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Multinational Investment in China

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China is one of the economically developed countries in the world with high levels of technological developments. Most multinational firms in the world have set their focus on investing in the country and effectively penetrating its markets. The Chinese economy is stable. Hence, offering an opportunity for continued expansion and high profitability among these companies. This leads to increased induced investments as most multinational companies desire to enter the Chinese economy and establish business empires. However, several factors such as import and export restrictions, labor relations, and tax rules must be considered by any multinational company willing to invest in the country in order to determine the mode of operations.

This essay explicates various factors that need to be considered by multinational companies wishing to invest in the Chinese economy.

The country has strict import and export restrictions in order to ensure that it maintains a favorable balance of payments. These restrictions have been cautiously put in place in order to ensure that trade contacts with the outside world are maintained. According to Ambler, Xi, & Witzel (2008), custom duties are levied on imports and exports and are considered the most significant aspects of the restrictions. The country charges tariffs on the imports, hence, ensuring that its exports are more compared to imports leading to a surplus balance of payments. China focuses on promoting exports especially to developing countries. This necessitates the reduction in the duties levied on importers. Multinational companies willing to invest in the country should adequately understand these restrictions as this would lead to compliance with the country’s restrictions. The country emphasizes on the provision of authentic and accurate data relating to imports and exports in order to establish the effective duties that could be charged. In cases where an industry imports raw materials from other countries, lower import duties are charged with a view to increasing productivity in the economy. Thus, China import and export restrictions provide for different duties on exports and imports. Imports are charged higher duties compared to exports in order to promote a favorable balance of trade in the country.

China has established labor laws that aim at protecting employees in all sectors of the economy. The labor laws are guarded by the Constitution of the country, hence, ensuring they are fundamental to the citizens of the country.  Boone & Kurtz (2011) points out that the labor laws help in preventing and reducing the abuses that employees face in their areas of work. Thus, employees in China are protected against unfair dismissal, harassments by the supervisors and top management, and unfair wages. Employees are also given an opportunity to express themselves through their trade unions. The labor laws provide that all companies must ensure that employees are allowed to participate in collective bargaining through their various trade unions. Multinational companies willing to invest in China should ensure that all the labor laws are put into consideration as this would ensure that employees are guarded, hence, producing at maximum levels. The government ensures that there are reduced industrial actions through continued negotiations with trade unions across the country. With these laws, China ensures that all employees enjoy their working in various sectors of the economy.

Tax is a crucial part in the development of China’s economy. The significance of taxes to the economy necessitated the establishment of effective tax rules that ensure that the system is economical, it achieves a high level of production in the economy, and it is fair among individuals. In China, tax rules provide that multinational companies must submit their interim tax reports in every three months. This facilitates monitoring of activities and determination of whether effective taxes are paid by the company.  Council (2011) asserts that tax rules also provide that companies should always deduct taxes from their employees at source and contribute to the social security. All multinational and other local companies must comply with the tax rules in order to ensure that there is no interference in the production process.

I would include this information in the report. I would ensure that the report covers the policies on employee relations and employee welfare that are antithesis to what the CEO believes in order to ensure that the report is adequate in its presentation of information. Inclusion of this information is vital, as it would enable the CEO to understand the real situation on the ground hence providing for the necessary changes. The information would play a significant role in changing views of the CEO in relation to these policies. Omission of the information would negatively affect the company because of continued practice of the beliefs of the CEO relating to employee relations and employee welfare. Therefore, I would include the information in the report with the aim of ensuring that the company complies with all policies of the country hence achieving an effective level of performance and profits. The company would also be stable in the Chinese economy due to reduced industrial actions due to the changes that would take place because of the inclusion.

In conclusion, China is one of the most developed countries in the world in terms of technology and other aspects. Multinational companies all over the world have focused on investing in China and effectively penetrating her rich market. However, several considerations need to be adhered to by these companies in order to be successful in their activities in China. For instance, multinational companies should consider tax rules, export and import restrictions, and the labor laws in China. This will facilitate increased profitability and survival in the market due to government support.

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