In this paper, I will focus on the cultural issues, which American investors wishing to venture into the Chinese market need to learn. It has been noted that different countries have different cultural backgrounds and organizations need to understand the culture, economy, and politics of a foreign country before venturing into that market. This means that time and resources must be invested in research of these cultural backgrounds. In addition, understanding how cultural dimensions in China compare to that of the US is very important because it helps an investor in taking advantage of them in making the right decisions. Since the Chinese are very proud of their culture, it has been noted that foreign investors should take advantage of joint ventures in order to benefit from the relationships established by local firms. In addition, the quality of Chinese products is under scrutiny across the world, which means that foreign investors should ensure that products are up to standard.
China is rapidly becoming a superpower economically and as a result, it has been approaching the economic abilities of the United States. Globalization is about the flow of international knowledge and ideas, culture sharing, global environment, and civil society. It has to be noted that the reason why companies decide to invest in other countries are diverse. Global expansion brings about extensive benefits and challenges for organizations wishing to take this path. Extensive research, learning, and patience are required before one invests in a foreign country. It is important to study the customs, culture, language, economic implications, and legal systems of the country one is wishing to invest (Kline, 2010).
Countries have noted that China is a very impressive country for foreign investment because of the economic growth happening in the country. It is of paramount importance to note that each country has a unique culture, which implies that any foreign investor ought to take time to understand the culture of the destination country. Culture could be defined as a set of the shared values, practices, attitudes, and goals that give an institution or organization its identity. Investing in a country before one understands the culture of that country leads to failure (Alon, 2003).
Major dimensions and elements of culture in China
1 Major cultural dimensions in China
The People’s Republic of China, which is commonly referred to as China, is the most populous country with a population of more than one billion. The geographical area of China is more than 9 million square kilometers and as a result, it is the fourth largest country in the world. There are several ethnic groups in China, the Han Chinese is the largest group, and it is found in almost all parts of the country. Other minority groups include Tibetan, Zhuang, Korean, and Mongol. The Chinese society is high context and non-verbal. The Chinese people acquire the knowledge of what they are supposed to do and say even if they are not told through conversation. Voice and facial expressions play a critical role in determining the feelings in a person. They do not have facial expressions when in a conversation. Direct eye contact is avoided because it is viewed as a symbol of disrespect (Clair & Norris, 2011). The Chinese alphabet is very different from the others because characters represent whole ideas, concepts, or words.
The dialect does not determine the symbols to be used and they are uniform throughout the different dialects. Chinese people speak the Mandarin and Cantonese. Cantonese dialect happens to be common and it is mainly spoken in the south while Mandarin is common in the northern part of the country. It is worth noting that a dialect is the way words are pronounced but not how they are written. Moreover, it is difficult for two people communicating in different dialects to understand one another. In addition, different voice tones result in different meanings of the same words, which mean that the wrong tone results in a different meaning for a word (Kelley, 1993). Greetings are a formal affair in China and elders are given preference by being addressed first. In western countries, people are addressed by their last name and titles. On the other hand, names are reversed in China whereby a person with the name of Tom Hanks would be known as Mr. Tom. Chinese keep their heads down when greeting another person and use a handshake after introduction to foreigners. In most cases, entertainment is conducted in public places.
A great honor is given to those who attend home invitations. Tardiness is not accepted and people are expected to remove their shoes when entering houses. Failure to remove shoes is seen as a sign of disrespect and dishonor to the host (Alon, 2003). During dining, the host is always the first to start eating. The host proposes the toasts. Guests are expected to eat a lot of food to show their host that the food is delicious. Smoking and consumption of large quantities of alcohol is common during feasting. The host is the one expected to take the last item from a serving dish whereas slurping of dishes, burping or belching are common among the Chinese after taking drinks or food. The traditional eating utensils are the chopsticks and they are set on a rest or table when not in use.
