the
organization decides the entry mode after evaluating the risks and benefits of different entry
mode. The consider entry mode is strategic alliances and joint venture.

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Further research in the OBOR initiative definitely benefits for the organization to intend
going into the China market. The rise of Chinese e-commerce operations among the belt and
road countries drawing a whole new map. Going forward, there will be an interesting focus in
seeing how OBOR initiative being able to develop and for the future market expansion for
the organization, especially going into digitalize One Belt, One Road.

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