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Competing and Cooperating: Intemational Game Rules Is Still A Barrier For Chinese Pharmaceutical Firms To Further Expand
Competing and Cooperating: Intemational Game Rules Is Still A Barrier For Chinese Pharmaceutical Firms To Further Expand
Competing and Cooperating: Intemational Game Rules Is Still A Barrier For Chinese Pharmaceutical Firms To Further Expand
further expand.
Learning from Indian experiences, Chinese companies should consider not only
mainstream markets such as those in America, but also the niche markets in other
continents and establish multiple alliances. Because the leading Indian companies
have strategically extended their business in developing countries a big part of their
overseas revenue comes from there. In the developing countries, barriers to entry are
low while cost advantages are more obvious, with less competition, and higher profit
margin. In China, Tiens and KPC China have found this strategy rewarding. In
aligning partnership internationally, Chinese companies can refer to Dr. Reddy's
business cooperation matrix.
Also, the shortage of talent has to be tackled. For complicated reasons,
most Chinese enterprises don't have a system of nurturing, training and
motivating talent. Rome was not built in one day. The ecosystem for
professional executives can only be established by improving the
management transparency, defining management boundaries and
creating more space for career development. All in all, competitive
compensation integrated with stakeholders' interest is botr. a
benchmark in the market and a must-liave for attracting and retaining the
elites in management and itsearch.(Roland Berger, 2005) According to a
Roland Berger report, Chinese companies approach this in two ways:
One is to attract and train talent, preparing them for overseas business
expansion. They may either send staff abroad for training, or employ
expatriates, or recruit the "Sea-Turtles" (Chinese coming back from
abroad with qualification and experiences); another is to localise
overseas managers and staff. Dr. Jing Zhongren from Fosun Group
believes that it is critical to have a reasonable "mixture" of human
resources after overseas M&A, for the localised sales force is better for
marketing while Chinese research staff costs less.
COMPETING AND COOPERATING
Chinese companies also have some advantages. Some APIs and
antibiotics made in China have a strong cost advantage. In the late
1990s, rivals from China began selling Norfloxacin in India for half the
price of Dr. Reddy's. Executives at the Hyderabad-based company
realised that they couldn't keep up and soon abandoned the Norfloxacin
business. With continuous efforts, TCM from China is also expected to
be a growth segment in the near future. Moreover, globally speaking,
China has a leading advantage in biotechnology such as gene tests,
vaccines research and production, and gene treatment.
We can expect the unleashing of even more of the potential of China's
pharmaceutical industry due to its ongoing reform. During the GMP re-
certification, the industry has witnessed large scale M&A and a flood of
investments from the private sector. On one hand, the reshuffle and
reform of the industry have brought out new sizable pharmaceuticals
groups, which is good for developing core competence and making
better use of resources. It is a more difficult and time-consuming task for
the pharmaceutical industry in India due to its sheer size. There are
20,000 pharmaceuticals companies and company qualities are
inconsistent. On the other hand, the established infrastructure, both
physically and politically, creates a more solid foundation for further
development of this industry in China. In the foreseeable future, it will
gain more momentum with the improvement of corporate governance,
the integration of industry with clear strategy in capital financing,
technology and
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