Playing with chopsticks is disrespecting the host (Kelley, 1993). The communist party, which rules China, is officially atheist. This means that they do not believe in the existence of God. Government officials are prohibited from holding any spiritual beliefs and if any member is found to be religious, she or he is removed from office. Despite the fact that religious freedom is guaranteed in the Chinese constitution, many are harassed and persecuted for their religious beliefs. The Chinese constitution only acknowledges five religions, which are Buddhism, Islam, Taoism, Protestantism, and Catholicism. The Chinese law does not cover any person who practices any other religion (Hu & Allen, 2005). The main religion in the country is Buddhism. Buddhist monks introduced it into the country in first century A. D. Buddhism religion is based on Buddha Siddhartha Gautama’s teachings. Rituals, values, morals, and traditions form the philosophical system of the religion.
The fact that Buddhism is not theistic means that many people do not consider it a religion. On the other hand, Taoism is very important in the culture of the Chinese people. Taoism has shaped the characters and minds of millions living in China, Hong Kong, Mongolia, Southeast and East Asia, Taiwan, and Korea. The two main philosophical systems and religions are Taoism and Confucianism. Islam and Christianity account for less than six percent in the country whereas a very small proportion of the population practices Protestantism and Catholicism. Muslims study their religion through the Quran as Christians use the Bible (Hu & Allen, 2005).
The Chinese people have several holidays, which are Chinese festivals. The most common are Journalists’ Day, Teachers’ Day, Army Day, Chinese Communist Party Anniversary, Children’s Day, International Nurse Day, Youth Day, Arbor Day, Women’s Day, Dragon Boat Festival, Qingming Festival, National Day, Mid-Autumn Day, May Day, Spring Festival, and New Year’s Day. The National Day and the Spring Festival, which are public holidays, lead the Chinese to receive three off days. Marriages have immense cultural meaning to the people of China. Marriage unions are not between a man and woman only, but they unite families. A proposal meeting is set up and when the bride’s family accepts the groom’s family, the groom and bride set a wedding date. Several gifts are sent to the bride’s family. It is worth noting that arranged marriages and incest are prohibited (Kline, 2010).
2 The cultural elements in China
Given the high population in China, the government has imposed a one-child policy. In urban areas the law is strictly enforced but a family has the right to petition the government to have a second child for several reasons. The obligation/s of a person towards the others is based on the teachings of Confucius, who was a Chinese philosopher. This is referred to as Confucianism and has been used in defining cultural values amongst East Asian countries for thousands of years. Confucianism is the leading philosophical system used in China.
The Chinese education system is based on Confucianism. The government puts emphasis on education and those who attain excellent marks are appointed to government positions. The appointments raise the living standards of the person appointed as well as that of the family. Children from well to do families have higher opportunities of accessing quality education when compared to those from poor families. Since the people value education, some children are locked up in rooms for the purposes of learning in some instances (Anantatmula & Thomas, 2010). The elements and dimensions integrated by locals conducting business in China
2.1.1 The integration of locals conducting business in China
Corruption has been on the rise in recent years in China and it is considered one of the top social and political problems. Studies have revealed that corruption is on the rise in the country and as a result, people are aware that the monetary cost brought about by corruption is on rise. Although the Chinese government has mechanisms of eradicating corruption, they are not sufficiently enforced. Evidence suggests that less than three percent of corrupt officials end up in jail (Clair & Norris, 2011). Chinese organizations are unwilling to engage in deals with companies, which they do not know. All business materials concerning corporate history, services and products as well as business information are sent before an organization starts doing business with another one.
