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The People’s Republic of China is considered by many to be one of the most promising and important emerging countries in the world. Given that China has the largest population and one of the largest land masses, the country stands to provide the rest of the world with buying power, labor, and other valuable assets to companies interested in expanding business operations to Asia.
As part of any international business expansion, a company must always consider environmental factors to include the differences in people, business customs, legal system, economy, trade policy, and so on. Therefore, preliminary international business research should be conducted prior to engaging in business beyond national borders. ... Doing so will allow a company to assess the economic and legal risks of business expansion (Czinkota, Ronkainen, and Moffett 2002). A business analysis provides a manager with a foundation of knowledge to better understand the opportunities, limitations, and risks of expanding business operations to China with regard to the country’s laws, economy, infrastructure, distribution, trade policy, etc. ... Dating from 2,500 years ago, the primary religion or spirituality, Confucianism, serves as a moral code of ethics to the Chinese people that dictates a harmony between men and society (Summerfield, 1994). Confucianism also affects the way the Chinese conduct business focusing primarily on harvesting and honoring relationships. ... Age and rank are respected in China, and young people are expected to obey their elders without question. ... Older foreign businesspeople have an advantage in this regard and are likely to receive more serious attention than younger people. These concepts may be foreign to American managers, especially considering that most American managers are considerably younger than Chinese managers (Coggin and Coggin, 2001).
Guanxi, or relationship, has a profound effect on the way business is conducted in China. Many Americans would define the business relationship as "its not what you know but whom you know." The Chinese develop personal relationships, or feelings, before they develop business relationships. Chinese regard doing business as a part of relationships. For instance, a manager may go to China to conduct business and find him/herself first sitting down to elaborate meals, going on sightseeing excursions, and having long conversations about their family. ... Recent business publications applaud multinational corporations who skillfully use guanxi while entering the Chinese market. ... Guanxi could be used to benefit a firm in many ways. ... If learning the language is not feasible, given the variety of dialects associated with the primary language spoken in China, a business manager might want to have a local translator assist in business transactions to minimize misunderstanding and mistakes (Summerfield, 1994).
Other factors must also be considered when conducting business with the Chinese. ... Second, business associates should have a working knowledge of Mandarin or a translator to avoid confusion or misunderstandings during negotiations and contract establishment. ... S. manager conducting business with China can be considered complex, especially when comparing the disparity between the two cultures. ... Furthermore, the Chinese seek and nurture long-term relationships, again a stark contrast from American business relationships. While there are long-term relationships in American business, American managers tend to be assertive through negotiations and obligations. Nonetheless, a good first step to successful business within China is a comprehensive understanding and appreciation of cultural differences.
Before considering business expansion in another country, the legal system should also be given consideration. A host country’s legal system, or lack of it, can produce enormous risk to any foreign company. A foreign company can find a number of obstacles from intellectual property protection to import restrictions. While China still has a long way to go, many advances have been made in the legal system to promote free trade beginning with China’s introduction into the World Trade Organization (WTO). ... China is still complying with the WTO’s international trade standards through various measures such as changes in trade laws, reduction in trade barriers, and reduction or elimination of tariffs. Consequently, China hopes to project an image of stability and security, thereby increasing the confidence of foreign companies and investors (Zeng, 2002). ...
In July 1994, China passed the Foreign Trade Law, the foundation of law governing foreign trade activities. The framework and the five guiding principles of the Foreign Trade Law encourage the development of foreign trade, promote equal trade relations with other countries, ensure independent operational authority of foreign trade dealers, provide safeguards for fair and free trade order, and encourage the country to practice a unified foreign trade system (http://www. ...
In an effort to promote trade and reduce conflict, the Chinese government also strengthened laws pertaining to controversial issues, such as anti-dumping and intellectual property, thereby protecting domestic industries while encouraging foreign trade. China’s Ministry of Foreign Trade and Economic Cooperation (MOFTEC) is the convening authority on a variety of trade issues, such as anti-dumping. ... Recent changes in Chinese intellectual property right laws provide protection against piracy, a major breakthrough for foreign computer software developers and entertainment providers. Amendments to the country’s copyright and trademark laws recently added subjects such as architectural designs, acrobatic performances, literary works, and artistic works (Boyarski, et al, 2002). Although China has modified laws in order to comply with the WTO’s international standards, strict enforcement of these laws still needs much improvement and commitment from the government.
Approximate Word count = 4328
Approximate Pages = 17.3
(250 words per page double spaced)
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