• One of the major market challenges seen in the Chinese market can be seen in regards to lack of predictability in the Chinese business environment.
• The Chinese legal & regulatory system is referred to be as transparent, opaque & inconsistent.
• Second market challenge seen in the Chinese market is that, in some sectors of the economy is known as mercantilist due to its export growth model.
• The last market challenge seen in the Chinese market is that, it retains majority of the apparatus of the planned economy along with the five year plans i.e. setting targets, goals & strategies.
• The market opportunity shall be seen in the Chinese economy by understanding the capabilities of the firm as well as have in depth knowledge of the same.
• Other market opportunity which is evident in the Chinese economy is in regards to its contribution in education & tourism industry is increasing day by day.
• Last market opportunity seen in the Chines economy is in regards to the growth of imports in the various sectors such as machinery, transportation, construction, chemicals & range of other services which makes China a viable market for products and services.
Market Entry Strategy
Some of the market entry strategies which can be used to enter in the Chinese market:
• Joint venture
• Open an office
• Due Diligence Professional service
• Use a distributor
• Direct Marketing
Culture of China
In order to have improved international relations, government reforms & expand the economy doing business in the Chinese economy is a lucrative affair.
In order to perform business in the Chinese market, business people will be in contact with the Chinese people and officials. It has been said that, people doing business in China will learn more about areas such as business etiquette, business protocol, negotiation techniques, business culture so as to make the maximum of the business trip.
Important key areas while doing business in China
Some of the important key areas which shall be kept in mind while doing business in China have been listed as under:
• Meeting & greeting: In China, meeting & greeting start by shaking hands with a slight nod of the head. One should not be vigorous while shaking hands as it would be referred as aggressive by the Chinese people.
• Face: While doing business in China, one must learn the subtleties of the concept and understand the possible impact one could have on doing the business in China.
• Confucianism: While practicing business in China, one shall see how Confucianism affects the business practices of Chinese economy.
Political & Legal factors
The study of political & legal system in any economy is complex and extensive. The political system refers to the system of politics & government plying to the country. It takes into consideration various set of rules & regulations, attitudes, etc.
While assessing any business option, some of the risk factors which shall be kept in mind by nay business professional are as follows:
• How stable is the government of that particular country
• If the new party comes into practice, will the rules of doing business change?
• Is it democracy or dictatorship
• What is the level of involvement of the government in the private sector?
• The transparency levels of political, legal and economic in the decision making process.
• Whether there is a well established legal environment to enforce policies & rules.
• Whether the power lies in the hands of few people or has a constitution for the same.
Government intervention in Trade
The government intervention in trade can be used to manage trade & create rules and regulations to manage trade in an effective manner.
• Import quotas
• Export financing
• Administrative policies
• Currency control
• Local content requirements
• Free trade zone
Differences in finance and banking system between China & US
• China is under going through a lifetime experience of transferring power and other things smoothly
• It has been seen that, banks operating in China do not know how to operate in the foreign markets such as the US. They lack the manpower to staff the branches operating in Us and assess credit risk.in order to build such capabilities China will take a very long time
• Industrial & Commercial Bank of China is referred to as the world’s most profitable lender, but in reality it deals on 80% of the US unit of Bank of East Asia.
• Though Banks operating in Chin are huge & profitable but it is not clear whether they are as strong as the Banks in US. In order to act as big as the US bank, China has to fall out from the $3 trillion loans which they have put in the Chinese economy following the financial crises.
• There is a backlash against the China’s banks which limit both, the growth & force them to lend money domestically to the private sector entrepreneurs.
Rules in International Business Ethics
Rule1: If you try to understand the various values of various different culture, come common points can be fetched easily
Rule2: Based on the analysis of the facts, the business men will realize that honesty & reliability will benefit you in the long run
Rule 3: Based upon the analysis of the case studies, the business men will realize the benefits of fair play.
Rule4: Rule number 4 states that, loyal dissent will lead the economy to the right direction.
Rule5: Reducing the labor force is the one and only way of respecting the stakeholders
Rule6: In order to establish the brand name, one should act as a fair competitor.
Rule7: If the business acts against discrimination, it will help to increase the productivity along with profitability.
Rule8: Protection of the intellectual property will help the stakeholders to receive their due share.
Rule9: The economic achievements will stand on the ground if corruption is diminished.
Rule10: Ongoing changes in the information technology requires new form of loyalty
Rule11: In order to have long tern success, constant care to the environment shall be practiced.
Rule12: The public relations strategy will secure the reputation if and only if it witnesses high levels of quality and excellence.
Rule13In order to become a refined player in the global market one shall cultivate good manners & sharpen its skill.
Rule14:Utmost care for business will lead to care of the society in the long run.
Ambler, T., & Witzel, M. (2000). Doing business in China. London: Rutledge.
Li, J. (2001). Managing international business ventures in China. Amsterdam: Pergamum.
Tian, X. (2007). Managing international business in China. Cambridge: Cambridge University Press.