Global Financial Management: Doing Business in China
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Long-term investment projects require a thorough understanding of all attributes of doing business in that country, including import/export restrictions, labor relations, supplier financing, tax rules, depreciation schedules, currency properties and restrictions, and sources of short-term and long-term debt, to name a few. China is currently the focus of investment and market penetration strategies of multinational firms worldwide including My Company (BELL TECH, USA). My supervisor has therefore asked me to gather information on some of these factors that our company or any MNE would want to consider when doing business in China. (This is my primary focus in this Research.)
My research has discovered that our company would make a significant profit from doing business in China. I also found that policies on employee welfare, labor relations, etc. are the antithesis of what our CEO firmly believes. Do I need to include this information in my report, or just provide the strategic information I was asked to gather? (Please let me know if I need to provide him with this ethics question/information in just 2 paragraphs).
My objective is to gather information on doing business in China by providing info on the following:
Short Intro: Doing Business in China
Import/Export Restrictions
Labor Relations
Supplier Financing
Tax Rules
Depreciation Schedules
Currency Properties and Restrictions
Sources of Short-Term and Long-Term Debt
Please use the web sites listed below and other internet sources to support the project.
Extract from Guide to Doing Business in China: http://info.hktdc.com/chinaguide/7-2.htm
China Business Etiquette: http://www.cyborlink.com/besite/china.htm.
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Solution Summary
The solution discusses global financial management including doing business in China.
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Doing Business in China
China has abundance of cheap labor, it has largest manufacturing facility, it is world's fastest growing economy, with practically no debt, and a double digit savings rate. All these fundamentals are strong in sustaining rapidly increasing consumption, and increasing investment in building China's economy much stronger. China presents an excellent opportunity for U.S. companies to reduce their cost of operation by leveraging China's cheap labor and high-tech manufacturing facilities. However, that cost comes at a price. In order to be successful in China, trading company must understand ("Helpful Hints for"):
? Everything in China happens slowly.
? Everything in China is difficult.
? Everything in China is possible.
? Everything in China is negotiable.
? Everything in China is flexible.
For an American company, patience is what needs to be embraced to build successful business story in China. Chinese work at their own pace. This pace can be later changed to meet trading partner's specific needs only after a relationship has been built.
Import/Export Restrictions
Earlier, China restricted the trading rights or the right to import and export. Trade regulations were not managed properly as Chinese manufacturing companies took drastic measures to make profit. The measures were taken at the expense of consumer safety. The issue became worse when in 2007 U.S. imposed export restrictions on China. As a result Chinese government took steps to assure the quality of goods exported from China and has accepted that upto 20% of Chinese exports were substandard and ...
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