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Essay on Challenges Of Doing Business In China
One of the first investment decisions when looking at China as a potential market is deciding where to invest. There are specifically designated areas, these include Special Economic Zones (SEZs), Economic and technological development zones (ETDZs), and New and High-Technology Development Zones (NHTDZs). In addition there open coastal cities, coastal zones, open inland cities and so on. It is essential to get the correct advice in order to distinguish between the different incentives on offer for each area.
Another key decision is selecting the appropriate business structure, Start-ups, joint ventures and equity partnerships all have their pros and cons. It is vital to take independent advice and listen to, and learn from the acquired knowledge of experienced companies.
Legal and political environment
As the social, economic and political systems in China are unique, we were not surprised that many foreign companies have expressed concerns about the complexity of (and their unfamiliarity with) the Chinese national and local laws and the relatively frequent changes in regulations (Powell, 2002).
Since the civil law system became effective in 1987, continuing efforts have been made to improve various legislations. However, there is a lot of room for development and foreign investors may still have doubts on the comprehensiveness and enforceability of the Chinese laws
Foreign exchange controls (including repatriation of capital and earnings)
Although the State Administration of Foreign Exchange has relaxed some foreign exchange control measures since 2001, all capital account transactions are still subject to approval by the State Administration of Foreign Exchange under the current rules. Foreign investors may repatriate profits in the form of dividends after the foreign investment enterprise's annual income tax filing has been agreed by the Chinese tax authorities (Powell, 2002).
For most current account transactions, the State Administration of Foreign Exchange has delegated some of its....