All the information shared is official and the Chinese prefer face-to-face dealings. Rank plays a key role in business whereas gender is irrelevant in business. During social meetings, the Chinese do not engage in any business matters. Chinese prefer to offer gifts, which should be wrapped and received by both hands upon delivery. When one wants to engage in a meeting, a date should be set in advance. Patience is very important when in meetings and each speaker is given enough time to air his or her views. Rank is very important in the Chinese culture and this implies that senior members sit together. Senior members of an organization are the ones who engage in negotiations. Men are expected to wear dark colored business suits whereas women should be in a business suit or a dress that has a high neckline with flat shoes (Clair & Norris, 2011). How cultural elements in China compare to the US business and culture
3.1.1 Customs and Language
The United States is larger than China in terms of geographical area. Its population is the third largest. Just like China, the United States has several ethnic groups. The three main ethnic groups in the US are the Caucasians, African Americans, and the Hispanics. Other minority groups in the country are Asian Americans, Native Americans among others. Americans are a verbal society as opposed to the Chinese who are non-verbal. In the US, looks and facial expressions are important in conversations but they are accompanied with verbal expressions. In the American society, altercations occur whereas the Chinese avoid all embarrassing situations. The Americans use the English language for communication, which originated from England. English has an alphabet that is used to construct different words. After English, the second most common language is Spanish. Accents depend on where a person originates from and all the people comprehend the different accents as opposed to China. In the American culture, a handshake is the most common form of greeting.
In addition, kisses, hugs and kissing on the cheek are other forms of greeting but not very common. Men are expected to remove their hats when dining or indoors. Mrs., Mr., and Miss followed by the last name of a person are used when addressing people for the first time. Although home entertainment is common, each person is expected to inform a host before visiting (Longenecker, 2010). A person should excuse himself or herself before leaving a dinner table and eating should start after the meal starts. A guest is not expected to eat everything offered as it happens in China. Belching, slurping and belching are signs of rudeness in US. The American constitution guarantees all the people religious freedom. Moreover, majority of the people are Christians but a few practice Islam and Buddhism, which are also practiced in China.
Although atheism is practiced in US, promotions are not made as it happens in China (Anantatmula & Thomas, 2010). Some of the officially recognized holidays in the US are Labor Day, Independence Day, Memorial Day, President’s Day, Martin Luther King Day, Thanksgiving, Christmas, and New Year’s Day. Most American workers are given off from work on these days. There some other unofficial holidays, which the American people celebrate. Ethics and values are based on ones religious beliefs. The majority of marriage laws are the same in US and China. Polygamy and domestic violence are offenses in both states .There are no birth control laws in the US, as is the case in China (Kline, 2010).
Corruption in the United States has been brought into the forefront by the scandals involving Enron, Martha Stewart, and other inside trading deals. The Securities and Exchange Commission (SEC) is charged with the responsibility of ensuring that businesses and investors are not subjected to illegal and unfair practices. Most organizations in the US have a code of ethics that must be followed by all employees in order to curb corruption. The code of ethics aid in protecting the businesses and ensure that employees behave ethically (Anantatmula & Thomas, 2010).
3.1.2 Government elections
Although education is important in the lives of Americans, government appointments are not based on what one scores in school. Government appointments are given through free elections, which are conducted by the American citizens. Prior to allowing a person to run for these positions, she or he has to meet certain conditions, which are age for Governor and President and Citizenship when one is running for presidency. Other positions are through appointment by the President (Kline, 2010). Implications of US businesses wishing to invest in China
4.1.1 The importance of learning a foreign culture
It is important to familiarize with the culture of the country a person is wishing to invest in. Corporate relationships could be easily built after learning the culture of the Chinese people because interactions would be easier. The culture of the Chinese people is very different from that of the Americans. The Chinese are proud of their culture. This implies that when a business fails to respect the Chinese people and their culture, it cannot be successful in the country. There are several individual challenges that a person faces once she or he opts to invest in a foreign culture. It is important to understand that one must invest resources, time, and money when she or he chooses to take the challenge. Global expansion is rife with very many challenges and risks, and this makes it difficult to understand the competition.
In addition, a business should try to understand the competitive advantage that it has over the other organizations in the same market (Longenecker, 2010). To reduce the risks involved in investing in China, one might choose to enter into a joint venture with an existing Chinese organization. This would give the American organization an advantage because it would be in a position to take advantage of the relationships established by the Chinese organization. The economy of China is growing rapidly and it threatens to overtake that of the United States.
