The Chinese population is immense, their history is very long and their culture is one of the most complex in the world. China is really a unique country for many reasons. First, we can notice a huge gap between urban and rural areas. China is so vast so there are a lot of cultural and economic differences. For example, some areas are very advanced (Shanghai) but most of them are backward. And the gap is growing due to rapid changes every year. These changes essentially concern advanced cities which are already open to the world. Second, China has exactly 34 local governments. So laws depend on the location and investors have to be aware of local laws and habits.
Before starting this paper, it is really important to present a brief summary of China's economic reforms. These reforms are the source of the success of China. China is a socialist country which has established a system of market economy. Reforms evolve very quickly. The main economic reforms of these last 30 years include the creation of the Special Economic Zones, the opening of 14 coastal cities and the recent opening of central and western regions to the world. Setting up the SEZs allows China to develop job opportunities, to obtain advanced technology or to learn about Western management skills. Furthermore, the opening of many coastal cities helped China to change its economical structure (especially the industrial structure) and to attract more FDI. Now, China makes full use of the advantages of its coastal cities. Finally, the recent attempts to open the central and the western areas to the world will certainly reduce the gap between the eastern and western regions. In this way, China is trying to unify its territory and reach the goal of a common prosperity.
[...] Furthermore, doing business in China includes having an important network. We have seen how important it is to maintain good relationships with customers, business partners and government body. Creating a joint venture in China implies to know the local way of work and a closer network may permit that the situation never occurred. The Danone and Wahaha joint venture case study served to reinforce how difficult it is to operate a partnership in China with some problems that have usually been settled with face-saving and private negotiations. [...]
[...] The involvement of a Chinese investor is not required. Thus, the foreign company keeps a greater control over the business. Potential problems with the domestic partner are also avoided. It can easily control over technology, know-how, operations and management. The wholly foreign-owned vehicle presents many disadvantages: the profit is not maximized and there is a risk of leakage of the intellectual property. Moreover, the foreign company often has difficulty in relationships with partners and there are more restrictions on project approval The intellectual property field in China China is known as unable to efficiently protect the intellectual property of companies. [...]
[...] http://www.chinaorbit.com/china-economy/china-joint-venture.html China orbit. China: Sino-Foreign Cooperative Joint Venture in China. [Online]. http://www.chinaorbit.com/china-economy/joint-venture-in-china.html China orbit. China: Wholly Foreign-Owned Enterprise in China. [Online]. http://www.chinaorbit.com/china-economy/china-wfoe.html Wikipedia. Intellectual property in the People's Republic of China. [Online]. http://en.wikipedia.org/wiki/Intellectual_property_in_the_People's_Republic_ of_China FPIF. Labor Rights in China. [Online]. http://www.fpif.org/articles/labor_rights_in_china Wikipedia. [...]
[...] Legal context of doing business in China The Constitution of the People's Republic of China is the highest law. The current version was adopted by the 5th National People's Congress. Many laws have been enacted about conducting business in China Business entities Foreign companies may operate through permanent establishments or representative offices. Moreover, they also can establish foreign investment enterprises. Sino-foreign joint venture law and wholly foreign- owned enterprises law are special. They are different from the company law of the Constitution. [...]
[...] [Online]. http://www.chinadaily.com.cn/china/2009-10/05/content_8763937.htm Npicenter. Danone and Wahaha Group Reach an Amicable Settlement. [Online]. http://www.npicenter.com/anm/templates/newsATemp.aspx?articleid=25140&zoneid =11 Chinalawblog. Danone v. Wahaha: Lessons for Joint Ventures in China. [Online]. [...]
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