China is the second leading economies in the world with a very vibrant business environment. This has attracted several multinationals, investors, managers and employees working in this firms who seek to take advantage of the boom in the Chinese economy. The large Chinese population offers a wide local market for the products (Cheng, DeLisle, & Brown, 2006). Further, goods originating from China are widely accepted in the world increasing the business capability of firms operating in China. However, the AmCham China Business Survey of 2014 shows the rise in the hostility of the business environment in the country. China has become unfriendly and unwelcoming to foreign firms and their managers originating from western nations and more so the United States.
The factors behind this hostility include too much protectionism, slowing growth, information inequality, undue political influence on the business environment and the local government. China is exerting undue influence on the business environment and denying firms from overseas countries to freely operate in the country (Walter, Lechner, and Kellermanns, 2008). In their survey, the American chamber of commerce established that China was acting in an unfriendly manner when treating and dealing with foreign companies.
According to the study, 75 percent of the companies that took part in the survey indicated that the Chinese government was treating them unfairly by offering unclear information aimed at threatening their business. The government seeks to protect the local firms from the stiff competition from the foreign firms (Walter, Lechner, and Kellermanns, 2008). The government does through the information asymmetry that favors the local firms. Politics has also played a critical role in determining the business environment in China. The political tensions are quite unwelcoming and threaten the survival of the foreigners and their firms.
The hostility of the business environment continues to rise even though other international bodies such as the World Bank have intervened. China, on their ambitious plans to significantly affect the world economy and empower their currency against the dollar, continues their unwelcoming behavior against the foreign firms to their country (Cheng, DeLisle, & Brown, 2006). The situation has seen the rise of unfairly tight censorship against the foreigners and forced technology transfers. China complicated the operations of the US credit transfer to make the environment favorable for the local financial transfer firms China Union Pay. Even though the US firms are more so targeted on the unfair treatments in China, other European firms have also suffered the same fate. Hugo, a German clothing firm has suffered due to the stiff competition it posted on the local manufacturer BOSSsunwen which copied its trademark. Therefore all foreign firms are facing problems in China.
There are several efforts to mitigate these hostility problems in the second world economic leader (Cheng, DeLisle, & Brown, 2006). First international diplomatic ties that aim at bringing these problems to an end are ongoing. This is mitigation measures that seek to end the unfair treatments the Chinese firms and the government are posting on the foreigners. There are efforts by international bodies in collaboration with the local government to separate politics and business. These measures will ensure that any political instability in a country does not significantly affect the business environment (Swaine, 2011). Through this, the managers of foreign firms operating in China do not have to face problems of operating businesses that are negatively affected by politics. Foreign firms should also comply with the requirements of the local government and negotiate well with the government to develop laws and regulations that will guarantee a good environment for every business player in the country.
Cheng, T., DeLisle, J., & Brown, D. (2006). China under Hu Jintao: Opportunities, dangers, and dilemmas. Singapore: World Scientific.
Swaine, M. D. (2011). America's challenge: Engaging a rising China in the twenty-first century. Washington, DC: Carnegie Endowment for International Peace.
Walter, J., Lechner, C., Kellermanns, W., F., (2008). Disentangling Alliance Management Processes: Decision Making, Politically, and Alliance Performance, Journal of Management Studies 45, No. 3 (2008), p. 530.
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