The impact of China's new membership in the World Trade Organization is much debated, but most agree that inflows of foreign direct investment will pick up. Foreign firms will have unprecedented access to geographic regions and economics sectors but must contend with China's general lack of codified laws, the regional diversity of "legal systems" and practices, and the absence of case precedents. A literature survey and in-depth interviews with business and legal experts in China make it clear that firms entering China must be fully aware of these challenges and quickly establish the personal connections and procedures needed to operate successfully.
The fact that this big economic opportunity of a market of over 1.3 billion people opened up to the world economy, has meant that all multinational managers have to gear up to understand the nuances of the way of doing business in China.
There are multiple forces that come into play when doing business in a foreign country, which can be categorized as external or uncontrollable forces and internal or controllable forces.
Internal and controllable forces are to do with the factors of production – personnel, finance, production and marketing – that management administers to adapt to changes in the uncontrollable forces listed below.
External Forces are those that on which management has no control and internal forces are those that management can develop and use to formulate and execute the firm’s strategy given particular external forces.
External forces affect foreign business due to cross border difference as listed below: 1. Competitive: where the kinds and number of competitors, their locations, and their activities are not controllable. 2. Distributive: the kinds of national and international agencies that is available to distribute goods and services in the foreign country 3. Economic: Variables such as GNP, unit labor cost,...