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INTERNATIONAL INVESTMENT - A FOCUS ON CHINAVarious forms of international investment have different levels of managerial involvement andcontrol that is retained My interest in the Chinese market has led me to determine which method ofinvestment would be best under the circumstances presented by the Chinese business environment There are several investment methods covered in our management text that allow varying managerialcontrol These include licensing franchising joint ventures and fully owned subsidiaries Investment in ChinaBusiness EnvironmentSince the Peoples Republic of China PRC announced its open door policy on foreigninvestment in 1979 there have been many factors inherent in all forms of investment China is anambiguous environment in which it is difficult to get definite answers to questions relating to costsoperating conditions or requirements Management must be patient in dealing with a variety of local officials ministries as well as thePeoples Bank of China Even commitments are not guarantees as the PRC likes to exercise its rightto change its mind The government is continuously changing the rules and going back onagreements In late 1995 companies were rushing about trying to close deals in a matter of weeks toavoid the changes in plans to be enacted in 1996 Some companies had been negotiating these dealsfor years The change incorporated large tariffs on foreign firms making them no longer able to bringin capital equipment duty free Chinese authorities are also highly unpredictable when assessing customs duties and taxes The average taxes for foreign operations in 1993 were 24 and are rising currentlyDoing Businessin China pg 114 Political EnvironmentManagement must be aware of current political situations when attempting to invest in ChinaMany companies have lost opportunities in China due to political conflicts Unfortunately the onlyretaliation China has is against US businesses Some current political issues include repeatedallegations of Chinese human rights violations threat of withdrawing Chinas most favored nationtrading status and failure to back the Chinese entry into the World Trade Organization Anotherconcern of the US is the widening
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