This means that investing in China would help the country’s economy to grow and thus overtake the US. Corporations intending to globalize are attracted by the availability of cheap labor in China. Such companies cut the overhead costs and as a result, increase profits. Although this seems to pose an advantage to organizations on business point of view, in the end it would hurt the US economy further because it is under recession (Longenecker, 2010).
4.1.2 Why local organizations invest in global markets
Globalization has led to many organizations investing in foreign countries because the world has become a global village. The main reason why US corporations are investing in foreign lands could be attributed to the fact that the US economy is under recession, which means that organizations have suffered huge losses over the recent years. US consumers do not have as much money as they used to have before and this has slowed down consumption. In addition, very many people have lost their jobs because of collapsing organizations, which has drove down the spending ability among American citizens (Alon, 2003).
The American labor market is very expensive and this has been reducing profits for corporations. On the other hand, the Chinese labor market is cheap and this means that an organization that operates from China accumulates higher profits than the one operating from the US. China has an estimated one billion consumers and this provides an ideal market for organizations. Although the challenges and risks associated with globalizing are very many and real, it is important to note that when one conducts a comprehensive research chances of success are very high. This implies that before investing, one ought to take time and conduct an extensive research in order to ensure that she or he makes the right choices (Kelley, 2003).
4.1.3 The necessary conditions for expansion into international market
Any organization that wishes to invest in a foreign country must take time to learn all the aspects regarding that country. After gathering information about the foreign country, the investor must ensure that she or he comes up with an export plan. Investors should take time to learn the customs, culture, and the economy of the country they wish to make investments. The advance in technology has made it possible to gather information online and this should be the starting point. Visiting the target market is very important because it gives the investor an opportunity of understanding the potential buyers, competition, distribution channels, and local rules. Attending events and trade shows that are related to the field one would like to invest in is very important. At the show, it is important to take notes on services and products, competitors, labeling and packaging of products, which are similar to what the investor would be offering (Jayaraman, 2009).
Prior to investing in a foreign country, one should have a clear understanding of the politics of that country. The Communist party in China controls cultural and economic institutions and has absolute power over the country’s legislation. Rules in China are not absolute and transparent as those of Western countries. Social networks are very important and they help an organization in avoiding bureaucracy and red tape. In addition, it takes time to build a reliable social network and this is a challenge for organizations investing in China. China has several legal challenges because the law is not clearly defined. Although China has been incorporated in World Trade Organization (WTO), patent rights are not clear and competitors and employees steal patented technology.
This has made China a leader in the production of counterfeit goods, which are openly sold in markets across the country. Since Chinese value their culture more than anything else, a western investor entering the market must have an intermediary. This implies that he or she cannot do business in China if she or he is not willing to collaborate with other Chinese investors. It is important to have a clear understanding of the Chinese people because they do not directly refuse an offer.
In most cases, the quality of products originating from China has been questioned because they have had several low quality products over the recent years. This implies that any organization wishing to invest in China should understand that it has to fight these challenges if it has to have a competitive edge. In the western world, quality is very important and production should be done according to the specifications given in the contract. This implies that western organizations have to take time when checking the quality of products originating from China (Jayaraman, 2009).
Questions before investing
5.1.1 Is the timing right
One of the first questions that an investor should ask himself or herself when looking to start an investment either locally or in foreign markets is whether the timing is right. The aim of any investment is to harness as much profit both on short and long term basis. To guarantee this, an entrepreneur should do a forensic research on his or her target market. While investment is all about taking risks and trusting that all will go well, it is possible to foretell the chances of business survival if one has the right timing in his or her target market. This calls for an evaluation of certain factors like the economic policies of the host nation, the international trade policies and the market condition. The right timing for an investment creates more opportunities that guarantee success. An investor needs to consider the demand of his or her goods and services as well as ability to supply them at the given time of investment start up (Murray, Ju & Gao, 2012).
