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CASE STUDY Business in China
Subject name: International Business Environments and Operations Teacher: Dr. Farid Uddin Submitted By:
Submission Date: 28/12/2010 Name: Ishrat Jahan Roll no: 3416 Name: Maruf Roll no: 3417 Md. Abdullah Al

Their trends to buy luxuries product. and they are not depends on importing. because it is one of the big growth market. like helped capital formation. agreed in trade . they have communist rule. they have also joined in WTO in 2001. where govt. Since then they are proven themselves as a strong resourceful country where investment can really a lot for the investors. railroads are main factors to change lifestyles in china.Business in China Introduction: From 1949 to 1979. Market performance: purchasing power becoming higher and higher day by day due to their positive economic growth. rather they also prohibited FDI and foreign trade. And also they required most foreign firm to have an equity share along with Chinese people that means a fifty fifty ownership in FDI investment or in technological part. Over 30 years of history of china. Japan. After a deep filtering in those matters and construct some issues. 1. On the other hand china also see the benefit with filtered proposal. Market potential: huge selling in market because of their population. they accept free trade. After some experimental combination of investment china finally opened the barrier and begin export and import. 3. Infrastructure: infrastructure projects. power plants. living factors are very handy at that part. then it will hamper their culture and politics. politics people pass a rule that foreign people can invest money to Joint Venture Company where one party is Chinese people. subway systems. China also gives importance in petroleum and minerals and convert products from those. Some cases are exceptional where ownership from foreign and remain one. but also have a deep eyes on activity of foreign investment whether it help the country or not. China exports those and earns a lot of foreign currencies. 2. The politicians are very much belief that if they opened the door of trading and FDI. highways. that is highly maintained by the government of china. Days are passing after a tri-decade. Strategic positioning: investment in china is known as invest in a global market. technology enhancement etc. 5. create job field. dams. which increase continuously their GDP. Resources: China has a huge talent labor and petroleum and minerals. 4. Taiwan even USA are more interest to invest in china.

Trade has increased from under 10% of GDP to 64% of GDP over the same period. it agreed to considerably harsher conditions than other developing countries. it increased again to 160 billion by 2004. The contest between market economics and ideological legacies in china will play out over many years. China's trade surplus is considered by some in the United States as threatening American jobs. especially in heavy industry. Foreign investment was also liberalized.and investment liberalization. China's experience supports the assertion that globalization greatly increases wealth for poor countries. within the Chinese government. So I think it’s a predictable evolution. considerable erosion of the work ethic. . Chinas import tariff on automobiles increase gradually very fast. State authority experiment with various ways to energize the economy. Profile the evolution of the Chinese business environment. This experiment was successful and SEZs were expanded to cover the whole Chinese coast. Although FDI fell briefly after the 1989 student protests. If you see these short time profile then we can easily said that they have create a positive business environment to increase economic growth. Does this evolution strike you as predictable or unpredictable? Why would its degree of predictability matter to foreign investors? Ans: China has a degree of openness that is unprecedented among large and populous nations with competition from foreign goods in almost every sector of the economy. QUESTIONS & ANSWERS 1. China is considered the most open large country. From then they maintained global trading. The foreign investors are played key role to develop china’s business structure and which is related to developing a nation’s back born. because the success of China's economic reforms in its move from a planned economy to capitalism despite unfavorable factors such as the troublesome legacies of socialism. When China joined the WTO. in which officials presiding over areas of high economic growth were more likely to be promoted. decades of anti-market propaganda. and export products doubled from past. Foreign investment helped to greatly increase quality. Special Economic Zones (SEZs) were created in the early 1980s to attract foreign capital by exempting them from taxes and regulations. they are also doubled FDI investment in their country. The latest steps in china’s long march towards the open market economy. knowledge and standards.

