Kingston Demonstrates Power Of Guan-xi
By Steven Fyffe, Electronic News -- EDN, August 10, 2001
Western companies hungrily eyeing the emerging Chinese semiconductor market could learn from Kingston Technology Corp.’s recent experiences trying to set up a module manufacturing facility near Shanghai.
Kingston’s efforts to establish a manufacturing base in China stalled several times before the Fountain Valley, Calif.-based company turned to the power of guan-xi - the Chinese terms for goodwill.
It can take many years to build up high levels of guan-xi with the Chinese government officials who control business and politics, but Kingston short-circuited the process with the help of a powerful friend.
On the advice of old China hand IBM Corp., Kingston entered into a joint-venture with CGCsz, a subsidiary of China’s biggest PC-maker China Great Wall Computer Shenzhen Company Ltd., said Stephen Rodriguez, director of strategic initiatives at Kingston. IBM (nyse: IBM) has many joint ventures with the same subsidiary itself, Rodriguez said.
With the help of an insider, Kingston found that the bureaucratic roadblocks that had previously plagued the company fell away, Rodriguez said.
The joint venture, announced today, will be called Kingston Technology Electronics (Shanghai) Co. Ltd. Kingston owns an 80 percent stake in the new company, and CGCsz bought the remaining 20 percent with its $2 million contribution.
The facility is a 50,000-square-foot plant equipped with assembly lines and testing equipment. It is located in Shanghai’s Pudong harbor district.
