The Process of Restructuring the Activities of an Economy Achieve Industrial Progress of a Country - Essay Example

Introduction to Business Essay Developing Economies Economic development is the process of restructuring the activities of an economy in order to achieve social as well as industrial progress of a country. It can also be measured in terms of increase in job opportunities and average income of citizens. As a result of industrial growth the developing economies like India, China, and Brazil attained faster economic growth in recent years. Now a day, China’s increased dominance in world market has become a threat to developed economies like US and UK. This paper critically analyses the international trade between China and UK, and its adverse impacts on UK’s business and market in connection with China’s supersonic economic development. Though Chinese economy had been extremely backward in the middle of 1940’s, they could become top of the fast developing countries at the beginning of 21st century. China formulated “five-year-plan” for its sustainable economic development, in which 9th plan (1996-2000) helped them to lead a large distance from the competing economies. China achieved a tremendous gross domestic product (13,687.59 Yuan) for the year 2004, which is 9.5 percent higher than the previous year (China’s economic development). Chinese industries dominate world market by their cheaper and technologically improved products. They are achieving systematical economic development in connection with increase in standard of living of people. The excellent organization of Beijing Olympics and Guangzhou Asian games were the direct view of the economic and technological stability of China. As Chinadaily reports, “The UK is China’s third-largest trading partner in the European Union (EU), while China is the UK’s second largest non-EU trading partner” (Chinadaily Nov 11, 2010). As the multiplicative opportunities in the Chinese market has recognised, more and more UK companies wish to invest with China. According to ‘Chinadaily’, 24 contracts were signed between companies from UK and China on 10-11-2010, which include a contract of 750-million-pound ($1.2 billion) between Rolls-Royce and China Eastern Airlines (ibid). China-Britain Business Council is the agency formed to assist the British companies to conduct business in China. According to financial reports China exported goods worth $23.107 billion to UK in 2008 whereas it imported goods from UK only for $5.072 billion (BritCham. 2009). The UK operates a trade deficit with China even though it has a trade surplus with China in case of export of services. It clearly reflects China’s economic policies toward foreign investment; they keep their domestic economy open for foreign investment. There are approximately 4000 British firms in China. Although UK keeps good trade relations with China, their annual exports lag behind Germany and France. It means UK cannot take maximum advantages of the world’s bigger market. This contradiction arises as a result of numerous conflicts prevailing among these nations on the ground of tough competition on manufactured goods. The intellectual property rights and liberalised laws in China also become a constraint for UK to penetrate into Chinese market. Similarly, Chinese government has initiated some restrictions on UK firms with intent to save traditional Chinese industries from UK’s corporate giants. In contrast, China takes all benefits of UK market in order to sell out their diverse products and services. China’s tremendous growth during the last few years threats UK economy very much. Even though the introduction of China-Britain Business Council ensures full time access for UK industrialists to Chinese market, UK has not yet utilised the opportunity at its level best. At the same time, Chinese export to UK increases largely year by year. Chinese inflation causes great threat to UK, which occurred as a result of huge wage rise occurred in China. From the study conducted by Bank of England’s Monetary Policy Committee, it is clear that “while China was lower-cost provider than most of the other countries from which Britain had traditionally sourced these goods, there was also more inflation imbedded within imports from China than elsewhere” (Louth). Chinese economy has recorded an average growth of 9 per cent every year for the last 25 years. To illustrate, we examine the Chinese economic development and its impacts on British small business industries. China manufactures 90% world’s toys, 40% of world’s socks and 80% of world’s DVD players. It leads the British traditional industries to a great crisis since the demand for their commodities gradually declined in their home market as well as in the world market. The cheap imports and cheaper labour costs of China create great difficulties to the UK companies thereby they cannot hope to compete. Majority of the UK companies have no idea about the potentiality of Chinese market so that they cannot exploit the infinite opportunities in the world’s largest market. Since Chinese industries across the globe are well-rooted, it will be a cumbersome task for other economies to crack the fast developing Chinese market dominance. Chinese business regulations against foreign companies including UK also intensify the complicatedness of the situation. Similarly different cultures and languages, varying business environments, and multiple needs of people raise possible hindrance for others to enter the Chinese markets (Chardwick, 2006). The outstanding development of Chinese technology enables them to produce commodities at lower cost, which is not possible for UK business due to their lower access to cheaper raw materials and ultra modern manufacturing technologies. The existing UK companies in the Chinese market also struggle with Chinese industries for survival. The prices of Chinese products are much lower than the prices of other similar products so that rivals cannot even think about a price competition. The only alternative for UK small business houses is to maximize their product quality; but it will cause further price rise for their products. Even though Chinese economic development is a threat to UK businesses, it provides some opportunities too. For instance, the emerging strength of Chinese ceramics industry is an excellent opportunity for UK companies if they promptly formulate business strategies. According to recent financial reports, China will be the world’s largest economy at the end of 2030 which reflects the scope of UK industrialists in China. Although there are many economies leaping toward the dream of sustainable economic development, china is the shining star among them. China gives extreme opportunities to UK industries, with regard to their infinite market demand. In contrast, China’s cheap import facilities and minimized labour costs prevent UK companies from exploiting these opportunities. Reference BritCham News, ‘UK-China Trade & Investment Statistics: January-July 2009’, The British Chamber of Commerce Guangdong, viewed 10 Dec 2010 China Daily 11 Nov 2010, ‘Li: China to Deepen Trade Ties with UK’, viewed 10 Dec 2010 Chadwick, G 23 April 2006, ‘Is China a Threat to Britain’s Small Businesses?’ The Independent Business, viewed10 Dec Louth, N 21 July 2010, ‘China’s Inflation Poses Threat to UK’, Msn.money, viewed 10 Dec 2010 People’s Republic of China 2008, ‘China’s economic development’, viewed 10 Dec 2010 Read More