Better corporate governance lowers risks for all stakeholders. So doing business in here is more predictable by imposing disciplines and giving you the tools to make the business steadier. and allows for . and that the company will be able to make decisions more quickly. investing in China means that your workforce will be more motivated to help achieve goals. The average cost of replacing an employee is 150 percent of the employee’s annual salary. Do you think the benefits of operating in China outweigh the risks? Ans: The benefits of operating business in China: Business environment are more aware of how to manage and prevent risks. foreign firms receive preferential treatment in China.S. So it is very much win win situation for the foreign investors and they are very much interested to invest in China.this includes financial and operational risk categories. Employees care that the companies they work for are ethical. Of even more significance. China does relatively better than other developing economies. improves the image of the company. which will reduce the voluntary departure rate. since high taxation can be viewed as a barrier to the entry of foreign capital. China has maintained an average statutory corporate tax rate of 30 percent. Another measure of interest to investors is the corporate tax rate. customers and suppliers. there is a big incentive to reduce turnover and lower your costs. Therefore. 2. and more bargaining power with your vendors. Over the sample period. This means more just-intime delivery. Better processes and more engaged employees. Therefore. well-run and stable. Investing means that the market will remain more trustworthy because you are willing to make your operations more transparent. Companies that have steady. lower than the average for all other developing economies.Predictability matter to foreign investors: China is doing relatively well today is in the provision of economic freedoms. predictable business are valued more highly by investors. and they will appreciate your investments in processes and systems that give them a clearer view and more access into your business. including democratic economies. lower inventory costs. often enjoying an effective tax rate of only 15 percent and being exempt from taxation the first two years of operation. Information will be easier to find and use. China has aggressively attracted FDI by offering low rates of corporate taxation and secures property rights for foreign investors inside special economic zones. The Economic Freedom index ranks countries as economically free if they have lower rates of corporate taxes. This is even lower than the rate set by the U. the overall risk profile of the company goes down . Suppliers are a critical part of your supply chain.

Limit its Risk: Preparing a risk management plan each year will allow you to review the risks associated with your farm. Of course this doesn’t mean you need to completely overhaul how you do business. it requires a large commitment of time to analyze the programs that fit the goals of the business.better decision-making and more efficiency in the company. There are no budgets or rewards forecasting. . There are several areas of the business that deserve a risk management review. These programs are complicated but deserve analysis since they impact the net income of the farm. tools. 3. but in all employees. The following are five simple and cost-effective tips for leveraging technology to achieve this goal. Preparing the plan will uncover your level of aversion to risk. Oftentimes. and technology to eliminate the bottle necks and inefficient practices that are currently preventing your business from operating at its true potential. Start by studying the rewards history of your business and then calculate what the rewards of the business should be if it were to operate at optimum levels.rewards as a line item of expense and then engineer the business around the "maximum rewards" that can be gotten from the business. Government programs are a risk management tool. Despite stronger statutory protection. one of the best ways to make your business more profitable and successful is to make it more efficient. 4. One the other hand. in the next few years? If it chooses not to do so. it simply means you need to begin leveraging the right systems. Departmentally will also be a great step in the right direction. Is it reasonable to expect China to adopt and fully enforce WTO regulations. This will be reflected not just in the board of directors. Pre-Planning. and knowing this information will allow you to identify strategies that are tailored to your business. rather. The benefit of such a task is making better business decisions and a greater peace of mind. China has strengthened its legal framework and amended its IPR and related laws and regulations to comply with the WTO Agreement on Traded-Related Aspect of Intellectual Property Rights (TRIPs). what options would companies have to protect their interests? Ans: Since joining the World Trade Organization (WTO). What would you advise a company to do to maximize its rewards? To limits its risks? Ans: In most cases we find that business owners treat rewards as what is left over after expenses are deducted from sales. particularly regarding intellectual property rights.

it is likely to be illegally duplicated. and flavorings are all now patentable. U. Paris Convention. As a signatory to the Patent Cooperation Treaty in 1994. There are several factors that undermine enforcement measures. 20 percent of all consumer products in the Chinese market are counterfeit. Bern Convention. Though they have observed commitment on the part of many central government officials to tackle the problem. companies are not alone. companies lose over one billion dollar in legitimate business each year to piracy. China follows a first to file system for patents. beverages. while initial preparation may be done by anyone. To comply with TRIPs. Protection in intellectual property right: Though China is a party to international agreements to protect intellectual property (including WIPO. Patents are filed with China’s State . trademark.China continues to be a haven for counterfeiters and pirates. the piracy rate remains one of the highest in the world (over 90 percent) and U. which means patents are granted to those that file first even if the filers are not the original inventors. including the European Union. corruption and local protectionism at the provincial levels.S. and lack of public education regarding the economic and social impact of counterfeiting and piracy. China will perform international patent searches and preliminary examinations of patent applications. and copyright laws are described below. Under China’s patent law. a company must register its patents and trademarks with the appropriate Chinese agencies and authorities for those rights to be enforceable in China. Patent: China’s first patent law was enacted in 1984 and has been amended twice (1992 and 2000) to extend the scope of protection.S. the latest amendment extended the duration of patent protection to 20 years from the date of filing a patent application. as pirates and counterfeiters target both foreign and domestic companies. Copyrights do not need to be registered but registration may be helpful in enforcement actions. If a product sells. On average. as well as food. a foreign patent application files by a person or firm without a business office in China must apply through an authorized patent agent. which recognizes the “first to invent” rule. but is consistent with the practice in other parts of the world. This system is unlike the United States. among others). limited resources and training available to enforcement officials. According to one copyright industry association. A brief summary of China's patent. Chemical and pharmaceutical products. including China’s reliance on administrative instead of criminal measures to combat IPR infringements. enforcement measures taken to date have not been sufficient to deter massive IPR infringements effectively.

