China is a market almost every company, whether domestic or a multinational, wants to conquer. With more than one billion people potentially waiting to be customers, and an economy that is currently fourth largest in the world (at US$1.97 trillion), businessmen worldwide are beginning to recognize what a powerhouse this former sleeping giant is.
For the past two decades, Chinese leaders have realized that China can no longer shut itself off from the world. For it to prosper, it must adapt to the free-market economies of the other countries it wants to do business with. After the death of one of the most powerful leaders of china, Mao Tse Tung, the country, under the leadership of Deng Xiaoping, set to modernize itself and loosen some of the restrictions communism has brought about to the country. At present, the People’s Republic of China has a socialist government.
China is the one of largest country in East Asia with an area of 9.6 million square kilometers and 1.3 billion people living in the country (CIIC, 2007). The country’s central government is seated at its capital, Beijing. Aside from this, the country’s population is growing at a rate of 5.87 per year despite their one-child policy. At the moment, the population is slightly skewed favoring 51.5 percent towards the male gender compared to 48.5 percent of female. Majority of the population is composed of those who can be part of the productive workforce (ages 15-64 years) at almost 71 percent.
Most of the Chinese live near the eastern coast of the country, near the most fertile and accessible lands. This is the area of the Yangtze Delta, Sichuan and the counties and cities along this coast (Heilig, 1999). Ninety percent of Chinese live in around here, which is roughly 30 percent of the total land area of the country. This area is quite dense at 354 people per square kilometer (Heilig, 1999). This is also the most industrialized area in the country.
China is bounded by the East China Sea, Korea Bay, Yellow Sea and the South China Sea on its eastern side. The rest of the country is bounded by the following countries counterclockwise starting from the north east: North Korea, Russia, and Mongolia. Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan, India, Nepal, Bhutan, Burma, Laos and Vietnam (CIA, 2007). It is the fourth largest country in the world, after Russia, Canada and the United States (CIA, 2007). Depending on what part of China one is at, the terrain can be mountainous, dessert, flat and swampy, hilly or fertile. It can either be very hot, like in the Gobi Dessert, tropical like in the southeast or extremely cold like in the mountains of the Himalayas.
China is rich in natural resources. The CIA, in its fact book, cites that China has coal, iron ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, uranium and hydropower potential from its rivers. Unfortunately, the country is visited by typhoons or what Americans would call a hurricane, leaving damages in its wake. Aside from this, areas near the country’s major rivers also cause flooding and the country is also vulnerable to tsunamis, earthquakes and droughts (CIA, 2007).
Majority of the people are literate, with Mandarin as the official language, although several dialects are also used, like Cantonese and Shanghais (CIA, 2007). However, because of China’s exposure to the outside world, some Chinese are beginning to learn English.
In doing business with any country, it is important to learn about their culture and society. This is to ensure better understanding and avoid embarrassing situations of unknowingly insulting the host country and jeopardize Chinese culture has rich traditions dating from thousands of years ago. Until the last century, China has been ruled by dynasties. However, China has undergone several changes in its political structure from democratic to communism to socialism at present.
The Chinese have moved forward and dress similarly to most westerners and reserve their traditional dress for celebrations and special events (Premier Star Co., 2007). Red is considered a lucky color for Chinese.
The Chinese also place a high regard for a person’s credibility, image and honor, which is close to their concept of “face” (Premier Star Co., 2007). The chinaunique.com website advises that the concept of “face” is ingrained in their culture so they are careful not it insult, embarrass, shame or demean a person. Causing embarrassment to a business associate may result to severed business times. Maintaining his “face” may be crucial in conducting a deal.
