China s Second Largest Economy - 2291 Words

China is second largest economy in the word. Size of the Chinese economy and future growth potential has attracted the foreign companies to operate and earn profits. Thrust for cost saving and market expansion direct Multinational companies towards China. China has open the door for foreign companies between 1978 and 1990. Mode of entry utilized by multinational firms includes direct export, franchising, joint venture wholly owned subsidies. The various factors affecting the success of any foreign company in mainland, including but not limited to the time of entry, mode of entry, institutional framework, and culture difference. However, doing business in China is not as easy as doing in developing nations. A lot of companies have burnt their fingers in China operation. All sectors are not accessible to the foreign companies. Government has categorized the industrial sectors in to three categories i.e. encouraged, restricted and prohibited. Different industries have different market entry and operation characteristics as per categorization by the government. Resource based and institutional based review suggests major concerns for multinational companies including Government policy regarding foreign ownership, Government procurement, inefficient intellectual right protection, support to domestic companies, unskilled manpower, vast geographical difference and bureaucracy. Foreign companies should have complete understanding and savvy strategy to deal with major practicalShow MoreRelatedChina s Second Largest Economy844 Words   |  4 PagesAs one of the results of globalization, China’s economy has been growing rapidly. China became the second largest economy in 2005 (Allen, J. Qian, M, Qian, 2005). 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