ASSIGNMENT

INTERNATIONAL BUSINESS MANAGEMENT

BY,

NAVNEET KUMAR

1st MBA,

1BG10MBA32,

BNMIT,

BANGALORE.

INTRODUCTION OF HOME COUNTRY:-

I am a restaurant owner from New Delhi, India & I want to start a new branch of my restaurant in China. So I had to study the business environment & other related factors in China which are going to effect on starting a business in China and International trade between China and India.

INTRODUCTION OF CHINA:-

China is one of the world’s major countries. It’s situated in central and East Asia. It’s known because of its rich population, a rising economic super power and its different style of management. China is a country with golden history. Especially, its Chinese Revolution brought a lot of progress in all its sectors. . World politics is becoming even more dynamic and different blocs are emerging in the world. These blocs are of multiple nature, among them are the countries, which are although included in developing countries, but they are trade winners. Their G.D.P rate is increasing continuously.

With more than 4000 years of history, China has the oldest civilization. In Ancient times, Xia Tribe, establish a state in the area of the Hvanghe River (Yellow River) basin. The tribesmen, believing that this was the center of the world, called this state the “Middle Kingdom” and regarded the surrounding areas as peripherals.

Thus China has been known by this name even after the 1911 Revolution which abolished the feudal monarchy and gave birth to the Republic of China. Further again in 1949, after a long struggle, the Chinese communist party under the leadership of chairman Mao Zedong led the Chinese people of all nationalities to over throw the rule of imperialism, feudalism, and capitalism, gaining victory for the new democratic revolution and establishing the “People’s Republic of China”. From then Chinese people took control of their country’s fate and became its masters.

INDIA-CHINA RELATIONSHIP:-

India has always been according a very high priority to its relations with China. China, on the other hand, had been perceived to have accorded higher priorities to its relations with many other countries and regions. Of late, China would seem to be paying more attention to India. This is not as a favour to India but is a part of Chinas pragmatism and primary attention to her own strategic interests. In a way, it is based on the recognition that India has really grown out of her exploited under-dog status of nearly two centuries and of the potential of her current status as a significant power economically as a matter of fact, militarily as a matter of relative strengths, and politically if we can learn to leverage them to our national advantage. The current situation poses many challenges (like getting over past deficit of trust and opposition to international communism) as well as opportunities to India in the conduct of her relations with China in the coming years.

PHYSICAL STRUCTURE

Located in East Asia, on the western shore of the Pacific Ocean, the People's Republic of China (PRC) has a land area of about 9.6 million sq km, and is the third-largest country in the world, next only to Russia and Canada.China has land borders 22,800 km long, with 15 contiguous countries: Korea to the east; the People’s Republic of Mongolia to the north; Russia to the northeast; Kazakhstan, Kirghizstan and Tajikistan to the northwest; Afghanistan, Pakistan, India, Nepal, Sikkim and Bhutan to the west and southwest; and Vietnam, Laos and Myanmar to the south. Across the seas to the east and southeast are the Republic of Korea, Japan, the Philippines, Brunei, Malaysia and Indonesia.

GEOGRAPHY:

China’s geography is varied and complicated, with towering mountains, basins of different sizes, undulating plateaus and hills, and flat and fertile plains.

A bird’s-eye view of China would indicate that China’s terrain descends in four steps from west to east. The top of this four-step “staircase” is the Qinghai-Tibet Plateau. Averaging more than 4,000 m above sea level, it is often called the “roof of the world.” Rising 8,848 m above sea level is Mt. Qomolangma, the world’s highest peak and the main peak of the Himalayas. The second step includes the Inner Mongolia, Loess and Yunnan-Guizhou plateaus, and the Tarim, Junggar and Sichuan basins, with an average elevation of between 1,000 m and 2,000 m.

