Multinational Operations in China
Obtaining a big profit is a good sign of success of a company. But before you achieve this kind of accomplishment, one must know the important things that should be considered in doing a business. If a company wants to business in China, one must have a clear understanding of the locale or in particular China where you want to established it. . It is very important to understand and comprehend yourself with the culture of a country before investing capital in your business.
China is one of the largest nations in the world and in fact the most populous country in the world; hence there is a wide range of diversity in culture, beliefs and behavior. The company must first understand it before undertaking operations in China. By doing so, one can established a greater possibility of surviving and even succeeding in the venture taken.
The company must also know the local business practices before you do business in a particular area in China. China has most diverse cultural differences in the world and understanding its business culture is very vital. Since every country has different culture, what works with one country can not be appropriate for China. Becoming aware of how people think and their business practices can establish better and harmonious relationship with them. Organizational practices, activities and policies must be flexible and adaptable so that it can accustom easily with China’s practices.
Having a representative office in union with a strong local private partner and which has access to all important information is very strategic and help to attain success. Setting up a joint venture is a good move for a company but one must ensure that they have selected the correct partner or else both companies will end up in failure. In the management part, Chinese expertise must be integrated or consulted in the decision making process. This will guaranteed that all aspect of China is considered before making a decision.
There is a big need of establishing business relationships. Relationship or also known as Guanxi is an essential component in attaining success in China. Top level manager must know the importance of establishing and nurturing close relationship with their customer, supplier and their local counterparts. It is a great help in knowing the domestic market of China and also builds a strong bond that the company can use in need of assistance or in case of trouble.
Company must also build a strong relationship with the China’s government officials. Government is the main factor in the economic movements. They play a vital role in ensuring economic stability and administering foreign investments. Approval, application, and authorization of the business can encountered fewer interruptions or delays if one has already established good relations with the regime.
Company must know the financial system of China in doing business here. People’s Bank of China is the one responsible for the establishment and implementation of macroeconomic and fiscal policies. PBOC is also responsible for the regulation of currency circulation and domestic financial activities.
Seniority is an important in China. Hence, one must be polite in conversing with older people. Labor relations are also an important factor to secure business stability. The company must established good relations with their employees. They must look for their welfare. The company need human resources, without them company operations may be suspended and may eventually result to the closure of the company if not handled well.
It is also important to recognize the preferential policies offered in China so one can be able to take advantage of it. These policies stimulate foreign investments. Industrial policies monitor foreign investment projects. They are classified as encouraged, permitted, restricted and prohibited.
China has extremely promoted the subsequent measures to protect intellectual property rights. In fact China has decreed the Patent, Trademark and Copyright law in order to secure such rights. Works must be registered to the related authorities.
In line with this, the government of China proclaimed several security measures to monitor the import publication and reproduction of recorded tapes, video tapes and the like. State Press and Publications Administration, must first grant an approval on the import goods and necessary permit papers must ne obtained. It is subjected to further examination of products. Violation of these security measures may result to subtraction of illegal income and closure of business and payment of fines.
China has also required all enterprises to maintain books or accounts for all their business related activities. At the end of the year, they are required to pass an annual financial report. Thus, a company that wants a business in China should know this financial reporting and accounting policy.
Tax is the main source of fiscal income of China. It plays an important role in strengthening the macro-economic regulation which is responsible for economic and social development.
On the other hand, taxation policies are relatively important in every company. Tax contribute to the input cost of the company, thus it is needed to know the tax policy before doing production and market operations. Also, one can know which kind of business has lower or reduced tax and even exempted to pay such kind of charge.
Given those kinds of considerations, tips and reminders on doing business in China, the company would surely make profit on it. Based on the research employee welfare, labor relations are indeed important factors in establishing a business in China. Although the CEO does not believe on this and my only task as a researcher is to gather strategic information, I will still include those findings. As a prudent researcher, it is important to include such information because it may affect the company; operations, activities and profit. My task is to gather strategic information on business in China and these findings I assume is still part of my job.
If I do not include such information on the research, this may create trouble for the company. My point is, it is safe to include it on the research since I just give it as an extra detail. The task is now on my CEO; whether he still wants to adopt his beliefs or these new finding.
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Lee, Joseph. Analysis of the Failure and Success of Doing Business in China. Retrieved April 17, 2008 from http://www.china-window.com/china_business/doing_
PKF: Accountants and Business Advisers. Doing Business in China. Retrieved April 17, 2008 from http://www.pkf.com/jahia/webdav/site/pkf/users/emma
Williams, De’Edra. (1998-2008). China. Retrieved April 17, 2008 from http://www.cyborlink.com/besite/china.htm.