Business in China

Section A: Business in China

Business background:

China is the second largest economy in the world but in 1978, China was a poor country with GDP per capital level similar Zambia. This index was lower than 50% of Asian average and lower than 67% of Africa average. China experienced an average GDP growth dramatically close 10% per year until 2014 and achieved $7,590 per capital. This achievement has lifted 800 million people out of poverty. The main reason for this accomplishment is China became the world’s manufacturing hub, especially in the labor intensive, export low price products. To conclude, the growth strategy of Chinese is selling the cheap goods to the world.

Business structure:

The Socialist market economy is model that was created by the People’s Republic of China. It is based on the potency of state-owned sector and the open market economy. The original version was introduced under Deng Xiaoping. The main idea is that China was in the very first stage of Socialism, as a result, China has to adapt capitalist to grow up. In spite of this, the Socialist market model has been proved as a form of Government capitalism.

Management style:

According to Confucian Philosophy, all relationships are seen to be unequal and this situation is respected in China. The managers always expect and receive loyalty and obedience from employees. As a result, the managers have responsibility to interest in the benefits of colleagues. It is a mutually beneficial two-way relationship. Senior managers have close relations to Communist Party and they make decisions under the controlling of Communist Party. It is believed that China has lack of high quality and experienced managers, and the fees to hire an available talented manager are very expensive.

Communication style:

Unless you use Mandarin, it can be very difficult to run a business in China without translators. The English level are quite low and although a layer of fluent English is exist but it is thin and decrease quickly. Chinese are famous for their impassiveness. The body languages are very limited but it does not mean the Chinese do not have their own reactions. Finally, never assume that somebody speaks English fluently is more competent than somebody who doesn’t.