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International Business Case Study: China - Essay Example

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International Business Case Study: China Table of Contents Table of Contents 1 Background 2 Political Factors 2 Legal Framework 3 Economic Factors 3 4 < http://www.saylor.org/site/wp-content/uploads/2011/02/Economic-Growth.pdf> 4 Some of the factors that have contributed to the rapid growth include favourable economic policies, prioritising and promoting the growth of the local enterprises and government investment…
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Download file to see previous pages GDP Accumulated Growth, in percent, constant prices. < http://www.saylor.org/site/wp-content/uploads/2011/02/Economic-Growth.pdf> 14 International Business Case Study: China Background The growth of the Chinese economy has captured global attention, especially due to its 15-year sustained progress. The miraculous economic prosperity started in 1979 with the implementation of Xiaoping's economic reform policy. This earned China the status of being the world’s fastest-growing economy. Such growth is difficult to achieve considering that the country’s population comprises one-fifth of the world’s population. The following essay explores the reasons behind Chinese rapid economic growth and offers explanations focused on political, economic and technological factors. Political Factors The focus on political factors involves the analysis of the Chinese constitutional system. The Chinese government is a communist regime. The country is governed by a sole political party; Communist party of China. The communist administration has the power to control all business activities undertaken within the Chinese territory. This implies that the establishment of an international business venture in China directly promotes growth of Chinese economy and enhances the stability of communist government. However socialist, the stability of the Chinese government enhances economic growth because all efforts are geared towards economic prosperity rather than resolving political issues as is the case in democratic economies (Business Monitor International, 2008). The low public involvement in decisions involving business activities indicates that the favourable strategies formulated by the communist government have the ability to promote economic proliferation more effectively compared to democratic economies. However, this form of business control may be ineffective because lack of public contribution may have adverse economic setbacks that may cause instability in the present and future economic orientation. Legal Framework Additionally, the Chinese legal framework is moulded on a communist perspective. This discourages international investors because their democratic views may conflict with the socialists’ perspectives leading to uncertainty (Avusgil, Knight and Riesenberger, 2011). The weak inconsistencies and wording between local and national regulations makes Chinese laws subject to interpretation. The judicial system is also unreliable as most judges are vulnerable to discrimination. This may force them to make unlawful rulings on cases related to business issues. Such legal malpractices amount to lack of freedom in making international business decisions. However, China government has adopted trade ad investment legislations that ensure investment fairness for both international and local companies. One of the strategies involved in levelling the business playing field is decentralisation of international trade business activities. This provides a fair autonomy for international companies to make independent decisions related to business activities upon investing in China. Decentralisation has led to the current increase in the number of joint business ventures in China. Another strategy involved in the ...Download file to see next pagesRead More
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