The Assignmnet/Essay is divided in two questions:
1. Threats foreign companies face when investing in China and what Chinese authorities are doing to combat them
In 1978 China introduced the Open Door Policy which was the first step to open up the Chinese market to international trade. The economic reforms during the 1980s caused China’s growth rate to increase rapidly. The policy encouraged many Chinese firms to export their goods to Western companies and also Foreign Direct Investments (FDI) increased heavily. (Wei, 1995) China’s entry to the World Trade Organisation (WTO) in 2001 the business opportunities for foreign companies in China grew. Western firm are keen to enter the Chinese market and to make use of these opportunities in the future. (Al-Khatib, Vollmers and Liu, 2007)
2. Sustainability of the current rapid growth in the Chinese economy
China is undoubtedly known for its currently strong economic growth rate with has been on average 9% during the past years. This rate is not only high at Western European standards but also compared to other developing countries. The main reason for this development has been the effort China put in its integration into the global economy. (Zhang, Wu and Sanders, 2007) According to Yang and Lee (2002), China has a high potential for growth and it is becoming one of the biggest markets for international businesses. In order to rate this outlook, the factors in the Chinese economy that caused this development have to be assessed.
Table of Contents
Threats foreign companies face when investing in China and what Chinese authorities are doing to combat them
1. Intoduction
2. Threats
A. Intellectual property rights
B. Corruption
C. Local competitors
D. Foreign competitors
E. Protectionism
3. Measures
A. Introduction
B. Protecting Intellectual Property Rights
C. Combating Corruption
D. Making Local Competition fairer
E. Allowing for fair Foreign Competition
F. Reducing Privileges through Protectionism
Sustainability of the current rapid growth in the Chinese economy
1. Introduction
2. Factors influencing growth
A. Demography
B. Country Politics
C. Country Economics
D. Economic Institutions
E. Incentives
F. Technology
Objectives and Topics
The paper examines the challenges faced by foreign enterprises operating within China and evaluates the sustainability of the country's rapid economic growth. It explores governmental responses to market threats and analyzes key factors—such as demography, political landscape, and economic institutions—that impact long-term stability.
- Intellectual Property Rights and corruption risks for foreign investors.
- Market dynamics involving local and foreign competition in China.
- Governmental measures and trade policies aimed at fair competition.
- Evaluation of economic growth sustainability factors like demography and infrastructure.
- The role of entrepreneurship, technology, and economic institutions in China's development.
Excerpts from the Book
A. Intellectual property rights
One of the threats foreign companies face when investing in China is the infringement of intellectual property rights (IPR). This refers to the issue of “unauthorized manufacturers blatantly and consistently use famous trademarks to sell their products and profit from well-recognized brand names. “ (Trainer, T.P., 2002) According to Betts (2004) two-thirds of all pirated or counterfeited goods worldwide come from China. To foreign firms investing in China this is a problem because they are at the risk that Chinese partners use the company’s knowledge for its own purposes. The major sectors for Chinese counterfeiting products are replacement car parts, cigarette production and distribution and pharmaceuticals (Navarro, P., 2007)
For example the established British brand Burberry largely operates through franchisees in China. The company chose this approach mainly to overcome its lack of market knowledge in China. According to Burberry (2010) the main issue associated with this is the “lack of direct control and transparency and as the Group moves into increasingly higher risk locations the operating and reputational risk increases”.
Chapter Summary
1. Intoduction: This chapter provides an overview of the Open Door Policy and China's integration into the global economy, setting the stage for business opportunities and associated risks.
2. Threats: This section details the primary challenges faced by foreign businesses, including intellectual property theft, corruption, intense competition, and protectionist measures.
3. Measures: This chapter outlines the regulatory and legal responses implemented by Chinese authorities and international organizations to improve business conditions.
1. Introduction: This chapter discusses China's rapid GDP growth and establishes the conceptual framework for evaluating the sustainability of this expansion.
2. Factors influencing growth: This chapter provides a comprehensive analysis of the socioeconomic and political drivers of growth, including demography, politics, and economic infrastructure.
Keywords
China, Foreign Direct Investment, Intellectual Property Rights, Corruption, Protectionism, Economic Growth, Sustainability, Open Door Policy, Market Economy, State-owned enterprises, Entrepreneurship, Technology, Infrastructure, APEC, WTO
Frequently Asked Questions
What is the core subject of this publication?
The publication analyzes the business environment in China, specifically focusing on the threats encountered by foreign investors and the sustainability of China's rapid economic growth.
What are the primary themes discussed?
Central themes include intellectual property rights, corruption, market competition, government protectionism, and the structural factors influencing long-term economic development.
What is the main objective of the research?
The goal is to evaluate the risks for foreign companies in China while assessing whether the country's recent economic development is sustainable in the long term.
Which methodology is applied in this analysis?
The work utilizes a qualitative approach, synthesizing secondary data, case studies (e.g., Burberry, Johnson&Johnson), and economic theories to evaluate the Chinese business landscape.
What does the main body address?
The main body covers a dual analysis: first, identifying specific investment threats and governmental countermeasures; second, examining factors like demography, country politics, and economic institutions.
Which keywords define this work?
Key terms include Foreign Direct Investment, Intellectual Property Rights, economic sustainability, protectionism, and market reform.
How does the author view the banking sector in China?
The author identifies the banking sector as a major institutional risk, noting that banks are burdened by bad loans due to political pressure to support state-owned enterprises.
Why are private property rights significant for the author's argument?
The author argues that limited private property rights and insufficient government support create significant barriers for entrepreneurs, which undermines the potential for sustainable innovation.
What role does the 'Open Door Policy' play in the narrative?
It is presented as the foundational impulse for China's transition from a centrally planned economy to a market-oriented system, serving as the starting point for modern foreign investment.
What conclusion is drawn regarding the Chinese legal system?
The author concludes that the legal system lacks necessary transparency and due process, remaining essentially under-reformed and poorly suited for a modern market economy.
- Citation du texte
- Katja Assenmacher (Auteur), 2010, Chinese Economy, Munich, GRIN Verlag, https://www.grin.com/document/174868
