Chinas Business Practice - Term Paper Example

China’s Business Practice Introduction The research provides a critical description of the international relationship of China by examining its current business practices in the global business environment. In this regard, the discussion of the research focuses on China’s involvement in the global business environment including its trade relation with the United States. Correspondingly, critical evaluations by exploring few major areas have also been undertaken while successfully building strong trade relationship with China. In this context, the study would primarily focus on the areas including the definitions of the basic factors and the steps needed to be considered while successfully doing business in China (Hua, 2011). Additionally, critical assessments of the cultural differences in this nation and possible challenges that may have negative impacts on the foreign marketers have also been observed in this discussion. In this regard, describing the cultural attitude of the nation towards the role of women in business transactions and workplaces has also been considered as a major part in this research study. A critical focus on the labor issues faced by the international marketers in China along with currency and regulatory challenges faced by the American companies in this nation is also taken into account in the primary discussion of this study. China Current Business Practices and the Involvement in the Global Market In relation to the current trade relations of the global nations, the People’s Republic of China has long been witnessed as the most sophisticated market in the Pacific region. The strong economic performance and extensive resources have helped in enhancing the capabilities of the resources as well as global nations to expand its business subsidiaries across different locations in China. Additionally, the deregulatory policies in the trade relations and emphasized standards in the bilateral policy have also influenced the nation to create major opportunities for the foreign entrepreneurs in the form of increasing Foreign Direct Investment (FDI) in various vital resources of China (Morrison, 2015; 2011). The extensive economic capability in the form of increasing growth of national income and annual Gross Domestic Product (GDP) dimensions have also been identified as few of the key factors of China to build strong international relationships with global nations, especially with developed countries. The steady performance in terms of maintaining robust growth in GDP up to 9.2% in 2009, 10.3% in 2010, 9.2% in 2011, 7.85% in 2012 and 2013, and 7.45% in 2014 has cumulatively attained considerable attention of the foreign marketers to increase their investment in China. Despite the lower trend in GDP growth rate from the year 2009 to 2014, its strong trade relationship with the US has enabled the nation to sustain as one of the most emerging nations in the Asia-Pacific region (US Commercial Service, 2012). In this regard, the strong trade relationship between the US and China has successfully strengthened their bilateral agreement in both import and export transactions. The trade association between these two nations has led to an amount of US$100 billion in 2011 from US$91 billion in 2010 as export activities by the US to China. In addition, China remains as the second strongest trading partner, as of the association with Canada. The export activities of the US to China in the form of fishery, agriculture and forestry has reached to a major height of US$21.9 billion in the year 2011, which is a significant increase of 13% as compared to the export of these trading elements in the year 2010 (US Commercial Service, 2012). Behind the strong association of these trading partners, the embankment of policies and regulatory norms has been playing a major role for both China and the US. However, the trade relationship between China and the US remains dogged due to their long-lasting mutual mistrust. The mistrust among nations stems partially from the major differences in their political systems (US Commercial Service, 2012). According to the on-going business trend of the US marketers in China, a majority of the organizations are highly discontented due to the authoritarian political structure and governmental system of China. Moreover, in various cases, it has also been determined that brutal suppression of dissent anachronism controlling process of the government in China often restricts different leading foreign marketers to invest or commence their business activities in the nation. The landmark decisions associated with the relationship between China and the US can be critically identified from the bilateral policy, multi-lateral and public diplomatic development since the past decades (Hua, 2011). Bilateral Policy The pace in the bilateral interaction between China and the US has increased with a dramatic growth in the recent decades. Since the development of the bilateral agreement, both China and the US have strengthened their diplomatic relation by interacting 24 times. In relation to the observation of the report published by the state media and the Chinese government, it has been identified that both the nations have involved more than 90 bilateral dialogue mechanisms throughout the decades (Lawrence, 2013). The bilateral dialogue mechanisms developed during the interaction of these nations have been considered as among the most influential elements behind the substantive development in business transactions. However, according to arguments made by the Obama Administration, it has been critically identified that the bilateral dialogues facilitate both the officials of China and the US to understand their positions on different issues. The Administration has also asserted that the bilateral dialogues are the first steps to determine areas about the common interests of both the nations and managing their differences on the involvement of various trade and political development activities (Lawrence, 2013). Although the economic performance of China and the US is interdependent, the different economic model of these trans-nations has contributed to form major mistrust. In this context, the state contributes major support towards the