Doing Business in China (Research Paper Sample)

Doing business in china
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Abstract
Globalization and other related advancements in technology have made many regions be quite accessible thus conducive for business activities. China is one of the nations that have benefited from such advance developments thus making it to be a major investment and business attraction. The paper concentrates on the prospects of doing business in this vast nation where it explores all the issues concerned with such activities. All the relevant areas like legal environment, competition, supply chain, and marketing are explored to give an informed view of the business environment in this nation.
Executive Summary
China has emerged as a nation where majority of the businessperson aspire to conduct their business to tap from the numerous economic opportunities. The nation has an elaborated and sophisticated network and communications networks that tend to reduce the overall costs of doing business. The population increase in this nation implies that a businessperson have the privilege of hiring labor at affordable rates thus boosting their profit margins. The increased population also plays a critical role of facilitating an available market that leads to quick stock turnovers. The corporate and business policies that have been enacted in this nation are comparatively fair thus enabling the investors to tap into the available opportunities. The population increase is a challenge to marketers in this region in that they need extensive product promotional activities to make their products known thus boosting the chances of selling them. The modernization and mechanization of various sectors of this robust economy have led to improved logistics and supply chain activities thus making China, a favorable destination for dedicated foreign investors.
Introduction
Over the recent past, china has become one of the most important economies in the world. Apart from being the most populous country in the world, China’s GDp has also surpassed all other countries in the world. Most of the countries in the world are now doing business with china. There are many reasons why countries and corporations shifted their focus to china. One of the reasons is the fact that china offers a ready market for good and services from its enormous population. Secondly china has cheap and readily available labour for production of goods. Therefore, for investors china forms a suitable environment to do business. However, this is not always the case with many firms who wish to operate.
Many firms’ especially multinational companies from other economies (Europe and America) acknowledge that china is one of the challenging environments to do business. Management of firms in china admits that the reality of Chinese business environment is complex than what investors expect. There are many risks, and investors should pay attention to these risks before investing. Any firm thinking of investing in china should be ready to handle many challenges that come with the Chinese market. They should assess the markets and identify all possible risks involved in those markets. There are several factors that one has to consider before investing in china.
Bucknall (2004) argues that the culture of the Chinese people forms one of the significant factors for anybody doing business in china. The Chinese people culture is identified from their language to the way they interact amongst themselves and other people outside china. Chinese people are also known to be conservative. This culture also affects how people are doing business. Although china has changed significantly over the recent past, the effects not yet witnessed in many parts of the business environment. While some countries in the world may be willing and ready to work with foreign investments, Chinese people show minimal support to new foreign entrants into their market. Many foreign firms are not attractive to most consumers in the market. In addition, the Chinese government offers minimally to foreign investments. Most of the Chinese people appreciate their products and services. It is important for any investor to assess their product and determine whether the products can be adapted into the Chinese culture and the local market. It is important that there is no single Chinese market. China’s large geographical area and population that can be segmented in different cultures and market. There are different markets in china that firms can invest. There are also different industries in china that offer avenues for investment.
One of the best ways to enter into the china is through local partners. Since local partners are aware of the local culture, it becomes easy for an investor to enter the market. Local partners help in identifying the customers, governments’ bodies and other key stakeholders in the markets. They also help in the selection of and hiring of the workforce and designing suitable business models for the business. The business partners should have enough experience in the area of business. They should be familiar with the local market culture. It is important that business partners be people with enough resources and relationship that match with yours.
Since china has a huge geographical area, the issue of business regulation is vital or any firm doing business in china. There is different local regulation for doing business in china. In addition, there are different local mechanisms used for enforcing national regulation in each region or province. It is, therefore, important for firms to identify local contacts that will help them gain an understanding of the local and national regulations. Any firm or individual doing business in china should maintain a positive and unsustainable relationship with the local governments. China has strict rules for business entities. It is, therefore, important for firm to adapt to china rules and regulations. Firms should align their business to match the regulatory demands. Most of the Chinese regulations are constantly changing. Therefore firms should be ready to address these changing and unknown regulations to avoid future downfall.
Doing business in china requires a lot of patience and persistence (Moser, 2008). There are many higher valuations in china markets which require a lot of persistence. There is also an expanded government regulation in china than most of the developed countries in the world. It is important for the managers to conduct due diligence early enough for their business. They should test and know how they are ready for any integration. Firms should use proactive assessment of their target markets and china’s cultural differences. Other factors to consider for due diligence include information technology, the labour force and environmental issues. All the risks should be put in the right context. Firms should treat each risk with informed decisions. All the stakeholders in the market should be mapped in order to give a good understanding of the stakeholders that have a direct effect in the business.
Labour is one of the significant factors that define the Chinese market. With its huge population china offers both benefits and challenges for many firms doing business in china. It is important for any business to have a strong and efficient workforce. However finding local human resource is long term activity in sustainable capacity building. China is among the countries with the highest aging population. This fact means that there is a decreasing workforce. Consequently, the cost of labour is rising steadily in china. As many firms are entering china the demand for local talent is also increasing. There is a growing demand for research experts and corporate governance workers. There is also an increased demand for middle-level managers in china. Finding these key middle- level managers is a challenging task that needs integration from the local partners. Local talent is a key factor in realizing success in china. Local talent is vital in unlocking key market potential in china.
Over the recent past, china has been known to produce counterfeit products. It is estimated that over 80 % of the world counterfeit products re from china. China offers cheap labour for manufacturers and it, therefore, easy to manufacture counterfeit products at a reduced product. Therefore, the issue of intellectual property is important when doing business in china. It is advisable for businesses to use effective due diligence to protect their products and intellectual properties.
When dealing with local connections it is important to maintain trust. Most Chinese want to do business with people they have confidence and trust. It is important to integrate and maintain a strong relationship with the partners before making a business deal. Financial reporting forms play a critical role in any business. Likewise in china financial auditing reporting is considered a key factor in the success of the company. Most of the consumers are interested in the financial analysis of the business. In addition the government is also interested in the financial data of the company for tax purposes. All companies in china are supposed to publish their financial reports to the public. In addition, the financial markets in China form a significant part in the success of the company. China stock market is among the sought after markets in the world. Most of the procedures carried out in the finical market are similar to the common procedures found in other stock markets. Although china stock markets are not as responsive as the western markets, they are indeed affected by forces in their surrounding like politics.
For foreign companies to thrive in the china, they need a strategy that will cooperate with the china regulations. They should always work hand in hand with the local governme...