You have been asked by a CEO of a multinational enterprise to evaluate whether or not his company should begin a business enterprise in China. Looking for some tips on what to write for a 2 page memo to the CEO explaining why or why he should not start a business in this country.
China continues to be an attractive destination for international companies. However companies should be geared to face the challenging legal, cultural and political issues in China, which would be considerably different from the framework the organizations are used to in their home countries.
China's foreign investment system is governed and enforced by central and local government authorities, rules and regulations (King &Wood Mallesons, 2013).
Foreign exchange controls are highly regulated and need to be complied with by the entrants (King &Wood Mallesons, 2013).
China has special taxation rules that govern foreign investors (King &Wood Mallesons , 2013).
Employment regulations in China include provisions for social insurance contributions, role of trade unions, workplace injury compensation and non competition clauses (King &Wood Mallesons, 2013).
IP protection should form part of a foreign investment. China has a number of dispute settlement forums for investors. China has anti bribery legislations which consider bribing public or private enterprise officials to be criminal (King &Wood Mallesons, 2013).
Doing business in China is treacherous (Hubbard, 2013).International firms can be slapped with charges that the company may be clueless about.
A survey of US businesses in China (USCBC, 2013) indicates that the top ten challenges of doing business in China are :
1. Cost increases
2. Competition with Chinese companies in china
3. Administrative licencing
4. Human resources
5. IPR reinforcement ( trademark, patent, copyright, trade secrets)
6. Uneven enforcement or implementation of Chinese laws and ...
The paper looks at the issues and challenges that US businessmen face while doing business with China. The paper enumerates the challenges and provides anecdotal information about how companies have addressed these issues.