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Essay on International Business In China
Various forms of international investment have different levels of managerial involvement and control that is retained. There are several investment methods covered in our management text that allow varying managerial control. These include licensing, franchising, joint ventures, and fully owned subsidiaries.
Investment in China Business Environment since the Peoples Republic of China (PRC) announced its open door policy on foreign investment in 1979, there have been many factors inherent in all forms of investment.
China is an ambiguous environment in which it is difficult to get definite answers to questions relating to costs, operating conditions or requirements. Management must be patient in dealing with a variety of local officials, ministries, as well as the People's Bank of China. Even commitments are not guarantees, as the PRC likes to exercise its right to change its mind.
The government is continuously changing the rules, and going back on agreements. In late 1995 companies were rushing about, trying to close deals in a matter of weeks to avoid the changes in plans to be enacted in 1996.
Some companies had been negotiating these deals for years. The change incorporated large tariffs on foreign firms making them no longer able to bring in capital equipment duty free. Chinese authorities are also highly unpredictable when assessing customs duties and taxes. The average taxes for foreign operations in 1993 were 24% and are rising currently.
Political Environment Management must be aware of current political situations when attempting to invest in China. Many companies have lost opportunities in China due to political conflicts. Unfortunately the only retaliation China has, is against U.S. businesses.Some current political issues include repeated allegations of Chinese human rights violations, threat of withdrawing China's most favored nation trading status, and failure to back the Chinese entry into the World Trade Organization.....
