UAE and China - Establishing Favorable Conditions for the Development of Business - Statistics Project Example

UAE AND CHINA Introduction With the numerous political and economic systems that are present in the modern society, most of them were taken from the different governance past and now most countries are trying to adjust their systems to reach economic advance and growth. In particular, capitalism and communism is transferring into the socialism and system of mixed economy for the purpose of the certain system could promote economic growth and achieve some new political and economic system for the well-being of the society. In order to understand how different political systems, in particular capitalism, impact businesses in the modern days, the following paper will examine the historical data of economic development of United Arab Emirates and China. Further it will also illustrate the role of citizens within the businesses of these countries and will discuss ethical approaches in doing business in UAE and China. To take a closer look at the capitalism impact on the concrete business, the paper will compare Construction industry in UAE and China to establish favorable conditions for the development of business. The United Arab Emirates Grounded in 1971, the country consists of seven emirates where 9.2 million people are living. The UAE is a constitutional monarchy with each emirate has an autonomy controlled by the government. Among other Arab countries, UAE has the largest GDP. This high level of economy is called by the main attention of the country on its natural resources, such as oil and gas. In addition, the GPP of the country constitutes 0.58% of the world economy and estimated in $360 billion based on the data of 2012 (as in the Figure 1). The drop in 2010 of GDP was the result of the global economic decline; nevertheless, UAE has successfully passed it and came back to its previous growing level. In 2012 the GDP per capita estimated $24,824.8. Figure 1. UAE Gross Domestic Product ( in $ billion) As illustrated in Figure 2, the liberal migration policies has called for more labor force to be involved into the country, and as a result, the GDP was in decline. Figure 2. The GDP per Capita in USD The GDP level of growth grew in 2013 to 5.20% comparing to the previous year, making an average 4.66% in the period from 2000 to 2013, despite the decline in the period of economic fall (see Figure 3). Figure 3. The annual growth rate of GDP in UAE Speaking about the service sector in UAE, its GPD comprises 40% of the entire UAE’s indicator. Here the most notable services are in the retail industry and wholesale. There are also 9% that belong to the business services, real estate, communication and 8% for warehousig, which is one of the main aspects in the GPD. The biggest part in UAE GDP belongs to oil and gas industry with 38% of the overall GDP of the country. Water and electricity as well as contruction have 13% and manufacturing has 8% of the UAE GDP. About 1% belongs to the industries of fishing, cattle and agriculture. The Republic of China Unlike UAE, the Republic of China has a very long historym, which dates back to the 221 B.C. when it was formed by the Qin Dynasty. Established in 1912, it was introduced in 1949 as the People’s Republic of China. Currently, the country has 34 divisions with provinces, autonomous and municipalities. 1.35 billion people living in China comprise the biggest level of population as there are nowehere else in the world. The form of government is a single socialist party. Since the country was proclaimed in 1949, its government was building and managed the economy of the country. However, only after 1978, when the Communist leader Deng Xiaoping established capitalist market principles, there wasobserved a great economis growht within the country. In the last thirty years the growth Chinese GDP grew in 10% as a result of such industries effect as mining and ore, producing of aluminium, iron and other metals, coal and armamanet, cement, chemicals and petroleum, consumer products and electronics, transportation and telecommunication equipment. As seen in the Figure 4, China has its GDP 9.182 trillion in 2012, which makes it the second biggest economy in the world. GDP comprises 13.27% of the economies of the world. Figure 4. GDP of China The GDP per Capita constituted $3,348.01 which is equal to 27% of the worlds GDP ( as seen in Figure 5). Figure 5. GDP per Capita of China The Chinese GDP was estimated as 7.40% in 2014, which show the annual growth rate in 9.14% since 1989. Figure 6. Changes in GDP in China Having the second largest economy in the world after USA, China was transformed under its reform in 1978, thus, its system was closed to the oriented market with more opportunities for the private sector. Indeed, the export sector was the main predisposition for economic growth. Conditions for doing business in UAE and China There is no need to compare the economy of UAE and China, where the last one will show its favorable position. However, according to the latest rankings, UAE places twenty-third position in the list of “Doing business 2013”, while China is on the ninety-sixth place only. Such conditions are the result of laws and general environment for conducting business operations in UAE, which are better than doing business in China. In addition to the PPP or purchasing power parity, there are more opportunities to hold business performance, since the United Nations World Happiness Report of 2013 place YAE to the fourteenth place of the happiest countries in the world, where again China is on the far ninety-third place. The other favorable condition