Training or acculturation to this concept begins at a very young age. People are taught how important their image to the outside world or “face” is. In responding to strangers on survey and interviews, responses are likely to be influenced by the respondent’s perception of how it will make him or her look, or their “face”. Other ways of obtaining information would have to be done. Aside from altering the usual method of how market research is done, trying to get responses from Chinese counterparts, like in process improvement, should also be done creatively in such a way that the concept of “face” is taken into consideration and respondents are encouraged to help improve the process. An example of how this can be circumnavigated is requesting for information on how to improve production presented in such a way that the team perceives that honesty is needed in order for the group to save face.
This concept is also prevalent in most Asian cultures so a foreigner must be familiar with the concept and respect it in order to successfully negotiate and do business with them.
The Chinese also believe in the concept of extended families. The family is a strong unit in China, with children either living with or nearby their parents. The influence of family can also be seen in personal and business decisions. Again, in doing business with the Chinese, familial ties need to be considered as well.
Most modern conveniences and appliances that Americans are used to are still rare in most Chinese households like washing machines, dryers and telephones (Premier Star Co., 2007). City dwellers, of course have more appliances than those that live at rural areas. This presents an opportunity for many foreign companies who have managed to penetrate the Chinese market.
China has been touted an economic miracle – rising from civil war and the Cultural Revolution for most of the second half of the twentieth century. Since then, any rise or fluctuation in the country’s economic activities has had great repercussions throughout the world.
China, as it is known now, was established in 1949 as a communist government, with the Soviet Union’s recognition (Chinavoc, 2002). However, it only became stable when the civil war ended and most of the nationalists fled to nearby Taiwan and set their own government. Up to now, China does not recognize the sovereignty of Taiwan and considers it as a province.
After the civil war, the communist government under Mao Tse Tung set to rebuild their country with their “Great Leap Forward” program to gain economic and technical development at a fast pace (Chinavoc, 2002). People were sent to communes to work at factories, mines and other establishments. They were supposed to be self-sufficient units. After a few years of trying to recover in the early 1960s, Mao tried to retake control of the country by initiating the Cultural Revolution in 1966, with the thinking that capitalist thought was creeping into the country’s policies. This led to intellectuals being sent to the communes to teach them the value of working for the party’s benefit all the time.
After Mao’s death in 1976, reformists led by Deng Xiaoping slowly gained control of the Communist party leadership and were able to start instituting their reforms (Chinavoc, 2002). However, despite the effects that the Cultural Revolution wrought to the country, Mao was still recognized for his efforts to unite China.
Deng Xiaoping gained leadership and started giving more freedom to people in the communes in terms of deciding what to produce. The government policy turned from prioritizing politics to economics (Chinavoc, 2002), the start of the Four Modernizations: industry, agriculture, science and technology. His leadership saw the rise of what the Chinese call the “Second Revolution”.
However, while there were more freedoms in the economy, political freedom is not yet as well developed as international human rights groups would like to be. There have been calls for the Chinese government to free political prisoners and administer reforms for freedom of speech, which, ironically, is part of the ratified 1982 constitution.
China is yet to strengthen its business regulation and banking systems although analysts are confident that the country will eventually fix these issues. In the meantime, nearby autonomous regions like Hong Kong is providing their own help in terms of having a model for similar institutions. China politics, however, remain as a single-party system up to now.
Central Intelligence Agency (2007) The World Fact book: China. Cia.gov. Retrieved March 23, 2007 from, https://www.cia.gov/cia/publications/factbook/print/ch.htmlChina Internet Information Center (CIIC). (2007) China: Quick Facts. China.org.cn. Retrieved March 23, 2007 from, http://www.china.org.cn/e-changshi/index.htm
China Internet Network Information Center (2007) CNNIC Released the 19th Statistical Survey Report on Internet Development in China. Cnnic.net. Retrieved March 25, 2007 from, http://www.cnnic.net.cn/html/Dir/2007/02/05/4432.htm
Chinavoc. (2002) Chinese modern time history, The People’s Republic of China. Chinavoc.com. Retrieved March 23, 2007 from, http://www.chinavoc.com/history/peoplerepublic.htm