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Business management: Oppurtunities, risks, and strategies for the UK-based companies to start business in China - Essay Example

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Business Management: Opportunities, risks, and strategies for the UK-based companies to start business in China Introduction One of the greatest stories of the economic success from the last three decades is of China that has seen a transition from a soviet-style planned economy to a much more market-oriented and vibrant economy…
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Business management: Oppurtunities, risks, and strategies for the UK-based companies to start business in China
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Download file to see previous pages Presently, the focus of a vast majority of the British companies that are either doing or intend to do business in China is a small number of cities that are large and familiar including Shanghai, Beijing, Shenzhen, and Guangzhou. Nevertheless, the conditions of business in most of these cities are quickly evolving. A lot of British companies have encountered increasingly saturated and mature markets in these cities of China. The opportunities for development are only niche whereas the pressure from the sophisticated Chinese companies and other foreign companies is being increasingly competitive. In these large cities, the factor input costs are the maximum. As a result of this, most of the British companies in these cities opt for fresh opportunities of business in the regional cities of China. China offers tremendous opportunities of establishment and growth of business to the British companies. The government of China is currently making intense effort to improve the social welfare, and the infrastructure of the country, and is also targeting resources for the development of the vast interior and rural regions of China. Presently, the industrial structures in China are rapidly moving inland and dozens of coastal areas and new cities are surfacing on the map of China and are developing into the urban clusters, thus providing immense opportunities for the British companies to arrive and establish their business there. One of the main concerns for the UK based company is where to start its business in China. While there might be a saturation of the fast food chain in the large and popular business cities of China as Shanghai and Beijing, there is plenty of room for growth in the newly emerging coastal areas and cities in China. Challenges of expansion of business in China for a UK-based company In some ways, expanding a business in China is more challenging than doing so in any other country. The protection of intellectual property and an astute comprehension of the cultural protocol are integral to the success of any company expanding in China. Meticulous research and preparation can help the company avoid most of the pitfalls in business. It is advisable for the company to also seek legal guidance before establishing its business in China. The biggest challenges of China are also some of the biggest advantages China has to offer. The market population of China is 1.5 billion which makes the country likely to become the world’s second largest market of consumers by the year 2015 (Startup Overseas, n.d.). Since most of the businesses in China are owned by the local families and the Chinese people place extreme emphasis on promoting their local businesses, it is challenging for an external company to come and gain the support of the local community without building relationships with them. Political risks for the foreign investors in China Management of political risk in China is very important. Since the last two decades and a half, the economic reforms of the Chinese Communist Party have paved the way for foreign investment, and have shown rapid growth. It has helped alleviate poverty in China and has provided the Chinese companies with a global platform. “But the country’s economy and the foreign companies that depend on its vitality are especially vulnerable to ...Download file to see next pagesRead More
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