Investors need to be able to predict the market movement in the future so that they can foretell the viability of the market before they venture into it. This may be possible through looking into the economic analysis of the nation and the international market. Some financial analysts claim that the market prices are always randomly fluctuating; thus, there is never an optimum time for venturing into a market.
This hypothesis has been proved null by critics who believe that an investor can determine the success rate of the investment if he or she chooses the right time to get into the market. Depending on the type of business that an investor looks to start, there are always periods of low markets and high market trends. An investor should avoid venturing into a market during the low sales season. In the event that an investor moves into a market during the lowest sales season, the cost of doing business may add to the liabilities. This leads to an eventual diminishing profits trend that would kill the business in the long run (Murray, Ju & Gao, 2012).
5.1.2 The scale of investment
Investors should look at their expected value before they decide on the scale of investment. The main aim of this should be to optimize the periodic capacity for the investors in order to minimize the failure insecurity (Dupuis & Prime, 1996). The investors should consider the time of investment as they calculate the scale of investment so that they can use the expected market value and trend to calculate the risk brought by the scale of investment. A good investor should not rely on chance, he or she should have his or her financial goals calculated in order to avoid unnecessary loses. Looking at the market trend at a given time, the financial analysts can tell the optimal scale of investment that would guarantee the success of an investment; this is normally done by using the market growth rate as an indicator of the future trends. An investor with unlimited resources may be at a better position to harness the opportunities presented by the right timing and the optimal scale of investment.
Globalization has linked the world to become one large market in which the competition in the entrepreneurial world is stiff. The market is filled with large and small corporations that each investor should consider before he or she embarks on a business venture. It is important to limit the scale of investment to a controllable size in the initial days of business. While the market trends may be enticing and promising, an investor should not get carried away in his or her assets expansion.
The use of the internet has helped most corporations to up their game in the competition. This means that a new investor or one looking to expand his or her enterprise should first invest in the latest technology and have a grip on the competition. The market may be viable but the competitiveness of the major players in a given field should limit the scale of investment. Starting on small scale is always the safest mode of investment. As the returns of the organization increase, the management should have a strategic plan on how to expand the investment (Dupuis & Prime, 1996).
5.1.3 The ideal location
An investor should always have a target society who will be the customers. Once an organization has pinpointed its potential customers, it should ensure that it locates the business in a strategic place where the products and services are easily accessible by the target group. China is one of the most developed nations in the world. It is extensively urbanized, meaning that there are many potential areas to situate an investment. There are various factors that an investor should consider before he or she chooses the location of his or her business in China. First, the people of China are highly cultural in the business activities. This means that depending on the type of investment chosen, the investor will have a certain group of customers. The business should be situated where there is a high concentration of potential customers for profit maximization purposes.
The investor should also consider the level of competition in the area he or she is locating the business. An organization looking to survive in the Chinese market should pick an area where it is easy for it to monopolize the market (Dunfee, 2001). The location should also be well facilitated in terms of infrastructure. This is particularly important for the accessibility of the business to the customers. There should also be an efficient transportation system for the raw materials and the finished goods. The location of a business directly influences the production cost; therefore, he business location should be in a place where the cost of production and other inherent liabilities are minimized. The location of the business should also be in an area where there is the potential of an expansion in the future.
The Chinese towns and cities are overcrowded and the possibility of an organization expanding is limited to the option of relocating. To avoid this, an organization looking to expand in future should locate its enterprise in a place where there is ample space. The availability of energy and the security of the area should also be considered before a firm selects its ideal location for its business. A foreign business has a great chance of survival in China if the location is in an area where the policies of the company are parallel to the cultural values of the organization (Sign, Zhao & Hu, 2005).
