Assignment Sample On Business Environment in China

Business Environment in China Introduction

With increasing forces of globalization and increasing competition, China has become one of the attracting sources to invest for multinational companies. With its low labor cost and availability of basic business necessities, it has been successful in attracting global investors. This Global Financial Management Assignment help paper would discuss financial system, current state, tax rules that a multinational company should prefer to using Business Assignment Help Online consider before entering into China.

International Expansion of MNE While taking decision regarding international expansion of a MNE, there are several factors that need to be considered by it. The foremost thing is the supportive international financial system for effective operations of the organization. At the same time, it also has to consider its own current position. Several times, it is seen that the company is not ready for the expansion instead it is being forced to expand that causes the failure of firm (Campbell & Hamill, 2004). The kind of foreign exchange exposure in the country, where the company is willing to invest, is also important. It ensures the long-term growth of firm in that country. ABC multinational company is willing to expand its business in China for which following things would be considered:

Political Environment The political environment in China is quite stable that opens the doors of opportunity for multinational companies. The government is quite concerned regarding Chinese market economy and its future development. Since the government is having full control over the incremental reforms, it has been successful in attracting maximum number of foreign investors. The functions of government are quite transparent and responsive that is very important to start new business in China (Jiang & Stening, 2006). In addition to this, being the power center of Asia, it would also be effective for organizations to start their business in China. The government of China has maintained good relation with other countries that is also important from new business’s point of view. The government is also supportive for businesses in terms of policy formulation.

Economic Environment From economic point of view, China is the 2nd largest economy of the world. For any multinational company, willing invest in foreign countries, it is very important to consider its economic condition to determine organizational growth. The restructuring of the economy has brought unique business opportunities for investors in China. Flexibility with controlled inflation and steady growth is the positive point for Chinese economy that has been quite successful in attracting foreign investors (Li, 2007). With special economic zone, it looks quite attractive for foreign investors to invest in China. Apart from this, China also provides tax exemptions, duty free import of raw materials and technology for companies operating in special economic zone that has made China an attractive place for foreign companies.

Import Export Restriction and Labor Relation The import export restrictions in China are not very strict as it allows most of the product line. This is the good sign for investors to invest in China. It also provides tax exemptions to foreign investors on the import of all kinds of products that also encourage foreign investors to invest in the economy. Being the member of WTO, China has made its import export policy flexible for foreign investors, so that maximum amount of investment could be bought up in the country (Chowb, Leeb & Sina, 2003). Apart from this, the availability of cheap labor in the country will also be beneficial for investors. The labor is very cheap in China as compared to other countries that facilitate low cost of production. In addition to this, there is no such issue of labor unions in the country that could help organizations to explore the business opportunities. It would provide smoothness to their activities in the organization resulting into its long-term growth (Eng, 2005). Apart from this, the labors are also very cooperative and there is abundant availability of different kinds of labor from skilled to unskilled. This is also the sing of huge growth potential of foreign companies in China.

Supplier Financing and Tax Rules China is the country with maximum number of suppliers in different product category that has created a good platform for foreign investors to determine their growth. Today, China is one of the biggest suppliers for many of the multinational national companies. This also has resulted into wide opportunities for companies in China. Companies would easily find suppliers and financing source in China to accelerate their growth (Griffith, Liu & Luo, 2004). This is the main reason why most of the multinational companies are willing to locate their operation in China. At the same time, the huge relief on taxes for foreign companies will also be beneficial for ABC to operate its business in China. Apart from the wide number of taxes imposed on the foreign companies like corporate income tax, business tax, resource tax, land appreciation tax etc. it has been point of attraction for investors because of its tax incentive (China Knowledge, 2012).  The government considers foreign investors as the strategic partner in the growth of country. The value of Chinese currency Yuan is also quite good in international market that has attracted the number of investors and it is convertible to all currencies in the world.

Short-term and Long-term Debt The short-term debt in China is comparatively lower than many of the countries that have helped investors to attract. In year 2010, the short-debt in China was 11.93% of total debt that seems quite attractive for investors for their growth opportunities. Since China has fewer obligations to pay, it would be good for investors to invest in China (Wilson, 2009). In terms of long-term debt, the country is also attractive for investors. China has recently decided to issue 50 year bond to help institutional investors, which would be beneficial for the long-term growth of organizations.

Employee Welfare Policies and Labor Relation While operating business in China, the company would put significant consideration to the employee welfare as well as labor relation since these are very important aspect of business growth. The company would formulate well effective welfare activities considering the benefits of employees such as fixed timing, flexibility of work schedule etc. As a part of its welfare policies, company would provide a minimum wage to employees. In addition to this, extensive training facilities would also be provided to employees in order to develop their skill (Fernandez & Shengjun, 2011). This would certainly help organization to explore the opportunities available in the market. Incentive programs would also be introduced for employees and fair treatment would be made with each employee. In order to develop effective relationship with employees, the organization would involve its key employees in the decision making process. Since employees are more familiar with the local conditions, it would help organization to better explore the opportunities (Li, 2007). In addition to this, employees would also be provided with health and security benefits by the organization in order to explore the potential of employees.

Conclusion Based upon the above discussion by China business assignmnt help experts concluded that China would be very effective to operate business functions of MNE. The supportive government, business environment, flexible tax rules would add great advantage to organizational growth in China. The organization would acquire highly respectable position with its business operation in China.

References- Campbell, D. & Hamill, J. (2004). Global and Transnational Business: Strategy and Management. USA: John Wiley & Sons. China Knowledge. (2012). Investing in China. Retrieved from Chowb, R., Leeb, J. & Sina, L. (2003). Market orientation and business performance in a Chinese business environment. Journal of Business Research, 56 (3), 227–239. Eng, J. (2005). China Investment Environment & Strategies: The Key to Winning in the Greater China Market. USA: iUniverse. Fernandez, J. & Shengjun, L. (2011). China CEO: A Case Guide for Business Leaders in China. USA: John Wiley & Sons. Griffith, D., Liu, S. & Luo, X. (2004). The Effects of Customer Relationships and Social Capital on Firm Performance: A Chinese Business Illustration. Journal of International Marketing, 12 (4), 25-45. Jiang, F. & Stening, B. (2006). The Chinese Business Environment: An Annotated Bibliography. Great Britain: Edward Elgar Publishing. Li, S. (2007). The Legal Environment and Risks for Foreign Investment in China. USA: Springer. Wilson, S. (2009). Remade in China: Foreign Investors and Institutional Change in China. USA: Oxford University Press.

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