should enforcement actions become necessary. Further. the Chinese Trademark Office has cancelled Chinese trademarks that were unfairly registered by local Chinese agents or customers of foreign companies. however foreign attorneys or the Chinese agents may prepare the application. The new implementing rules came into force on September 15. 2002. trade dress and trade secrets. Unlike the patent and trademark protection. while SIPO offices at the provincial and municipal level are responsible for administrative enforcement. copyrighted works do not require registration for protection. certification marks and three-dimensional symbols. which now include the United States. Copyright: China’s copyright law was established in 1990 and amended in October 2001. China has a ‘first-to register’ system that requires no evidence of prior use or ownership. which requires reciprocal trademark registration for member countries. Recent amendments to the Implementing Regulations of the Trademark Law allow local branches or subsidiaries of foreign companies to register trademarks directly without use of a Chinese agent. Trademark: China’s trademark law was first adopted in 1982 and subsequently revised in 1993 and 2001. Unfair Competition: China’s Unfair Competition Law provides some protection for unregistered trademarks. Foreign companies seeking to distribute their products in China are advised to register their marks and/or logos with the Trademark Office. Protection is granted to individuals from countries belonging to the copyright international conventions or bilateral agreements of which China is a member. leaving registration of popular foreign marks open to third party. with implementing regulations taking effect on September 15. China joined the Madrid Protocol in 1989. packaging. As with patent registration. foreign parties must use the services of approved Chinese agents when submitting the trademark application. However. under the State Administration for Industry and Commerce (SAIC) has responsibilities over the interpretation and implementation of the Unfair Competition Law. The Fair Trade Bureau. as required by TRIPs. However. The new trademark law went into effect in October 2001. copyright owners may wish to voluntarily register with China’s National Copyright Administration (NCA) to establish evidence of ownership. The new trademark law extended registration to collective marks. 2002. any Chinese language translations and appropriate Internet domains should also be registered. Protection of company names .Intellectual Property Office (SIPO) in Beijing.

is also provided by SAIC. respectively. legal system and local business networks. However. be your interpreter and navigate you through the bureaucracy. Improved . According to the TRIPs Agreement. As a result of their fast and steady rise to the top the need to standardize China’s trade policies and procedures is critical in order to ensure that all members of the World Trade Organization (WTO) are using the same system. The pace with which it is running currently. Chinese manufacturing has gained huge acceptance all over the planet and people really amaze witnessing this dramatic evolution of a super economy that was looked down upon by the capitalist super powers tremendously. It is the third largest trading power in the world. they must comply with world regulations. but in order to get to the top and stay there. How do you think the contest between market economics and ideological will play out in China over the next ten years? Ans: China is quickly becoming the World Trade Organizations (WTO) number one trading country. Conclusion: When doing business in China establishing a contact to act as an intermediary is important. China’s door is there and the world is knocking trying to get in and be a part of this giant in the making. This brings with it multiple benefits. Chinese economic ideology has been one of the greatest constraints in path of china’s development as a giant economy for a long time. China’s State Drug Administration and Ministry of Agriculture oversee the marketing approval of pharmaceuticals and agricultural chemicals. Overcoming this negligence has been the greatest challenge to the Chinese manufacturers and they have factually proved them to the world. anyone can guess easily that it would over cross the USA and other economic giants within the next ten years. Now Chinese GDP remains top on the world and it offers the strongest ever economy in the total Asia. The nation having the densest population of the earth could have been bigger double fold if could have started twenty years earlier from the time they appeared in the world market. They can act as a reference. China is predicted to be the world’s biggest economy by 2050 and be THE largest trading nation in the world. The future for China is very promising if it continues to conform to the WTO trade policies and standards. now China stands being one of the greatest super powers on earth. the population factor is once again responsible for its fast expansion all over. The opportunities for China’s growth are endless. Virtually. China is required to protect undisclosed information submitted to Chinese agencies in obtaining regulatory approval for pharmaceutical and chemical entities from disclosure or unfair commercial use. 5.

government reforms. Doing business in China means that business people will come into increasingly frequent contact with Chinese business people and officials. meeting protocol and negotiation techniques in order to maximize the potential of their business trip. business etiquette. It is imperative that those doing business in China learn about areas such business relations. an expanding economy and increased foreign investment make doing business in China a potentially lucrative affair. THANK YOU .