Together with all the opportunities in mind such as reducing costs in terms of operations, developing labour market, new emerging markets and a low cost incentive not to forget the changing Chinese culture and business environment.
Introduction
China a dominant country with many advantageous elements in terms of doing business, Thanks to its rapidly developing economy, political structure and sound business environment. The rapidly growing economy offers a good platform towards carrying out business activities in terms of operations. Its high Productivity rate has led many firms to outsource their operations such as production, manufacturing etc. The core opportunities in china are based on the growing consumer markets, China has a large productive economy, which also on the other hand also acts as a large consumer base. The Chinese economy has created many premium markets segments. Many are getting richer in china. Chinese regions vary in terms of economic development, costs of living and general business environment.
There is certainly a possibility of expanding our business operations in china. Supplying tailored plastic parts and components made to order. Some of the advantageous elements of doing business in china include low land, labour and operating costs. The Chinese government play a key role in emerging markets by giving direction towards sustaining growth. The opportunity arises from rapid economic growth in the world's largest market and the availability of a cheap manufacturing base from which to sell to China and the rest of the world. However it is also important to understand their values and cultural aspects. Aim here is to sustain mutual relations with suppliers and valuable customers. With all the opportunities in mind there are some implications with doing business in china, the Chinese culture has a big impact on their business operations and style of management.
Hence China offers a good platform towards expanding the business activities, particularly production it offers a low cost incentive. Together with low labour markets and a larger consumer base china offers a growing tertiary business sector. Therefore many possibilities arise for expansion, cutting costs, increasing market share and expanding customer base.
Findings
Entering a new market in china, firstly establishing a picture of Chinese business environment is vital. There are three main aspects to be considered doing business in china. Firstly the highly productive labour markets, secondly the cost reducing factors and finally the rapidly growing economy and emerging new markets. Along with these aspects the starting up approach should be planned and implemented effectively.
Start up approach
Starting up is clearly a complex process. There are many initial procedures to start-up a business in china, the business environment is varied around china the capital regions offer a valuable platform to operate with clusters of other businesses. The ex ante approval and registering with the local State Administration of industry and commerce is required before starting a business. The approval will certainly make operations simple and cost effective. Various regions offer advantages in terms of start up costs and operating costs. Hence there are many steps involved such as registering and approval of the company seal, tax bureau etc.
Highly Productive Labour Market
China has one of the world most productive labour markets. The labour market is highly skilled and the total costs of hiring labour and human resources are very low compared to other countries. However the labour costs vary from local regions. The rural areas have even lower costs. A more market oriented labour market is emerging; vast majority of the growth is in the urban private sector. In contrast to note there is a large surplus of labour in rural area. The level of competition is fairly high. Most of the labour market operates in the non agricultural sector. The Chinese labour market is becoming more and more attractive as the scale of unemployment is decreasing to some degree in urban areas.
Cost Reducing Factors
There are many cost reducing factors, china’s land and labours costs are cheap compared to other countries. Conducting business activities is fairly cheap such as production and manufacturing; also there are huge reductions in labour and land costs. The rural regions in china offer huge and skilled labour markets. The land costs in regions of Taiwan, Beijing and shanghai are very low. There is also a cluster of manufacturing businesses around these cities. This again will save costs on logistics activities to and from suppliers.
New Emerging Markets
Foreign trade in China is under quick development ever since China entered WTO in 2001. Total import and export value rose to USD 1760.68 billion in 2006 from USD 509.77 billion in 2001, with a high growth rate Chinas foreign markets are expanding with the high productivity rate new markets are created in the service sector in china. The Banking and financial sector in china has also developing there will be possible opportunities of investing and forming strategic
Problems / Implications
Setting up regulations/ strategy
To enter a new market in china, adapting at the right strategy will be curtail. A more detailed research has to be conducted on the geographical area of the business and more knowledge has to be gained in terms of establishing relationships with partners, suppliers and customers. Also not to forget the barriers to operating in china, the start up costs and establishing the name and type of the business in terms of wholly owned or a joint venture enterprise.
Culture
Foreign companies doing business in China face challenges due to the complex business culture. It difficult to adjust to the Chinese business environment: the Chinese are willing to bend a few rules in order to get things done. Many rules and regulations in China are not strictly enforced and are subject to personal interpretation to make room for exceptions.
Regulations
The ex ante approval and registering with the local State Administration of industry and commerce is required before starting a business China’s legal system consists of seven categories: constitutional and related law, civil and commercial law, administrative law, economic law, social law, criminal law, and litigation and non-litigation procedural law.
Conclusion
Entry to china will certainly expose opportunities and provide us with a market place to operate in. Conducting business operations will reduce costs, opportunity to invest and serving large consumer base china seems to be more effective. Core strategy is to start-up and establishing suppliers, labour force, and customer base and sustains relationships.
Recommendations
- Establish a clear business type either a joint venture or a wholly owned enterprise.
- Attend Chinese business conference and gain relationships with supplier, customers and gain an insight of the business environment.
- To develop a balanced adaptation to business culture in China
- To Venture or start up operations in coastal regions of china which consist of many cluster of businesses which are operating and expanding
- Establishing a partner and establishing a joint venture with an approved seal. Partnership would be advantages as we need someone with local knowledge and experience in the Chinese business environment.
- Employ local Managing director with Chinese business environment knowledge.
- Increase awareness in terms of business environment, local knowledge and culture.
- Obtain more market research on the manufacturing sector and construct a strategy
- Establishing a representative office in China before expanding which allows the company to become more familiar with the market, and get a better picture of what the market for their products and services are, and what the customers want.
- Use of an experienced advisor is highly recommended. The retention of professional
Assistance may also lead to an early exposure of unidentified business risks.