development of Chinese economy along with the state-owned corporations to perform their dominant business activities in the nation. Unlike the economic trends of the US, the economic performances of China have been heavily depending upon the FDI and export activities during the recent decades, rather than the consumption growth of the nation. However, the areas of raising major arguments within the bilateral economic association between these two nations through various major allegations emerged by the investors and the US governmental agencies. In this context, the allegations associated with Chinese cyber espionage over different governmental agencies and private corporations of the US can be duly regarded as a major concern on the trade relationship between these two leading nations (Morrison, 2015). Nevertheless, major inabilities or unwillingness towards preventing violation of the foreign intellectual property through Chinese entities has also been observed as one of the major factors leading to disrupt the international relationship of China with the foreign entities. Chinese policies that often appear to create major discrimination against the foreign business entities along with allegation against the currency policy of China have also been considered as the key aspect leading to bring about major debates regarding the political and trade relationship among China and the US (Morrison, 2015; Lawrence, 2013). Key Policy Issues Affecting Trade Relation between China and the US The trade relation between China and the US has been attributed to face major obstacles due to various key policy issues that significantly constraint the common interests of both the nations. In this context, issues associated with security of intellectual property along with their adequate compliance have long been observed as a major area of concern for the US based corporations. Nevertheless, the issues relating to cyber espionage to the different administrative and military service of other nations especially the US has also been regarded as the major issues in China (Morrison, 2015; Lawrence, 2013). In the context of issues associated with the protection of intellectual property, China was claimed as the most hazardous nation for the foreign marketers. With due regard to the reports of the United States Trade Representative, China is consistently identified as among the most lagging nations regarding overstepping of intellectual property of the corporations, especially the foreign entities. Perhaps, the most extensive systems of subsidies in the nation have also been observed to obstruct overseas access to the Chinese markets. For instance, Beijing, one of the most influential markets in China often minimizes possible opportunities for the foreign entities to extend their business units in this area (Hsu & Murray, 2014; Morrison, 2011). On the other hand, the issue of cyber espionage can also be regarded as major and one of the most critical concerns for the foreign marketers while intending business operations in China. According to the allegation made by the House of Congress, China was allegedly identified to campaign various espionage activities alongside the governmental agencies and defense contractors of the US. In relation to the recent observation, issues associated with commercial cyber-espionage were allegedly conducted by Chinese governmental agencies, which have further weakened its international relationship especially concerning the trade and transaction with the US. Alleged extensive cyber-economic espionage against various leading corporations of the US by the Chinese government entities has further deteriorated the common interests of both the nations to gain benefit from their international trades (Lawrence, 2013). Factors and Prior Steps required for Successfully doing Business in China According to the observation of the China’s current international relationship, it becomes a major concern for the corporations while intending to make expansion of their business subsidiaries into the nation. From the perspective of current economic and regulatory policies, China provides extensive opportunities to the foreign corporations to increase their investment across its different states. On the other hand, increasing risks due to the weak or poor security related policies especially in the context of infringement in intellectual property and cyber-economic espionage can significantly constraint the interest of doing business in the Chinese markets (Morrison, 2015). In this regard, it becomes an essential process for the multinational corporations to critically assess the changing trends in the international relationship of China with other foreign nations before determining their investments in different commercial industries in China. The adequate knowledge about the political systems along with authoritative power of the state over the foreign entrepreneurs can enable the marketers to avert the risk of any types of discriminations (Lawrence, 2013). Additionally, making investment in accordance with the increasing number of dispute settlement policies, especially in terms of protecting intellectual property of the corporations would also minimize possible risks while doing business in China. Furthermore, advancing rights in response to the increasing number of corporate economic espionage cases would also augment the capability of the corporations to minimize possible risks while performing their business activities in the Chinese markets (Lawrence, 2013). Implications of Cultural Differences on Business in China In addition to the budding risks associated with security, a vast difference between the cultural aspects can also be regarded as a major constraint for the foreign marketers while planning to establish their business operations in Chinese markets. In order to identify the possible implication of the Chinese culture on business, a critical assessment of the key cultural dimensions through Hofstede’s model can be a major tool for the organizations while expanding business units to the Chinese markets. Hofstede’s Cultural Dimension Model The model consists of six major dimensions including Power Distance Index (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS), Uncertainty Avoidance