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With China's membership of the WTO after fifteen years of negotiation, the country will undergo enormous changes in policies and laws that would be of great benefit to foreign companies doing business in China.

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Introduction

With China's membership of the WTO after fifteen years of negotiation, the country will undergo enormous changes in policies and laws that would be of great benefit to foreign companies doing business in China. With the decrease in tariff and quotas in both China and other countries such as the US, the opening of new markets, reduction in restrictions on foreign investors, amendments in laws on foreign funded firms and for the general public, encouragement from government and the fact China has to increase the quality of their products to international level will lead to the creation of new opportunities for foreign investors. Along with the new opportunities, as a result of the new international standard laws and policies China has to follow as it becomes a member of the WTO, its membership will also bring equality, security and stability for the foreign investors, encouraging them to invest in the 'new' China. The most immediate effect from China's membership of the WTO was the reduction in tariffs and quotas. Since the 1st of January, the average tariff dropped from the original 15.3% to 12% that affects more than 5,000 imported goods. It is then expected to drop a further 2% to 10% by 2005 (http://www.china.org.cn/english/BAT/29427.htm). ...read more.

Middle

Therefore, reductions on restrictions and red tape will make access to the Chinese market much easier giving foreign investors more confidence in investing in China. Once they have entered the Chinese market, due to the continuous expansion and the large number of potential customers, foreign investors will be able to expand their operations easier, generate more revenue and bringing them benefits resulting China's accession into the WTO. In order to be more compatible with the rules set by the WTO, China has revised its laws on import and export commodity inspections. With the revised law, import commodities listed on the 'list of import and export commodities subject to inspection by the commodity inspections authorities' will be examined in accordance with the compulsory national standards. Those not included in the list will be examined according to foreign standards (http://www.china.org.cn/english/2002/May/31990.htm). With the clear classification of the new law, it will be easier for the foreign companies importing to China. For example, they can easily see which standard their product have to apply to, eliminating confusions that may arise later which are time consuming and may affect the firm's operations. Along with these laws, quarantine and inspection staffs will now be duty bound to keep commercial secrets they may discover during quarantine and inspection (http://www.china.org.cn/english/2002/Feb/27792.htm). ...read more.

Conclusion

This will then lead to better market opportunities for the non-domestic products. With the enormous market in China, this change may give the foreign products more market share in the industry and therefore allowing them to make more profits. The increase in standards of products need to be produced will also give the foreign investors a competitive advantage due to their experience, technology and their extensive marketing skills. This competitive advantage will further allow them to gain a larger market share by attracting more customers and make more profits in the Chinese market. Therefore in conclusion, Chinas' accession into the WTO will no doubt bring benefits for the foreign investors doing business in China. This is the result of Chinas' enormous changes in its tariffs and quotas, law and policies and the opening of new markets that will attract foreign investors, as they will see the new market opportunities in China allowing them to generate more profits for their firm. However, the changes will not occur at the same time but rather through a transition period of five years. Therefore, the benefits brought about by China's membership of the WTO for some foreign investors may not be immediate or clear, but with China's continuous economic reforms to satisfy the WTO criteria, the investors will clearly see the benefits in the future. ...read more.

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