Impact of Economic Growth in China Business Processes - Example

Impact of Economic Growth in China Business Processes Name Institution Course Tutor Date Introduction A particular trend has been on the rise in the economic sphere in most Asian countries. Economic growth has been partly attributed to the trade freedoms and regulations among Asian countries with some of the biggest beneficiaries being countries like China, India, Japan just but to mention a few. Asia’s post-war miracle economies emerged, by following a recipe with just three ingredients: land reform; export-led, state-backed manufacturing; and financial repression. The Asian economy largely has depended on manufacturing, commodity production and trade for economic growth. The current economic development in Asia especially in the latter stages has been accompanied by a drastic decrease in poverty due to a sharp rise in demand, hence incomes for the unskilled labour. The manner in which Asia has taken initiative and continues to climb up the growth dimension has been by capitalizing on its available asset, unskilled labour. Alleviation of poverty in most Asian countries has been attributed to the use of the abundant unskilled labour. Most Asian countries seem to be actively participating in the flying goose formation of a union built on labour intensive growth initiatives, hence resulting to a significant drop in the poverty index in the Asian scene (Kojima, 2000, p. 386). The flying goose model used by the Asian community to accelerate its economic growth involves the passage down of older technologies from one economy to other economies, whose own income has risen as it moves to newer technologies. For example, poorer countries than China like Vietnam, Cambodia among others have picked up the textile business in recent years as costs go up in China. Asia’s interaction with the rest of the world has catapulted hence its economy to one of the fastest growing economies in the 21st century with China being one of the fastest growing economies in world. China borders Mongolia and Siberia to the north, the Korean peninsula and Japanese islands to the east; Central and Southern Asia to the west; and Southeast Asia to the south. Known for its ancient civilization rich in art, religion, and science, China endured a chain of difficult socioeconomic actions such as the Great Leap Forward in the late 1950s and the Cultural Revolution of the 1960s that left the social economic situation in great disorder. However, reform-era actions in the late 1970's put the Chinese economy on a path of increasing parity with other major world powers (Krugman, 119, p. 69). Radical reforms on the Chinese economy have shifted the then centrally based economy to a socialist based economic system. These reforms include price stability, market liberalization, fiscal decentralization, creating a diversified banking system, stock markets development, increased autonomy for state enterprises, increased private sectors, and an open door policy for the trade and investment. This in return has affected the trading and businesses processes in the country. As China steers into the domain of a global economic power house, the Chinese culture has shaped the country’s attitude towards aspects that support business processes like information technology, enterprise resource planning and reengineering. Advancement of information technology in China and its adoption has been partially due to economic growth in the region. Globalization of business activities and cross border investment has had a great impact on the role of information technology in business oriented spheres. An economic shift brought about by information technology is taking place in China. In a macroeconomic sense, information technology in China is affecting the patterns of production, investment and employment. The Chinese population is quickly moving from the industrial age to the information age. Due to this, there is a rising demand in the service arena that needs expertise. For example the existing service industries like banking and distribution require knowledgeable workers to enhance efficiency, allowing for business expansion and growth. In a microeconomic view, information technology is changing business activities and a knowledge based workforce is steadily on the rise. Uniform change in business activities in China like product development, sales, promotion, and procurement is playing a vital role. Rapid development of diverse goods and technology is on an all-time high in order to satisfy customers. A further impact of this is the over haul of production systems as the Asian economy booms. Enterprises in China are changing production systems from mass production under economy of scale into production on demand by enterprise resource planning. This is allowing such enterprises to increase their market share and effectively compete with large companies and businesses. Reengineering business process is still facing sum hurdles as economic change and Chinese social culture clash. Economic growth In Asia has come with its own wave of change, challenging other countries in the area, China include to conform to economic growth oriented mannerisms. Cultural aspects like, respect for hierarchical authority, where the management and those in charge tend to be seen like father figures and their judgement not questioned has affected the reengineering of business processes in the country. Historical approach by the Chinese has been to automate existing business processes instead of reengineering them. Mainstream economic growth in the Asian community has however brought a wave of change, both negatively and positively on the business processes in China. Implementation of enterprise resource planning for example has been a key struggle to both small sized and medium companies. Caught up in a cultural vortex, their pride has led them to primarily rely on Chinese vendors who have dominated the local market. In a bid though to better their infrastructure, and spread out their business operations, small and medium sized businesses are facing challenges earlier encountered by larger enterprises, and In spite of the need, the time consuming implementation process has been a great thorn that is slowing down the revamp process in these businesses. Larger firms and business companies however are embracing reforms that would create room to allow them to realize long term strategic value of putting into effect business processes like enterprise resource planning. Since these larger companies in China have a need to go global, due to the continued economic growth in Asia, data systems have been integrated to allow for easy accessibility to information by the management during decision making. This realization has been attributed to indirect forces as a result of