for making business in UAE is its location, which connects the Western and Eastern countries. Moreover, the political system offers more possibilities to the citizens of small and large businesses. If to take a look at the rate of unemployment, UAE and China perform good indicators in comparison to the developed countries within and outside Europe (Figure 7). Figure 7. Unemployment rate of UAE and China The other data obtained on the basis of World Economic Forum’s Global Agenda Council held by Professor Porter from Harvard Business School. UAE here was established as the country with the lowest level of crimes among the other countries. The Social Progress Index has also named UAE as the country with the lowest rank of violent crime, lowest homicide rate and the highest level of people with the secondary education. In comparison to United Arab Emirates, the level of crime in China is high and different types of violent crimes are common to this country. Within the business environment, there are threatening of the business competitors, visitors are threatened by high restaurant and hotels charges, corruption is the common thing for government organizations. An important point should be mentioned about the judiciary system, which is easy changeable and laws and order cases cannot be managed well. There are a lot of cases of violations of human right in terms of human trafficking. China is a country with the growing level of drug abuse, which is a significant problem for the business and the country in general. The country is located in the unfavorable position regarding the drugs transshipment, which are called also Golden Triangle that connects Burma, Thailand, Laos and Vietnam. Construction industry in UAE and China Within the UAE, there is one common Federal Law no.18 of 1993 that manages all commercial activities. The UAE Commercial Transaction Law constitutes all general and mandatory laws that manage contractual relationships of business activities for UAE. In China, the Contract Law controls construction activities. Despite the differences in the political systems of both countries, legal systems are similar as they are the civil law family. China’s construction market is the largest in the world, as it spends $1.25 trillion in 2012, which represents 19% of the GDP of the country. During the last five years, the construction activities grew within the country despite the fact that most of them are concentrated on the East and South cost of China. These activities comprise 55% of the whole spending on the construction activities. In the future, there are predictions as to the growth of this industry to 9% annually. In comparison to China, the construction industry in UAE is growing and it have been even awarded for the Expo 2020 event. Analyzing RNCOS, there are many ongoing infrastructure projects within the country, which are supported by the government. It invests largely into the construction and green open spaces, the number of which in 2012 was estimated in $39.4 billion. It is predicted to grow in 9.5% in the period from 2012 to 2016. Another report forecasts the UAE construction industry to increase in its performance to the same level as it was before the recessionary period, according to EC Harris. The government in its turn is supporting the construction industry due to the fact that it promotes tourism and leisure industries, which leverages the economy of the country. It establishes government policies, which permit non-UAE leaseholds and freeholds to attract the FDI in construction. Foreigners are allowed to acquire properties, as they will contribute the growth of the construction sector within the UAE. Conclusion In order to be achievement-oriented, there is a good reason for the modern world to grow Construction industry. Considering the development of China and its strong economy, the Construction is a promising area. UAE with its 30th rank in the world has also all chances to involve itself into the construction activities. However, due to the issues within the political and social systems of China, doing business in UAE is much better in terms of involving the domestic and foreign investors. Despite all the unfavorable conditions, planning of business-friendly environment is common for UAE and China, where investments would be able to bring profit for those industries of the countries that are well developed. References China economy, (2013). Economy watch, Retrieved from http://www.economywatch.com/world_economy/china Helliwell, J., Layardk, R. and Sachs, J., (2013). World happiness report, Retrieved from http://unsdsn.org/wp-content/uploads/2014/02/WorldHappinessReport2013_online.pdf Increases in Emirati population, (2013). Country economy, Retrieved from http://countryeconomy.com/demography/population/united-arab-emirates Social indicators, (2015). The United Nations Statistics Division, Retrieved from http://unstats.un.org/unsd/demographic/products/socind/ UAE is 14th happiest country in the world, Gulf news government, Retrieved from http://gulfnews.com/news/uae/government/uae-is-14th-happiest-country-in-the-world-1.1228822 UAE is world’s lowest for violent crime, (2014). Gulf news government, Retrieved from http://gulfnews.com/news/uae/general/uae-is-world-s-lowest-for-violent-crime-1.1325098 UAE & Chinese Construction Law, (2015). Al Tamimi & Co., Retrieved from http://www.tamimi.com/en/magazine/law-update/section-7/july-2/uae-chinese-construction-law.html UAE construction industry rises to new heights, (2013). Gulf news government, Retrieved from http://gulfnews.com/business/sectors/construction/uae-construction-industry-rises-to-new-heights-1.1161652 Read More