The Domestic Business Environment of China

Topics: Macroeconomics, Investment, Business Pages: 8 (2560 words) Published: October 29, 2008
China has already experienced a substantial growth in the field of international business because aside from its local companies going international, many international companies from different countries have already started to dominate the Chinese market. As a result, it was perceived that the Chinese economy will continue to grow at a relative pace and would be stable enough to be derailed easily by sudden crises.

But even though the Chinese economy is now getting popular in the international market, the country is not taking its domestic business environment for granted because no matter how the country’s economy was fueled by the growing presence of international companies, the country remained adherent and makes it domestic businesses still a priority. China has been known for being culturally embedded reason why when it comes in prioritizing business environment, its domestic business always come in first followed by its international counterpart. Consequently, it is quite inevitable that international companies experience some difficulties staying active and competitive in the Chinese market.

On the other hand, being a target for various international companies domination does not necessarily mean that China has a very accessible business environment because as a matter of fact, its huge market is driven by various demands coming from culturally-embedded consumers. Meaning, it is quite difficult for foreign culture to get Chinese consumers’ consideration for certain products and services. In order to determine the challenge and opportunity of doing business in China, this paper will explore the country’s domestic business environment, paying attention on its political, socio-cultural, and economic aspects. In addition, the effects of the country’s domestic business environment to international companies would be tackled as well. The Context of Domestic Business Environment

Over the years, China has demonstrated rapid transition from being a closed-cultured business economy to international through wide implementation of institutional change that made way for practicing international business practices (Child & Tse, 2001). However, this increasing attention being paid for international business endeavors did not diverted the country’s priority for improving its domestic business environment because the country is still committed in doing so. And this is evident in Chinese government’s actions in order to protect its own business environment, such as the increasing use of intellectual property protection that not only improves domestic but international enterprises as well, as explained by Frederick (2007).

Just like any other country, the business climate and environment of China is influenced by several factors which, according to Han and Baumgarte (2000), can favor or negatively affect the development of entrepreneurship and business career in the country. And one example for this was the the issue of domestication of policies which, according to Newell (2008), is about translating policy commitments contained in international agreement into a workable national policy. As a result, the domestic environment of business in this Asian country is even unstable and quite difficult to predict, especially by foreign companies. However since not all parts of China are infested by instability and issues of business environment, such as corruption and bribery in Guanxi according to Dunfee and Warren (2001), it is best to determine the movement in the domestic business environment of China by exploring the important aspects affecting the business climate. And among the important are the political, economic, and socio-cultural aspects. Political Environment

For the past several years, the domestic business environment of China has been bombarded by various challenges because of the widening entrance of foreign companies. With reference to Gilboy (2004), even though China continues to experience...
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