Business in China
November 29th, 2012 International Business Doing Business in China The role of government when doing business in China is very important.It is especially important if you are from a different country, such as the United States, because the approaches to dealing with the government are much different.There are many factors in which should be considered when dealing with business related issues with the government.
These include whether or not your business strategies go along with the plan the government has for Chinas development, understanding how the Chinese government interfaces with your business, and also how to deal with pressures from the government when they want you to do things you and your business don’t want to do.
(Palne, 2010). A major mistake foreigners often make when dealing with the Chinese government for business is that they think they can gain government support with money and connections to people in higher positions. Working with government isn’t a matter of periodically wining and dining the right officials or reacting when policies change; it must be a central part of the strategic planning process. ” (Palne, 2010, pg. 104) The role of culture when doing business in China is important if you want to be successful. When going to a foreign country to do business, it is essential that you learn the norms of the culture because they can be very different compared to where you are from. “A US company must learn the local business etiquette and norms. The correct protocol can actually be learned from the Chinese themselves.
As previously stated, humility is a powerful tool in China. Accordingly, a US company must be open to learning from the local Chinese. ” (Chapman, J. & Xu, W, 2008, pg. 9) The business dynamics are not going to be the same so you have to become familiar with environment to ensure that you are doing business properly within the Chinese culture. In China, personal relationships are very important when dealing with business. “With many layers of bureaucracy and personal interests to deal with, China is not a place where individuals function alone.
As a result, the whole pattern of business relationships in China is different from the West. Although the Chinese are generally polite, suspicion and distrust characterize all meetings with strangers. Moreover, China has a history of hostile relationships with foreigners. ” (Chapman, J. & Xu, W, 2008, pg. 9) Being from a different country when doing business is already an obstacle, and having to gain the trust and form a good relationship with local business owners makes it more difficult. China is a fast growing economy and is a great place for a business looking for an opportunity to grow.
There are many different reasons in why a company would want to move and do business in China. A major reason why many companies from the United States move to China to do business is because of the low-cost work force. A low cost workforce means that the wages for the workers in China are significantly lower than compared to those in the United States, translating into a substantial amount of financial savings for a business. “China also has an economy that has been growing 9 to 10 percent for years, and a vast market, including a rising middle class.
U. S. and other foreign importers and exporters can also benefit from China’s strong port infrastructure and the abundance of container services linking China with the rest of the world. ” (Armbruster, 2007, pg. 7) Starting a business in China is also a great opportunity to expand your business internationally. If you want to connect with a different area, China is definitely a strong place to go. When doing business in China, there are many risks associated with it. Although there are ample opportunities to succeed, it is also very challenging to do so.
The things that make doing business in China so challenging is that you have to not only worry about your company doing well, but you also have to worry about government and cultural issues. If the government is not in support of your business, it can make it very difficult to do well in China because government support is so important. There are also corrupt government officials that you potentially have to deal with. “There are a hundred corrupt officials who go unpunished for each one who is punished. (Armbruster, 2007, pg. 9) If that statement is even somewhat true, there has to be a large amount of corruption between officials which can go positively if you are doing business the wrong way but can also have negative effects. Having a China strategy is very important. A China strategy is a plan on how you are going to move your business into China and be successful. A China strategy is important because you have to know how to enter a market when going into a new environment, especially one as different as China’s. China is no longer a third world country or an emerging economy. As the second largest and fastest growing economy in the world, soon to overtake the United States, it is a genuine force to be reckoned with. Within the past few years there has been a remarkable development inside China and the establishment of a significant middle class. ” (Watson, 2011, pg. 51) You have to be able to know what you are going to do with your business once you are in China. You also have to have a backup plan in case you need to remove your company for any reason.
What I found most interesting about doing business in China is the many different things you have to deal with compared to doing business in the United States. In China, the government is very involved and if you are not getting support from them, then it makes it very hard to do well. “Many CEOs chafe at stalled negotiations and bureaucratic interference when they should be figuring out how to work with Chinese authorities. That’s critical; in most industries, it’s impossible to do well in China without the government’s backing. ” (Palne, 2010, pg. 05). Another thing I found interesting is the opportunity to start a business in China. I knew that they were a fast growing market but I did not know that they were developing so largely, only second behind the United States. Another thing I found interesting is why so much business is still moving to China even though it is heavily government controlled and there is a high level of corruption. You would think that there would be another country that you could find but at the rate China is growing, it is hard not to want to do business there.