Mastering the Art of Jugaad and Guanxi: A Western Guide to Business Practices in India and China

Mastering the Art of Jugaad and Guanxi: A Western Guide to Business Practices in India and China

Ron Berger (College of Law & Business, The Lander Institute - Jerusalem Academic Center, Ramat Gan, Israel)
DOI: 10.4018/ijabim.2014100102
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Purpose: Successfully entering foreign markets is a major issue in the field of international business. Cultural ignorance increases uncertainty that hinders a firm's international performance. Research has shown that the impact of cultural differences is one of the biggest obstacles to entering the Chinese and Indian markets, which are seen as one of the more important and growing markets in the last decade. This paper builds a framework for analyzing and choosing effective business strategies across the divide between very different business systems and cultures. It assists western firms in how to enter these complex markets and increase the probability of success. Design/methodology/approach: the proposed conceptual model hinges on social networking theory. Three different strategies are presented based on the different cultural, political and historical settings of China and India. Findings: the paper builds a framework for India and China structured around three core attributes to building social networks. It shows what international firms need to do in-order to build social networks that allow access to the local markets and decrease business risks. Practical implications: the proposed conceptual models enable marketers to cope even with the most complex markets and improve their probability for success. Originality/value: the literature review demonstrates that researchers have not dealt in-depth with the social constructs of social networks, especially in India. The paper depicts the commonality and differences between the two countries and serves as a basic business model when penetrating these markets.
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2. Importance Of India And China As Bric Countries

Much attention has been directed away from developed countries and toward emerging economies, and in particular, the BRIC countries (Brazil, Russia, India and China) the four largest developing markets in the world (Barnes et al., 2011; Yen et al., 2011). These emerging economies tend to be very heterogeneous in nature on the political, economic, cultural and institutional levels. Understanding the directional vectors of business culture and structure is of paramount importance to policy makers, academics, and those who want to do business in these countries (Ardichvili et al., 2012). Today, India and China are both the fastest growing and largest emerging markets economies and are seen as global growth engines. They are home to almost three billion people, or just under half of the total population of the world. They are slated by many to be the leading future super powers. India and China have exhibited phenomenal growth rates over the past decade, given the size of their population and the differences in their business structure compared to the West. Table 1 sheds light on the importance of the BRIC countries for international business.

Table 1.
The importance of BRIC countries in international business
Population (2011)1971431.241bn1.346bn
Total Area (SqM)8.5147.0983.2879.600
Density Inhab./SQK22.48.3382141
GDP (US$) 20112,5181,8851,8436,988
GDP Per Capita (US$ - 2011)12,91713,2361,5275,184
GDP Avg. Growth Rate
2011 – 2014 (Projected as of 04/ 2011)
FDI (2010) US$ M11.551.714.668
HDI 2011 (2010)0.808
Global Competition Index58635121
Share of Global Trade (2010)1.2%2.3%1.8%9.2%
Share of Global FDI (2010)3.9%3.3%2%8.5%

Source: IMF, World Investment Report, UNCTAD, World Bank

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