the economic boom in the region and carries with it a long survival value in the business sector in China and has been seen to shape and reinvent the historical notion held by a large part of the Chinese local business community. Recruitment as a pillar of support in business processes has also been highly affected in the Chinese business realm by the rapid economic growth in the Asian economy. More and more corporations and businesses have embarked on job creation tendencies and employment, as salaries continually become more competitive where in fast paced cities are approaching levels that can only be matched by other more developed countries. The phenomenal economic growth of China has led to a rapid rise in salaries for managerial and higher positions. This is in contrast to the very stable and generally stagnant salaries found in developed countries. Due to this, hiring and recruitment have been put on the spot light with most Chinese businesses looking for talented, innovative, experienced and competitive individuals as more businesses come up. Apart from recruitment as a support business process, operational business processes like manufacturing, purchase, marketing strategies and sales have also drastically been affected. For the last decade, a steep economic growth in Asia has caused a ripple effect in China’s manufacturing industries, increasing the level of output on both goods and services. Development of more industries, to meet the regional, national and international need for better goods and services can all be attributed to the economy growth in Asia hence indirectly impacting on the Chinese business scene. Greater success and better pay is helping drive an increased desire and ability to consume by this middle classes, making them much more an exciting market of new consumers and much less a source for low cost labour. With the notion planted by manufacturing multinational companies in Asia and the chance to serve these new markets, competitors from China are coming up daily. This will highly restructure supply chains in manufacturing over the several coming years in China. ‘This reshaping will also be influenced by an intricate macroeconomic and geopolitical issues including exposure to currency volatility, sovereign debt pressures and emerging protectionist policies of Asia to gain access of emerging and prosperous China markets. All these factors are driving more localized manufacturing supply chains in China’ (Wilson, 2001, p.125). Economic growth in Asia demands better, high quality products for trading. This has forced the restructuring and reengineering of manufacturing plants and a complete overhaul of manufacturing systems, to ensure standardized product integrity. The level of quality of goods manufactured from China has hence increased due to exportation of these goods to the larger Asian community and surrounding countries. Economic growth in the region has however resulted in high cases of counterfeit goods affecting sales and promoting illegal trading as the economy booms. Establishment of substandard industrial plants to manufacture these counterfeit goods has been on the rise as more and more individuals in China seek to benefit from already established product brands and the ever rising economic growth in the area. The Asian economic growth has hence had a direct impact on China’s operational business processes specifically on marketing and sales. China’s marketing strategies, sales and purchasing power from both individual and country’s point of view are on a steep path upwards as the country’s economy sky rockets. The evolution of marketing strategies in the Chinese business scene has been rapid for the past decade. This has been blamed on the financial wellbeing of the Asian community for having indirect impact on the China’s economy. Improvement of marketing strategies and sales due to a flourishing Chinese economy has been an aspect adopted by most businesses and companies changing the earlier dynamics that surrounded operational business processes like this. The downside to this though has been the increasing financial gap between the rich majority and the struggling minority. As basic operational business processes like manufacturing, purchase, marketing and sales get restructured, the cost of sustaining the economy tends to fall heavily and squarely on the Chinese working force. Heavy taxation as a result immensely affects the poor which in turn directly affect sales and purchase. Management business processes and corporate governance in China have also been influenced by the growing economic bubble in the region. China’s business management style tends to have the ideal boss as a "benevolent father". He is like a parent (a Chinese parent, by the way) who supervises his children on everything that need to be done. He believes in discipline and attention to details and manages his people at a micro level. He also spends lots of time caring for the personal welfare of his employees and regards it as part of his job. Though the root of China’s business management style is still dominant, and highly inclined towards culture, a slow shift is taking place in the country’s business management patterns to allow companies and businesses at large to fully benefit from the growth of the Asian’s economy. The father figure management phenomena is slowly been replaced by a market oriented governance which instead sets the vision and strategy for the business but empowers subordinates to execute. This encourages a two-way communication with the employees and allows bottom-up input in decision-making. Economic growth in Asia has truly had great impact on the regions’ economies and more so on China’s economy and its business processes. Conclusion In conclusion, China’s economic growth has had a great deal to do with the policies and strategies adopted by the Asian economic giants in the area. This has led to the growth of the Asian economy, hence challenging and indirectly exerting pressure on other economies in the region to follow suit. The rate of growth though has varied from one Asian economy to another over a period of time; a consistent trend is evident of economic development in the area. Miracle or not, Asia’s economic growth rate is on an all-time high and in the next decade, the probability of Asia economy decoupling from the reliance of the rest of the world’s economy is a possible reality. References: Kojima, K. (2000). Trade & development in the Pacific basin: towards the year 2000.. Vancouver, B.C.: Institute of Asian Research, Asian Centre, University of British Columbia. Krugman, P (1994) The Myth of Asia’s miracle, Foreign Affairs, 73/6, 62 Wilson, P. (2001). Inspired innovations a guide to highly efficient new product development. Salt Lake City, Utah: American Book Business Press. Read More