Now the huge market for the foreign goods

Now
western companies are moving towards china market and it has become the most
important market of the world. China is now counted in the most growing market
and difficult economic climate in the western and eastern countries, china is
growing day by day with high rate. It seems that China can also overtake the United
States market in the near future. China is now rapidly changing demographics, their
incomes are increasing, there consumer spending is on the upward side and are
having an open business environment. Due to these characteristics, china market
is growing rapidly and is becoming more attractive for the businessman in the
other part of the world. Due to the recession of sales in the home market of
different countries like the United States and Europe are on top, they are
having an eye on the markets of china to explore more and make long term strong
strategic relationships (Mark Hedley, N.D). Though it is a challenge for the
new-comers to open businesses because of their change environment and having no
experience but they are keen to do business because china market is emerging as
a most powerful market. China has the ability to represent the huge market for
the foreign goods and services. It is the challenging tasks for the companies
to find out where the opportunities lie. Apple is also now focusing on to move
towards china market and they seeking the life challenges of the Chinese
workers. The apple costs $65 when it is manufactured in the United States while
if they produce it in china it would cost an estimated $8. Apple is looking to
release the cheaper version of I-Phone in order to attract more customers in
the emerging markets because I-Phone is the most popular item in china and now
it seems that it has become easily reachable for most of the people. But the
fact is that the cheaper I-Phone is far more expensive and it way more than the
average income of a person (Global Edge, 2014).

China
has a lot of people and many of them are not having smart phones, but they will
be able to buy them. Apple has to make a strategy to convince Chinese people
rather than buying another phone. Due to the improved economic growth, china
has brought hundreds of millions of people in the middle class and also made many
of them rich and they at least afford Apple phones. The idea of manufacturing
apple in china would reduce flexibility and the ability to easily switch from
one supplier to another. It is seen that there is a slight decline in the
growth of the china markets. The slight decline starts in the year of 2013 and
continues till 2014. For the improvements, the country has established
strategic goals to rebalance the growth and make efficient economy by giving a
bigger role to the economy. These reforms will definitely have a positive
impact on growth in the medium term and could affect some of the sectors
(Global Edge, 2014). The sectors who will be most affected includes cement,
steel, aluminum, glass manufacture and shipbuilding. The main growth driver
starts to decline like property market which begins to cool down. While medical
care is enough in many cities of china but overcrowding can be an issue in many
hospitals. Health care seems to be expensive in the country of china. There is
a high level of pollution in many cities of china which can cause asthma. There
were more than 45000 cases of dengue in 20 cities of china. Travelers are
advised to protect themselves from dengue because there is no proper
vaccination to prevent dengue cause. There have been also reports of swine flu
and other diseases in china. There seem to be uncertainties over local
authority and private sector debt. There is the planning of major reforms, but
there are still shortcomings in the business environment. Their social tensions
are linked rising inequality. Their GDP remains weak in sharing of consumptions
and it is the challenge of the Chinese government to rebalance the Chinese growth
model. Robberies and other small crimes are popular in china while tourists are
attacked for their passports, laptops and handbags. Tourists should take
cautions in major places, airports, and events. Most of the visitors are not
allowed to drive in china, to do this they have to obtain a valid residence
permit and obtain a Chinese driving license after passing a driving test. As a
far as the terrorism in china, it seems to be moderate but in order to mitigate
more threats, china provides war and terrorism insurance (Co-face, 2015).

Best services for writing your paper according to Trustpilot

Premium Partner
From $18.00 per page
4,8 / 5
4,80
Writers Experience
4,80
Delivery
4,90
Support
4,70
Price
Recommended Service
From $13.90 per page
4,6 / 5
4,70
Writers Experience
4,70
Delivery
4,60
Support
4,60
Price
From $20.00 per page
4,5 / 5
4,80
Writers Experience
4,50
Delivery
4,40
Support
4,10
Price
* All Partners were chosen among 50+ writing services by our Customer Satisfaction Team

            After the year of 2006, it is
becoming most difficult to perform by businesses in china but the rewards are
too many if foreign companies survive to handle the political, social and
economical risks. China is developing them as a strong economy and also allows
a lot of opportunities to the foreign investors. Due to the huge potential,
china offers them to access the large market and, therefore, considerable
savings in labor costs. Cautions are required due to differences in political
and cultural that creates risks for investors. China is emerging as one of the
important markets in the world. Their government is keen to improve and develop
business operating conditions by developing rules and laws. Since the china has
joined World Trade Organization (WTO) in 2001, they are not stabilizing their
development and implementation. They are having the environment of the
inconsistent environment and there is rapid growth seen in the economic
factors, the country is providing the foreign investors with various business
opportunities, but there are some risks associated with it (Jay Hoenig, N.D).
If apple wants to make their first investment or them deciding to expand their
business, they must be aware of all the risks that are associated with it.
Before going to china, apple must take appropriate actions in order to tackle
or handle these risks. Foreign companies in china face different risks like
legal, financial, political, and social and environment risks, companies must
apply some of the strategies to prevent them. The risks of regulatory are high
in china and there are many sectors in china which are more market oriented so
there is restrictions and bureaucracy which are making hurdle implement
regulations. These regulations vary from place to place and there are several
authorities responsible for the implementation of same regulations. Foreign
investors must consult the relevant authorities and they incur more cost for
doing it (Jay Hoenig, N.D). So the cost of doing business in china becomes
high than the companies expects. Recently there were policies implemented in
order to protect domestic companies from foreign competition. There were
policies in the sector of engineering and construction, legal services and
banking especially which creates obstacles for the foreign companies which was
not in the awareness of them. If the foreign investors are going to plan a
business in china or making a joint venture with the Chinese company, then they
need to understand how regulations apply. There is an increasing number of laws
and regulations for the businesses in china, these laws can be different for
the domestic companies. There is a lack of skilled and trained employees especially
in the areas of engineering and finance. Retention rates are low and some of
the salaries are growing at double digit. It seems that talent management will
be a challenge in the upcoming years. Many of the economic reforms are adopted
by the Chinese government which has a positive effect on economic development,
but the government could change these economic reforms at any time. These will
either benefit or damage the operations (China Briefing, 2011). The things
that could have the effect of this are the level of government involvement in
the economy, foreign exchange controls, the balance of payments positions and
international conflict. There is the different Chinese economy as compared to
other countries and china is conducting tight grip in economic reforms. Apple
must consider some of the factors while going to china in order to build a
strong competition. There are many things which are time-consuming while it is
easy in western countries. These things include from opening a bank account to
registering a company or to obtain product approval because there is a lack of
strong rule of law and inconsistent application of regulations. Most of the
procedures that are fulfilled electronically in western countries may require a
lot of paper-work in china. To be successful in china, apple needs to have an
administrative team in place which will handle the paper-work in china. This
will make your time free for the sales team to promote apple’s product without
spending time in order to take approvals. While going in china apple must
consider which sectors would encourage the foreign investment (China Briefing,
2011).

