Business in Asia - Speech or Presentation Example

This strategy resulted in the problem of low motivation and incentives for workers in industries along with misallocation of resources among different sectors. By employing improved strategy for material incentives, China was able to infuse new soul into the people by creating new resources and allowed them to be used by sectors deprived of the facilities (Dorn & Xi, 1990). Chinese learnt from their bad experience of economy that autonomy must be granted to micro-organizations which will ensure the availability of resources to deprived sectors and provide incentives to workers.

Thus, Government still focused on its priority areas while autonomous enterprises were looking after low incentives as well as flow of resources into the low priority sectors. Chine underwent the reform based on the strategy of organic, gradual or incremental approach. This process is sequential and often involves experimenting with the available resources. Privatization of industries is not done on the large scale. It is an approach towards decentralization of resources so that rights could be distributed at small scales.

The approach of China towards the reforms was quite innovatory. The government opted for experimental and bottom-up approach instead of more conventional, comprehensive and top-down approach towards reform. It was believed by economists that liberalization, stabilization and privatization are the key to boosting a country’s economy and a treatment called “shock therapy” is quite essential for reforming. China had its own ideas and revolutionary thinking. The reform of China began at the end of 1978, when GNP went quite high and prices were kept stable to a large extent (Cao et al, 1997).

Elevation of importunate market strength of heavy industries in China gave rise to agrarian economic gesture of the Chinese markets around the world; there were limited products for export. Except for some small and low level agricultural products, nothing was contributing towards the market that could gather external investments from the world which was already facing detrimental consequences after the Russian economic up thrust and polarization. The interest rates were also high. The above mentioned reasons were some of the major problems in pre-reform era.

The interest rates and market trends changed later in 1952s five year plan in which interest rates were lowered down first because the increased interest rates were not market friendly for the heavy industries. People could not mobilize the heavy lump-sum amounts for international import of heavy products. Another major aspect that was a hurdle in China’s reform was concentration of labor force in those industries that were less focused by the Government. The productivity of agricultural industries was not quite up to the mark that could contribute towards raising the economy of China.

During the reform, the labor force was moved from low productivity sites to high profitability areas. This process is different from reforms in Eastern Europe and Soviet Union owing to the fact that labor force is not concentrated in low productivity area there. China began reforms by improving the low incentives in low productivity industries by providing new flow of resources. The resources for heavy industries were kept the same to maintain their productivity at the same level as before. New