Index (UAI), Long Term Orientation versus Short Term Normative Orientation (LTO), and Indulgence versus Restraint (IND) that can be evidently applied to evaluate the implication of Chinese culture on the foreign corporations (Hofstede, n.d.). The following figure demonstrates the current cultural dimensions of China. Source: (Hofstede, n.d.) According to the basement of cultural dimension in China, the national culture of the nation involves an extensive growth in PDI (80), which represents inequalities in terms of making decisions by individuals. The index also denotes the authoritative governance style wherein a single individual or group is endowed with the authority to make decisions for the other individuals in the organization. The lower rate in IDV (20) significantly represents a poor connectivity or be deficient in interpersonal communication of the individuals with other people outside family members or close friends or groups. The moderate or above the average level of MAS (66) also consigns male preference in terms of making decisions and distinct working roles (Hofstede, n.d). Correspondingly, lower level of UAV (30) generally represents lower amount of self-believe of the population with inadequate capability of taking risks in business decisions. However, the cultural obligations of China population generally focus on LTO (87) the tasks performed by the individuals within the workplace. Therefore, differences in individualism and long-term oriented dimensions in cultural aspects can be a major constraint for the foreign entrepreneurs to increase their professional skills in the organisation. In the context of IND (24), which signifies that a majority of the population in the Chinese culture is highly committed to avoid indulgence regarding their individual responsibilties. The dimension can be regarded as a useful aspect for the foreign entrepreneur to complete business activities within the stipulated time and/or cost (Hofstede, n.d.). China's Attitude on the Role of Women in Business Transactions and in the Workplace With due regard to the above cultural assessment, it has been critically observed that the Chinese communities are highly dominated by the masculinity. Correspondingly, it is quite apparent that males have the authoritative rights to control, manage and perform activities than the female individuals in the society or organization. However, according to the recent phenomenon, women have also been recognized to get equal opportunities in the workplace as compared to other individuals working within the organization. Currently, the nation incorporates strong policies that emphasize equal participation of women in both the public and private organizations. Moreover, the nation has also achieved phenomenal growth in terms of increasing opportunities along with diminishing discrimination of women’s participation in business organizations (Chen, 2013). Labor Issues In relation to the current business environment in China, the dominating trend of low wage along with limited regulatory policies relating to labor laws often reduce any type of unionization of individuals in both public and private institutions. The labors are liable for mandatorily arbitrate appropriate resolution over any disputes prior to taking any legal actions against the firm or organization (Guo, 2003). However, the recent pace of globalization has radically increased a major number of cases associated with labor laws in China. The amendments made during the recent decades also determine growing opportunities for the labors in terms of claiming their equal wage or compensation. In this regard, it can be critically asserted that the foreign organizations would get a major opportunity to obtain required number of labors within a desirable cost. Moreover, wider availability of resources especially in labor sector in the nation can also provide a major support to the foreign entities to accomplish their commercial objectives (Guo, 2003). Issues Relating to Currency Policy Despite the unabated growth of economic condition, China does not maintain any types of floating exchange rates of its commercial markets. From the past few decades, China pegged its national currency openly to the US dollar. In addition, the currency appreciation of the nation also involves independent rights towards changing its values in accordance with the changing trend of global economy. The process often helps the Chinese markets to maintain strong stability of demand of its own products than the other goods imported from the overseas nations. Subsequently, the independent role in currency policy may have a negative impact on the foreign markets and increase the risk of facing major cost in their production and supply facilities (Zheng, 2010; Hua, 2011). Conclusion The facet of international business can be considered as one of the major global aspects that significantly plays a central role for centuries so far. According to the present day context, the international business has gained wide recognition due to ample development in the multinational enterprises. According to an in-depth understanding of the China’s international relations, the nation provides a major opportunity to its foreign entities to gain continuous growth. However, the increasing number of risks associated with security policies can be a crucial decision for the foreign entrepreneur to invest in China. Despite the issue of risks associated with protection of intellectual property and cyber economic espionage, the business environment of China can be regarded as a one of the most sophisticated places for the foreign marketers. In this case, the cultural beliefs, perceptions and the increasing number of valuable resources can provide major supports to the foreign entities for successfully achieving their business objectives. Additionally, lower wage along with limited number of labor policies can also provide major advantages for the foreign marketers to obtain their long-term commercial goals. References Chen, L. (2013). The impact of Chinese national culture on Business culture and ICT use. WEI International Academic Conference Proceedings, 75-81. Guo, B. (2003). China’s labor standards: myths and realities. 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