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Introduction Nowadays, China has become one of the world’s most attractive locations and China’s rise carries enormous significant for the international business communities. China has a very good development in term of legal system, the size of the market, the low cost of labor and China’s growth potential together offer unprecedented business opportunities for foreign investor to do business in China. International business have developed very rapidly in China and today, China become increasingly integrated with other parts of the world and opened up to a whole range of crossborder economic activities. Managing an international business in China is not an easy task and there are some challenges will be occurred. The prime challenge for those interested in doing business in China is achieving their strategic objectives of cost reduction, local differentiation and the strengthening of core competencies in their specific functional areas and business activities. China is the formal member of World Trade Organization (WTO) since 2001 and from the date, China enjoyed all the rights the WTO gives to other members and full participates in WTO activities. China's entry will benefit its national economy, as well as encourage global economic growth and the improvement of the multilateral trade system. WTO membership opens up China’s market for more international trade and investment, and opens up the world economy for China’s exports. This report will cover the reason for doing business in China, defines and identify the macro environment of China in term of political, economic, social and technology factors in order to do business in China and the impact of China on joining WTO.
II.000 (as at 31 December 2010). 092. Background of China China has the second largest land area on earth with population reaches a total of 1. the world's largest exporter and second largest importer of goods. and nowadays. as a result of sweeping economic reforms and the GDP has grown impressively (9. Map of China List of GDP BY THE World Bank (2009) .341. China's economy has boomed since 1978. 142 millions). China has become the world's fastest growing major economy.000.
business philosophy and beliefs. f. Trade continues to play a major role in China’s booming economy. e. Infrastructure is less developed than in U. d. China has no nationwide credit database. g. (2008). . Conducting market research and identifying market sectors is extremely difficult. China is a unique market in term of political view. protections for intellectual property rights are not consistently enforced. h. Markets are subject to sudden changes in the government’s economic growth policy. d. The diversity of the Chinese market is significant. a widening disparity between haves and have-nots could cause significant upheaval. b. b. However. China is land of opportunity .Recently. China become the world’s second largest economy and has been "open for business" for over 30 years. requiring a variety of products to meet segmented needs. c.Labor and physical plant is relatively inexpensive. so it is difficult to assess consumers’ credit worthiness. making transportation a challenge. China is the member of World Trade Organization (WTO). Even with China joining WTO. China is undergoing rapid social and economic change. language. There are the reasons for those companies thinking of entering or expanding operations in this important market such as: a.S. Multinationals often must compete against local players with lower cost operations and lower prices. there are some barriers or challenges of doing business in China: a. according to Orfield. K. c..
Lesson 2 – Think local. particularly in major industrial zones. After the doors open. The Chinese government has tacitly and overtly encouraged this in order to maintain some control over foreign enterprises. Although labour and physical plant is relatively inexpensive. consumer needs and regional industrial strengths Compared to the West. including a non-level playing field. China differs across every measure — politically. North American firms should expect fierce competition. The ideal market entry strategy is to do your homework on the market. developing key local capabilities like marketing. partnering with a Chinese firm (particularly one with senior government or army connections) has proven to be the best and lowest risk market entry model. firms need lots of time to get the business model right. from local players. support cronies in state-controlled partner firms and buttress local companies from more efficient foreigners. consumers and competition. facilitate critical knowledge and skills transfer. For example. Getting to the point where you have boots and machinery on the ground often can take years of arduous effort and relationship building. act local China is a unique market. Its comprised of diverse regions with varying levels of development. service and distribution is not. invest in deep relationships with key door-opening politicians and regulators and show an exaggerated deference for Chinese business habits. KFC 10 years. capricious government behaviour and the germination of emerging Chinese competitors. Finally.Conclusion Lessons from this paper: Lesson 1 – Success takes patience and deep pockets Even large companies need a long runway before they start making money from their Chinese investments. Most North American companies can leverage little from their previous international experiences so they need to fully embrace local operations. P&G took three years to turn a profit. needs and customs. for foreigners JVs carry significant medium term business risks that include but are note limited to politically-motivated expropriation. language. which can easily extend investment pay-outs and make local operations uncompetitive. Once operations are set up. However. honour and beliefs. China is experiencing significant wage and raw material inflation. Lesson 3 – Joint ventures work best but carry longer term risks In most cases where you need to manufacture locally. business philosophy and beliefs. . on corruption.
however.Despite the pain and suffering. is will the runway to profits in China shrink as its economy grows? . many companies have finally turned the corner and are now reaping strong investment returns in China. The key question.
asp .wisc.bus.wikipedia. http://en. http://en.html 2.edu/update/winter05/business_in_china.org/wiki/People%27s_Republic_of_China 5.org/wiki/List_of_countries_by_population 4.com/executive/guide+doing+business+China/34176 88/story.References 1.wikipedia. http://en.financialpost.org/wiki/List_of_countries_by_GDP_(PPP) 3.wikipedia. http://www. http://www.