The
Chinese government can encourage restrict and prohibits investment by sectors
in accordance with the demand and needs of the country and the particular time
to make it. Apple must consider ways to protect its intellectual property
rights in china because Chinese law protects the rights of the person who first
register its trademark or patented technology or design. It means that apple
should protect its intellectual property rights as soon as possible. Apple
should also consider what the main guidelines for labor contract in china are.
Chinese law protects worker’s legal rights by demanding a written contract. It
is a requirement for the companies to provide a written contract between
employer and employee and in case if no contract is provided then employment relationship
will start from the employee’s first day at work. Apple should be aware of the
common inaccurate accounting policies. China tax structure is different that
staff commonly breaks the law in order to assist the company’s cash flow
(China Briefing, 2011).

            Chinese are having strong exchange
control policies and once a foreign investor receives its license for the
business, it is necessary for the business to conduct registration with the State
Administration of Foreign Exchange. Foreign Exchange Registration Certificate
is required to open a foreign capital bank account to handle foreign exchange
related matters. If the foreign investor like apple wants to introduce more
funds in order to increase registered capital, it has applied to State
Administrative of Foreign Exchange (SAFE) for doing so. While taking profits or
dividends, a company must need to submit receipts of corporate income tax
payments, annual audit report, and board of resolution on distributing profit
and dividend and foreign exchange registration certificate. China is providing
low pricing manufacturing exports which in result building pressure on
manufacturing jobs in south Asia and the United States (Simon Johnson, 2010).

The
policymakers of the United States start blaming others for the loss of
manufacturing jobs and suggest that china’s nominal exchange rate currency is
giving it the artificial level of export competitiveness. Increasing Chinese
exports to the United States mistakenly argued by some are the part of the
deficit in the United States. A revaluation in the Chinese Yuan may lead to
less pressure on manufacturing production in the United States and help them to
improve its imbalances such as deficit of United States. The revaluation of the
Chinese currency affects the trade account and also impact the capital flows.
The revaluation of the Chinese currency will lead to an increase in employment
and if the prices of input goes up then it will affect the businesses badly.
Chinese Yuan is competing with its rivals in order to compete with its rivals
in order to supply the world with everything from raw material to finished
goods. If the revaluation of Yuan occurs then it will make Chinese exports less
expensive (Arthur Pinkasovitch, 2010). Revaluation of the currency seems to
be not in the interest of the country. Yuan revaluation will decrease the cost
of domestic consumption and increase in international travel and decrease in
the china’s competitive advantage in the terms of trade. It provides different benefits
in terms of cheaper consumption to the residents of china.  It will have very bad effects if there is a
change in the Chinese exchange rate and will cut down the china’s growth. It will
create the deflation and create pressure on the Yuan. The re valuation of Yuan
may leads to the inflation. The revaluation may decrease the demands for its
goods so it will lead to inflation. Due to the re valuation in the Chinese
currency will increase the purchasing power of its consumers. China has
contributed a lot in terms of purchasing power parity terms and makes a global
growth. Due to re-valuation, global financial markets may become sensitive in
the development of Chinese economy (Clayton Reeves, 2011).

References

            Mark Hedley (N.D), entering Chinese business markets.
(WEB) Retrieved from:

China Market Entry Strategy: A Guide To Entering Chinese Business-to-Business Markets

            Global Edge (2014), China: Risk assessment. (WEB)
Retrieved from:

http://globaledge.msu.edu/countries/china/risk

            Co-face (2015), Risk Assessment. (WEB) Retrieved from:

http://www.coface.com/Economic-Studies-and-Country-Risks/China

            Jay Hoenig (N.D), managing business risks. (WEB)
Retrieved from:

Managing Business Risks

            China Briefing (2011), things to know about doing
business in china. (WEB) Retrieved from:

http://www.china-briefing.com/news/2011/07/29/top-10-things-to-know-about-doing-business-in-china.html

            Simon Johnson (2010), why china is willing to revalue the
Yuan. (WEB) Retrieved from:

Why China Is Unwilling to Revalue the Yuan

            Arthur Pinkasovitch (2010), what a rising Yuan means for
you. (WEB) Retrieved from:

http://www.forbes.com/2010/05/12/yuan-currency-investing-personal-finance-yuan-investing.html

            Clayton Reeves (2011), Yuan appreciation V.s Chinese inflation.
(WEB) Retrieved from:

http://seekingalpha.com/article/248390-yuan-appreciation-vs-chinese-inflation

x

Hi!
I'm Isaac!

Would you like to get a custom essay? How about receiving a customized one?

Check it out