5.1.4 Exporting or Importing
This is one of the least risky entry modes to a foreign market. In the Chinese market, there are many businesses that solely engage in importing and exporting products. These companies bring imports to China, which they sell out to the locals and they later export other goods from China to other parts of the world where they are based. The aim of this is to gain a deep rooting into the Chinese Market before they can engage in an intense investment mode in the market. The businesses normally form tight ties with importing and exporting agencies within China, which later come in handy after they fully establish their enterprises. This mode of entry into a foreign market significantly minimizes the risk of investment since the involved companies can evaluate the market trends and decide on the best investment timing and scale of investment. It is a strategic entry mode that has been very effective for different organizations globally (Shehane, Huan & Ali, 2011).
The most competitive corporations in China are Multinational corporations that export goods from China to other international markets and import the goods on demand in the Chinese Market. The business is particularly successful since the commodities involved in the trade are selected according to their market value locally and internationally. If a firm is looking to start up on a small scale, there are many intermediary export and import firms that may form partnerships with it and over time, the company may rise up and form its own enterprise. Export and import mode of entry into a market does not require a lot of capital; hence the chances of making loses are minimized. A company without the required amount of capital to start up its investment may engage in this mode of entry until it gathers enough profit to use as capital for start up (Murphy, 2012).
5.1.5 Use of intermediaries and their importance
Whether an investor is inexperienced or experienced in foreign markets entry, there is always the risk of using the wrong entry mode that would subject him or her to risks. To eliminate this risk factor in investment, an investor may choose to use or consult intermediary firms within the host country. The Chinese market has a very large number of intermediary companies involved with different products and services importation and exportation as well as sale in the local market. Among the first time investors in the Chinese market, the intermediaries act as a tool to deliver the imported goods to the local market on behalf of the investors. The intermediaries help in making ties with the local businesses in China who may be interested in the products being sold by the new investor.
The intermediary companies may also come in handy while acquiring export goods. Among the experienced foreign investors, the Chinese intermediary firms offer leads towards the feasible business areas (Weldon, Li & Tsui, 2000). The advantages of having the intermediaries is that they easily manage all the issues concerning the payment of taxes, license acquisition and export activities among other paper work that would be hectic for the investors. The fact that they are already acquainted with the local business men makes them very useful in the formation of new relationships in the market with the best business partners available.
With the help of the intermediaries, it is possible for the new players in the market to determine the genuine business partners in the host nation. They are also an asset when it gets to neutralizing the high competition especially in a developed nation like China where there are numerous foreign investors. As the new investors attempt to start up their investment on full swing in the markets, the intermediaries work as the trainers to their new management to help them cope with the policies in the host nation (Weldon, Li & Tsui, 2000).
5.1.6 International experience
The experience level of the intermediaries in the foreign market provides new investors with a tool to market their goods and to ensure that they get the right exposure to the target customers. The survival of foreign investors lies on who they know in the new market since the competition is always stiff. The intermediaries may help in securing business deals with potent investors in the international market, which further increases the chances of success.
The Chinese market is one of the fastest growing markets in the international trade and this means that the competition level is always on the rise. The intermediaries have the experience with the ever fluctuating market in China hence, for an investor who is looking to eliminate the loss risk in this market should seek for help from such firms. The foreign financial teams are always at a better position to advice the new investors on the most feasible strategic plans to use while venturing into their market. The Chinese market is seasonal for different products and the natives are best suited in the prediction of the market trends (Weldon, Li & Tsui, 2000).
5.1.7 Market size
The market size in a given nation is a great determinant of the profits attained of the foreign investors in that country. Foreign investors always look to invest in foreign markets in which profitability is guaranteed even for the small scale investors. The size of the market is determined through the demand for the given good and services as well as the state of the competition in that nation. The economic policies in the host nation must also be favorable in order for the market size to be feasible. The demand for most goods in the Chinese market is extremely high owing to the large population. The big size of the market reduces the uncertainty risk for the foreign investors. The size of a market also determines the investment entry mode, the timing and the scale of investment for foreign firms. The host nation’s government policies determine the feasibility of the market (Muller, 2007).
