Key Outline of the Assignment- International business expansion has become an important for organizational growth in the current business environment, where competition has increased and managing successful existence of the organization has become critical (Ahlstrom & Bruton, 2009). For the paper China is selected as a country in which business of the firm will be expanded. It is because the country has different legal and regulatory system from US it may be beneficial to assess the issues and challenges that are surrounded the business expansion. As an in-charge of the Business Development and Expansion committee of the company, it is essential to choose the right market for business expansion, so that chances of failure can be minimized.
There will be a discussion about the international business expansion plan that will include concepts and ideas that are beneficial for the business expansion in China. In this, issue of common and civil law systems internationally will be discussed in the plan along with defining intellectual property, copyright infringements, and legal ramifications. Similarly, human right violation, child labor law violation, impact of the European Union of the business environment and important aspects for international business expansion will be discussed in the plan.
Issue of Common and Civil Law Systems- Civil law system contains civil codes that define to the systematic, authoritative, and guiding statute of broad coverage of the legal life of entire nations through marketing with a new start and breathing to the spirit of reforms of national legal system. These codes differ from country to country due to having different systems (Cross, 2007). Such civil laws include high number of rules and principles along with classifying into different set of legal tasks. Cscommon law is based over the case law not on legislation. In the international market, while business expansion various issues are faced by the firms related to civil and common laws (Peng, 2008).
In China, proceeding over the commercial dispute related issues are faced by the foreign firm as a part of civil and common law system. In this, foreign investors also faced lack of litigation of the court to solve any complex commercial dispute for solving the case in a single day (Ahlstrom & Bruton, 2009). It increases frustration among them and create problem related to the investment in China. In addition of this, lengthy, complicated commercial agreements and startling high legal fees related issues under the common and civil law systems are also faced by the foreign firms while expanding business in Chinese market (Peng, 2008).
Additionally, due to differences in the legal systems between Common Law and Civil Law jurisdictions various transactional issues faced by the foreign firms while entering in China. Such differences have significant effect over the practical matters such as resolution of commercial disputes, contract drafting along with affecting mind of the managers of foreign firms and lawyers those follow such legal frameworks (Ahlstrom & Bruton, 2009). In China, firms face issues related to the lengthy standard and lengthy Joint Venture Contract template those are formed by the Ministry of Commerce and utilized by all the State-owned Enterprises also create issues for foreign firms while planning to enter in Chinese market (Peng, 2008). Additionally, Litigation in Common Law jurisdictions in China is also not effective and satisfactory that also makes it difficult to provide right judgment over the disputes that also create issues for the foreign firm to enter in Chinese market for their business. Overall, various issues of common and civil law systems are faced by the foreign firms while entering in Chinese market (Cross, 2007).
Intellectual Property, Copyright Infringements, and Legal Ramifications- Legal framework and intellectual property rights and related laws are strength of the Chinese governance. Additionally, the country has also counterfeiters and pirates as a part of the statutory protection. In this, pirates and counterfeiters are developed by China to protect the rights of the foreign firms in Chinese market (Defrancesco, 2012). Although piracy related problems are faced in the market, yet, central government officials committed to tackle the problem related to developing measures that are sufficient to deter massive IPR infringements effectively and efficiently (Protecting Your Intellectual Property Rights in China).
Additionally, to combat IPR infringements, corruption and local protectionism, there are various factors and measures used in China such as training for the officials, public education towards economic and social impact. In order to ensure the protection of the intellectual property of the foreign firms as well as local firms, there are various Chinese agencies and authorities worked where a firm has registered its patents and trademarks so that their rights can be enforceable in China (Defrancesco, 2012). It is also assessed that to meet with the global standard in relation of the protecting intellectual property, China has revised substantive law. In addition of this, The Copyright Law of the People’s Republic of China is formed and executed in China in order to solve the issues related copyright infringement and broadcasting rights (Protecting Your Intellectual Property Rights (IPR) in China). In this way, various legal authorities and branches are working in China as Administration for Quality Supervision, Inspection and Quarantine (AQSIQ), State Administration on Industry and Commerce (SAIC), Trademark Office, State Intellectual Property Office (SIPO), National Copyright Administration (NCA), General Administration of Customs (GAC) and many more those strengthen to the legal system of the country for investing foreign firms in China (Goldstein, 2006).
Violation of Human Rights and Children Rights- In China violation of human rights of employees and child labor law is available that created legal issues over the country’s legal structure. In this, low wages, discrimination among the workers at the workplace is countered as violation of the human rights of the workers (China: End Child Labor in State Schools, 2007).Overtime work violation is also available in terms of not giving right wages to the employees for their overtime. Similarly, firms give low wages to the workers as compared to decided local minimum wages by the legal authorities (Schaffer, Filiberto & Earle, 2009).
Along with this, Labor Association standards are also violated by the Chinese firm at the local market that also generate threat for the foreign firms in terms of having threat of protecting their rights where all human rights are violated by local firms (Cohen, 2003). Furthermore, there is also absence of any kind of the medical, unemployment or retirement insurance that also violates to the human right in China. At the same time, president of the union is appointed by the management of the factory that also does not have any power and freedom to take any decision related to the workers’ benefits (Children’s Rights: China, 2013).
To protect the children’s rights in China, The People’s Republic of China works positively through developing local legislation and by ratifying and joining the relevant international treaties. In order to protect the rights of the children and prohibit to the maltreatment towards these, “The PRC Law on the Protection of Minors” works positively. As per this law, 18th is decided by the legal authorities as age for the labor (Children’s Rights: China, 2013). At the same time, these laws are violated in China through involving children in factories and conducting other activities China: End Child Labor in State Schools, 2007). Government also violates to the laws through involving children in many activities and programs as school system. Such programs use child labor and there is lack of sufficient health and safety guarantees that demonstrates to the loophole in domestic labor law (Schaffer, Filiberto & Earle, 2009).
Perception of the People
People in China are not educated and not aware towards the legal systems and their rights in relation of working in a company and many more. Although it created negative image of the firm as well as legal system of the country due to violating the legal rules and regulations related to the human rights and any other laws (Clarke, 2008). Public have negative perception towards such organization those are engaged in such activities as due to violating the laws, government can take action against those firms any time (Schaffer, Filiberto & Earle, 2009). Additionally, it also prohibits to public to be involved and worked in such firms as they know that the firms will torture them and will not fulfill their duties towards humanity. Negative image is created of the firms those are engaged in wrong or unethical practices at the workplace (Liang, 2010).
Impact of the European Union- European Union regulations and directives have high impact over the business environment of China and in other countries. It is because EU sets the standards to be competitive in the global marketplace for Chinese and other firms of different countries (Liu, 2009). Additionally, EU also defines the rules and regulations to protect the environment, consumer health, safety and privacy to protect the customers’ rights and to minimize of free market distortion from unfair trade practices. Additionally, EU passed laws and regulation over the members and related business entities to adopt the fair practices and to face fair competition. For this, trade barriers are formed and executed by the EU to ensure the fair competition. In this, EU protects its members from the unfair practices that refer to its impact over the business environment (Liu, 2009).
Other Important Aspects of International Business Expansion- Instead of collecting information about the legal environment of China, the firms should have knowledge about the market and business environment of the country such as micro and macro environment. Along with this, the firm should analyze growth opportunity in the market so that effective results can be taken (Ahlstrom & Bruton, 2009).