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International Business - China
By Richard Jones
When conducting international business with any country, one must be aware of multiple factors that could influence their transactions. Cultural differences between trading countries can cause setbacks, if these differentials aren’t understood prior to developing a trading relationship. With the Chinese economy’s expansion, many businesses are looking into how to expand their operations in China. China can be a fruitful venture if there is cultural understanding of the country and its people. When conducting meetings and other transaction language can be a barrier. China’s official language is Mandarin Chinese. While many business people speak English in China, it is often not as well as they could read or write it. The language complications should be worked out prior with a designated interpreter, this is wise in order to make sure nothing is lost in translation. With the proper preparation the language obstacle can be overcome, but a more difficult barrier is the import restrictions. China has one of the largest populations of any country, to a business consumer’s equal dollar signs, but not so fast. The Chinese population is 1.3 billion plus people that have in many ways, been sheltered by a communist government. There are a large amount of restrictions on imports into the country. Even with all the restrictions, the country has become more open to trade in the past decade. In 1979 only 14 companies had licenses to conduct foreign trade operations in China, now there are over 9,000. The licenses for businesses to conduct operations are ultimately approved by the Ministry of Foreign Trade and Economic Co-operation (MOFTEC). Importing into China can be difficult, but there are organizations established to assist businesses with these regulations. When conducting business in China it is important to build a library of reference material to refer back to. There are many resources on the internet that can help with accumulating the necessary information. One site is The Federation of International Trade Associations. The website provides businesses with vital information to evaluate China and other countries prospective markets for expansion. Another website is Smart China Sourcing; this is useful to find products that China is exporting. When searching the site you can also find manufacturers to help bring a product to market, whether in China or someplace else. China can be a great place to conduct business as long as the right research is conducted. Researching cultural differences and business regulations can improve your initial contact with either the Chinese government, or another Chinese business. The immense population of China and the cheap labor makes it a profitable place to do business or have a product manufactured. The Falling Dollar
The dollar has fallen in value by ten percent between March and May of 2009. There are many factors that relate to a country’s currency losing value. One problem with the dollar is the weak US economy. As the economy goes through a recession and accumulates more debt through government bailouts, the dollar falls. International investors no longer want to purchase government bonds because the investment is less attractive to them.
The currency has also been challenged internationally by other countries. Some are switching their reserve currency from the dollar to a more valuable and stable currency. Others have gone as far as calling for a global currency to replace the world’s dependence on the performance of the dollar. While a global currency maybe a far reaching concept, it seems to be an idea that’s growing in popularity. Sources:
http://www.msnbc.msn.com/id/30967476/page/2/
http://china.fita.org/
http://www.cia.gov |
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Great intel Richard. Lots of information, about which few Americans have any knowledge.
Keep up the good work.
Frederick
I would have thought the fall of the dollar is irrelevant to business with China because China's currency is pegged to the dollar. The dollar has not fallen against China's currency.
 | | nick Jan 3, 2010 12:53 | |
CONTRIBUTOR'S REPLY
China is one of the largest purchasers of US government debt. The falling dollar and the lack of China's motivation to purchase more debt is directly related to importing / export relations between the two countries. Maybe I should have elaborated more on the subject. Thanks for everyone's comments, I appreciate your feedback.
Interesting topic and one that any global business needs to study. Cultural differences really can't be ignored if you want to be successful. Thanks!
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