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MOD001068 Chinese 
Economy: Issues and Policies 
Module Leader: Dr Jonathan Wilson (3rd Floor, LAIBS Building) 
jonathan.w...
Lecture 1: Introduction 
 Structure: 
 Key text 
 Assessment 
 Why China? 
 Myths about China 
 Open door policy 
 ...
Key text 
WEEK 1 Development of international business in China 
3 
Title: Managing International 
Business in China 
Publ...
Assessment 
 This will be fully explained during the 
seminar, however: 
 Based on a 3,000 word assignment 
 Assignment...
Why China? 
 Very much a ‘hot topic’ 
 Beijing host city of the Olympic Games in 2008 
 Entered the WTO in 2001 
 Impr...
Myths about China 
 1.3 billion customers 
 China is ‘westernising’ 
 Chinese people prefer low prices over brands 
 C...
China’s Open Door Policy 
 Implemented by Deng Xiaoping December 
1978 
 Four modernisations – defence, agriculture, 
in...
WEEK 1 Development of international business in China 
8
China’s Open Door Policy II 
 SEZs – Shenzhen, Zhuhai, Shantou 
(Guangdong), Xiamen (Fujian), Hainan Island 
 Characteri...
China’s GDP real growth 
rate - % 
WEEK 1 Development of international business in China 
10 
http://www.indexmundi.com/g/...
China’s Economic Growth 
 Why has China witnessed such 
phenomenal economic growth? 
 Market liberalisation 
 Fuelled b...
Benefits of economic growth 
 Growing middle class 
 Fewer people in poverty 
 Accession to the WTO to broader room for...
Gap between rich and poor 
 Salaries rose 7.5% in the last 5 years in China 
 Example salaries – Project manager: £12,17...
Development of SOEs 
 Many now privatised under the governments reform policy 
(from mid-1990s) 
 Private enterprises no...
Early stages of FDI 
 Largely restricted by 
government 
 Joint venture only option 
 Many industries e.g. media not 
o...
The strategic choices for 
transnational corporations (TNCs) in 
China 
WEEK 1 Development of international business in Ch...
Problems encountered with 
early investors in China 
 Understanding Chinese culture 
 Poor infrastructure 
 Corruption ...
Next week 
 Read: Xiaowen Tian ‘Managing 
International Business in China’ pp.22- 
49. 
 Read: ‘The dragon awakens: What...
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Development of International Business in China Part 1

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Lecture notes on International Business in China, this is the first part of the lecture notes series.

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Development of International Business in China Part 1

  1. 1. MOD001068 Chinese Economy: Issues and Policies Module Leader: Dr Jonathan Wilson (3rd Floor, LAIBS Building) jonathan.wilson@anglia.ac.uk WEEK 1 Development of international business in China 1
  2. 2. Lecture 1: Introduction  Structure:  Key text  Assessment  Why China?  Myths about China  Open door policy  Economic growth  Early stages of FDI WEEK 1 Development of international business in China 2
  3. 3. Key text WEEK 1 Development of international business in China 3 Title: Managing International Business in China Publisher: Cambridge University Press ISBN: 978-0-521-67993-0
  4. 4. Assessment  This will be fully explained during the seminar, however:  Based on a 3,000 word assignment  Assignment in the module guide  Submit via Grademark  Based on set questions, covering the full learning outcomes WEEK 1 Development of international business in China 4
  5. 5. Why China?  Very much a ‘hot topic’  Beijing host city of the Olympic Games in 2008  Entered the WTO in 2001  Impressive economic growth  Likely to be world’s largest economy by middle of this century  Leading player on world stage e.g. six party talks  The world’s largest recipient of FDI WEEK 1 Development of international business in China 5
  6. 6. Myths about China  1.3 billion customers  China is ‘westernising’  Chinese people prefer low prices over brands  Chinese is simply the ‘workshop of the world’  China does not have any globally recognised brands. Is this a myth? How many can you name? WEEK 1 Development of international business in China 6
  7. 7. China’s Open Door Policy  Implemented by Deng Xiaoping December 1978  Four modernisations – defence, agriculture, industry, science and technology  Based on Special Economic Zones (SEZ)  Tax incentives offered to foreign firms WEEK 1 Development of international business in China 7
  8. 8. WEEK 1 Development of international business in China 8
  9. 9. China’s Open Door Policy II  SEZs – Shenzhen, Zhuhai, Shantou (Guangdong), Xiamen (Fujian), Hainan Island  Characteristics of SEZs:  1. Tax incentives  2. Greater independence from central government  3. Main emphasis on export  4. Mainly contain joint ventures WEEK 1 Development of international business in China 9
  10. 10. China’s GDP real growth rate - % WEEK 1 Development of international business in China 10 http://www.indexmundi.com/g/g.aspx?v=66&c=ch&l=en / CIA World Factbook
  11. 11. China’s Economic Growth  Why has China witnessed such phenomenal economic growth?  Market liberalisation  Fuelled by foreign direct investment  Continued growth likely to continue WEEK 1 Development of international business in China 11
  12. 12. Benefits of economic growth  Growing middle class  Fewer people in poverty  Accession to the WTO to broader room for development  Attractive to foreign investors WEEK 1 Development of international business in China 12
  13. 13. Gap between rich and poor  Salaries rose 7.5% in the last 5 years in China  Example salaries – Project manager: £12,173, Software engineer £6,998, Accountant £4,677, Sales rep: £2,649, Production worker: £1,214 (source BBC)  Biggest divide between urban rich and rural poor in the world  Richest 20% of people account for more than half China’s income (3 times more than those of rural areas)  Government proposes tax reduction for farmers + offering free compulsory education for people in rural areas WEEK 1 Development of international business in China 13
  14. 14. Development of SOEs  Many now privatised under the governments reform policy (from mid-1990s)  Private enterprises now the main players in China’s economy  Led to mass redundancies  Problems with corruption WEEK 1 Development of international business in China 14
  15. 15. Early stages of FDI  Largely restricted by government  Joint venture only option  Many industries e.g. media not open to foreign firms WEEK 1 Development of international business in China 15
  16. 16. The strategic choices for transnational corporations (TNCs) in China WEEK 1 Development of international business in China 16 Cost-orientated strategy Combination strategy Differentiation-orientated strategy Competency-orientated strategy Pressure for local differentiation Pressure for cost reduction Source Xiaowen Tian (2007) p.16)
  17. 17. Problems encountered with early investors in China  Understanding Chinese culture  Poor infrastructure  Corruption and understanding government structure ‘red tape’  Differences in strategic objectives WEEK 1 Development of international business in China 17
  18. 18. Next week  Read: Xiaowen Tian ‘Managing International Business in China’ pp.22- 49.  Read: ‘The dragon awakens: What foreign investors need to know about doing business in China’, Strategic Decision, Vol.23, No.3, pp.6-9.  Read through the module guide WEEK 1 Development of international business in China 18

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