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R. 2. 6. 3. Five Differences Affecting China's International Business I would like to start by saying that for centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences. But in the 19 th and early 20 th centuries, China was beset by civil unrest, major famines, military defeats, and foreign occupation. After World War II, the Communists under MAO Zedong established a dictatorship that, while ensuring China's sovereignty, imposed strict controls over everyday life and cost the lives of tens of millions of people. After 1978, his successor DENG Xiaoping gradually introduced market-oriented reforms and decentralized economic decision-making. Output quadrupled by 2000.
Political controls remain tight while economic controls continue to be relaxed. When speaking about the country-specific external forces that influence the businesses in china, please refer to the following: Political: China is still a communist country that stresses the importance of the government control over peoples lives and their economic activities. The government does not support any other party except for the Peoples (Communist) party of China and governmentally directs the economic activity of the whole country. At the same time one should remember that the government hardly interferes in personal practices conducted by each individual company as long as they adhere to the strict government-established rules (Yuan, 56). Regardless of the name of the political system in China, there are not signs of civil unrest and system remains stable. Economic: It should be noted that in late 1978 the Chinese leadership began moving the economy from a sluggish, Soviet-style centrally planned economy to a more market-oriented system.
Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state organizations and individual citizens has been steadily increasing. The authorities switched to a system of household and village responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprises in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978 (Yuan, 58). In 2002, with its 1. 3 billion people but a GDP of just $ 4, 400 per capita, China stood as the second-largest economy in the world after the US (measured on a purchasing power parity basis). The company that wants to do business in China should match the general government direction for economic planning in China.
Therefore, if the Chinese government decided to promote car manufacturing this year, and your start up company wants to produce pet food, you are less likely going to be receiving government support (Jesudason, 129). Social: From the social point of view China provides the largest labor market in the world. Still it should be noted that this country has mostly labor for the labor-intensive industries and lacks highly skilled labor for hi-tech industries that currently are believed to be the guarantee of the successful market development and economic prosperity. Therefore, a labor-intensive company can easily start up in china virtually in any part of the country, while the high-tech companies can find skilled labor in the nations large cities only.
Cultural: From the cultural and religious point of view the Chinese are Taoists (Buddhists) for which hard work and pursuit of excellence is a religious duty. It is for this reason there is not wonder why the Chinese people are rather hard working and willing to receive small pay (because culturally wealth is associated with evil). The Chinese culture encourages the Chinese to be responsible workers and respectful employees (Jesudason, 133). Therefore if a company wants to do business in China it should not have any problems with attitude and responsibility. Technological: Currently china is one of the leaders in technological piracy in the world. China is not noted to be a great developer of new technology, yet currently seems to be following the example of Japan that was buying all possible technology in the world in the 1970 s- 1980 s.
The successful launch of a satellite, which made China the third country in the world (after USA and Russia) that conquered the space, signifies that technology although is achieved by stealing, copying and plagiarizing, is at a relatively high level (Richter, 90). Legal: From the legal point of view it is perfectly ok to do business in china for either Chinese or foreigners. The government currently supports foreign capital in the country and domestic economic growth in less populated territories (provinces) of china, therefore, if the company adheres to the Chinese corporate laws, it is free to do business in this country. It should be noted that Chinese membership in the World Trade Organization obliged the government to create laws and rules for the companies to compete rather freely and in a manner similar to the western economies despite the political system in the country (Bun, 56). Bibliography: Yuan, Fangyuan, Advanced Business Chinese: Economy and Commerce in a Changing China and the Changing World, prentice Hall, 2002. Jesudason, James, Ethnicity and the Economy: The State, Chinese Business, and Multinationals in Malaysia, McGraw Hill, 2001.
Richter, Frank, The Dragon Millennium: Chinese Business in the Coming World Economy, Penguin books, 2000. Bun, Chan Kwon, Chinese Business Networks: State, Economy and Culture, NY Random House, 2001.
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