The political environment in a host nation is the most important factor that a foreign investor should look at prior to making investment arrangements. Different governments have different policies that are effective on the foreign investors. The policies entail the taxation rates and the rates of subsidiary acquisition for the foreign firms. There are nations with very discouraging government policies that make the business environment very harsh for foreign investors while other nations have enticing policies.
China’s policies are very stable since the nation is politically stable. This means that the policies are not likely to be changed for the worse anytime soon. The availability of labor and the liabilities that the employees incur to the foreign investor should also be considered. The operation costs should be minimized as much as possible. The legal implications of the type of business that one is trying to start up should be considered too. This involves licenses acquisition and the certification of the ethical requirements in the host nation (Muller, 2007).
The population of China makes it one of the most viable markets for local and foreign investments. The high demand for goods and services calls for the entrepreneurs to keep up with the competition it creates. Having foreign investors in the Republic makes it difficult for new investors to venture into the market without first having to calculate the risk involved. Getting into such a market attracts a lot of risk that would lead to business failure. China has numerous companies that act as intermediaries for foreign investors. These companies help foreign investors to grow their businesses and to build surviving empires through forming partnerships with the most potent business firms in the republic on behalf of foreign investors. The intermediaries reduce the uncertainty risks for the foreign investors. The cultural elements of the republic also play a great role in determining the investment methods for foreigners as well as the locals. These factors should be considered by all investors looking to invest in the Chinese market.
Alon, I. (2003). Chinese culture, organizational behavior, and international business management. Westport, CT: Quorum Books. The author notes that the people across the world have understood that China is good destination for investment because of its rapidly growing economy. Moreover, several challenges face organizations wishing to invest in the country mostly because of the Chinese culture, which they are very proud of. The author explains what need to be done in order to be successful in China. Anantatmula, V. & Thomas, M. (2010). “Managing global projects: A structured approach for better performance.” Project Management Journal, 41(2): 60-72. Management of global projects comes with very many challenges because a person has to deal with a different culture and political environment.
This implies that investors must take time to study the implications of investing in foreign markets, and what it expects. Clair, N. S. & Norris, J. T. (2011). “Business ethics and social responsibility in contemporary China.” Journal of Academic & Business Ethics, 5: 1-9. Business ethics in China are very complicated because the law is not well defined. This is the main reason why China produces counterfeit goods and products of low quality. Investors should be aware of these challenges and devise ways of dealing with them. In addition, there are several legal challenges that investors face in China because of the control of the economy by the communist party. Dunfee, T. W. & Warren, D. E. (2001). Is Guanxi Ethical? A Normative Analysis of Doing Business in China. Journal of Business Ethics, 32(3): 191-204.
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This journal discusses the various business risks and uncertainties that are attracted by foreign investment. The authors particularly analyze the factors leading to success and failure in the retail business in the international markets. Hu, H. L. & Allen, W. C. (2005). Religions of the World: Taoism.
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Religion plays an important role in understanding the culture of a given society. The author discusses the world’s religions and how they influence the people around the world. They note that Chinese main religions are Buddhism and Taoism. The religions govern the cultural beliefs of the Chinese people. In addition, atheism is widely practiced in the country. Jain, S. C. (2006). Emerging economies and the transformation of international business: Brazil, Russia, India and China (BRICs). Northampton, MA: Edward Elgar. China is an emerging economy and receives the largest share of foreign direct investment after the United States. This can be attributed to the fact that the Chinese country has a very big population and this provides market for goods and services produced in the country. Jayaraman, K. (2009).
“A risk analysis.” Journal of Emerging Knowledge on Emerging Markets, 1(1): 1-9. Before investing in any foreign country, it is important to have an assessment of the risks involved. The author gives the reader an understanding of the risks involved when one is investing in China. The communist party and other legal challenges are the main risks associated with foreign investment in China. Kelley,L. (1993). International Business in China. New York: Routledge. China has very many international businesses operating in the country thanks to its growing economy. Investors have realized that one is able to take advantage of the one billion Chinese consumers to increase profitability.
Investing in China needs research to understand what one should do to be successful. Kline, J. (2010). Ethics for International Business: Decision-Making in a Global Political Economy. New York: Taylor & Francis. Decision-making is very important when investing in a foreign country. Mechanisms should be put in place, which allow employees to make the right choices at all times. It has been noted that the legal system of the China is flawed. This implies that very many legal loopholes used to swindle organizations.
This can be attributed to the fact that the government does not enforce all laws. Longenecker, J. G. (2010). Small business management: Launching & growing entrepreneurial ventures. Australia: South-Western Cengage Learning. Management of small businesses comes with challenges because of the competition offered by large multinationals. The US economy is under threat from being overtaken by that of Chinese government and very many US organizations are investing in the country. This means that the organizations are helping in developing the Chinese economy and this poses a threat to the US. Muller, T. (2007). Analyzing Modes of Foreign Entry: Greenfield Investment versus Acquisition. Review of International Economics, 15(1), 93-111.
This journal analyzes the factors to be considered by a multinational corporation looking to enter a given new market. It gives a highlight on the different forms of market entry that are viable for different foreign markets and the factors to consider in the markets. Murphy, M. (2012). An Integration of Cultural Frames of Reference with the Market Entry Decision. Journal of International Business Research, 11(1), 43-57.
This Journal discusses the implications of the cultural requirements in a market. The authors paint a clear picture of what is expected of an organization by the people while they are entering their home market. The ethics of their business is emphasized. Murray, J. Y., Ju, M. & Gao, G. Y. (2012). Foreign Market Entry Timing Revisited: Trade-Off Between Market Share Performance and Firm Survival. Journal of international Marketing, 20(3), 50-64.
The authors of this journal focus on the right timing in business investment. Their main focus is in the foreign markets. They address all the factors that an investor should consider and the indicators that a foreign market is viable. Shehane, R., Huan, X. & Ali, A. (2011). A framework analysis of the Action Plan for Import Safety (APIS). Journal of International Business & Cultural Studies, 5(1):1-19.
This journal gives an analytical framework for the importation policies and guidelines that should govern the processes of importation for the purpose of ensuring effective management. The analysis refers to the U.S. and the Chinese markets. The authors focus on the safety of imports and the management of imports. Singh, N., Zhao, H. & Hu, X. (2005). Analyzing the cultural content of web sites: A cross-national comparison of China, India, Japan, and US. International Marketing Review, 22(2): 129–146.
This journal is an analysis of the implications of the cultural beliefs and ethical standards involved in the business sector in different nations including China. The authors compare and contrast the cultural beliefs of the people in these states. Weldon, E., Li, J. T., & Tsui, A. S. (2000). Management and organizations in the Chinese context. New York: St. Martin’s Press.
This book focuses on business management requirements in the Chinese market. It discusses the challenges and strengths of good business management in the Chinese economy.
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Alon, I. (2003). Chinese culture, organizational behavior, and international business management. Westport, CT: Quorum Books. http://www.questia.com/library/106810418/chinese-culture-organizational-behavior-and-international Anantatmula, V. & Thomas, M. (2010). “Managing global projects: A structured approach for better performance.” Project Management Journal, 41(2): 60-72. https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=48836961&site=eds-live Clair, N. S. & Norris, J. T. (2011). “Business ethics and social responsibility in contemporary China.” Journal of Academic & Business Ethics, 5: 1-9. https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=70868688&site=eds-live Dunfee, T. W. & Warren, D. E. (2001). Is Guanxi Ethical? A Normative Analysis of Doing Business in China. Journal of Business Ethics, 32(3): 191-204. https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=12128518&site=eds-live Dupuis, M. & Prime, N. (1996) “Business distance and global retailing: a model for analysis of key success/failure factors”, International Journal of Retail & Distribution Management, 24(11): 30 – 38. http://www.emeraldinsight.com/journals.htm?articleid=857181&show=pdf
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