The third step, about 500-1,000 m in elevation, begins at a line drawn around the Greater Hinggan, Taihang, Wushan and Xuefeng mountain ranges and extends eastward to the coast. Here, from north to south, are the Northeast Plain, the North China Plain and the Middle-Lower Yangtze Plain. Interspersed amongst the plains are hills and foothills.

To the east, the land extends out into the ocean, in a continental shelf, the fourth step of the staircase. The water here is less than 200 m deep.

DEMOGRAPHY:

Hundreds of ethnic groups have existed in China throughout its history. The largest ethnic group in China by far is the Han. This group, however, is internally diverse and can be further divided into smaller ethnic groups that share similar traits.

Over the last three millennia, many previously distinct ethnic groups in China have been Sinicized into a Han identity, which over time dramatically expanded the size of the Han population. However, these assimilations were usually incomplete, and vestiges of indigenous language and culture still often remain in various regions of China. Because of this, many within the Han identity have maintained distinct linguistic and cultural traditions while still identifying as Han.

Several ethnicities have also dramatically shaped Han culture, e.g. the Manchurian clothing called the qipao became the new "Chinese" fashion after the 17th century, replacing earlier Han styles of clothing such as the Hanfu. The modern term Chinese nation (Zhonghua Minzu) is now used to describe a notion of a Chinese nationality that transcends ethnic divisions.

CLIMATE:In terms of climate, China may be divided between the humid eastern region and the dry west. The humid east may be further subdivided between the warm and humid south and southeast and the temperate-to-cool, moderately humid north and northeast. Much of the humid eastern region of China exhibits a monsoonal pattern of temperature and precipitation. In a monsoon climate, the warm summer months are typically the months of maximum precipitation.

Climate wise China may be divided into seven zones.

1. Northeast China. Known for cold winters with strong Northern winds, warm and humid summers, unreliable rainfall

2. Central China is divided for its warm and humid summers.

3. South China is partly within tropics. It is wettest area in summer. Coastal

4. Southwest China is known for summer temperatures moderated by altitude. Winter is mild with little rain. Summer is wet on mountains. .

5. Xizang autonomous region is the next division. It has high plateau surrounded by mountains. Winter is severe with frequent light snow and hard frost. Summer is warm but with cold nights.

6. Xinjiang and West interior consists of desert climate. Cold winters and rainfall are well distributed throughout year.

7. Inner Mongolia is known for extreme continental-type climate, cold winters, warm summers; winter temperatures similar to (1), strong winds in winter and spring, summer temperatures 14—28°C (Jul) with a little rainfall.

ECONOMY

The People's Republic of China is the world's second largest economy after the United States. It is the world's fastest-growing major economy, with average growth rates of 10% for the past 30 years. China is also the largest exporter and second largest importer of goods in the world. China became the world's top manufacturer in 2011, surpassing the United States. For 2010, inbound foreign direct investment into China surpassed $100bn for the first time, and investment overseas by Chinese companies in non-financial sectors totaled $59 billion.The country's per capita GDP (PPP) is $7,518 (IMF, 93rd in the world) in 2010. The provinces in the coastal regions of China tend to be more industrialized, while regions in the hinterland are less developed. As China's economic importance has grown, so has attention to the structure and health of that economy.

China's economy is expected to continue to power ahead with a growth of 9.8 percent this year, and inflation at 3.7 percent, the Chinese Academy of Sciences, a government think tank, predicts in a report.

Despite central government packages to rein in the market, the academy said that housing prices could rise 12.77 percent this year because of high demand and lack of supply.

Economic growth this year may be slower than in 2010 due to a higher base but this will help the world's second-largest economy avoid overheating.

Domestic consumption will be a more important driver by contributing 94 percent to economic growth, compared with 92 percent in 2010.

At the beginning of last year, the academy estimated that Gross Domestic Product would grow 10.2 percent in 2010. In fact, China saw GDP expand 10.3 percent to 39.7 trillion yuan (US$6 trillion) yuan.

It is targeting an 8 percent growth this year. However, inflationary risks remain.

The Consumer Price Index, the main gauge of inflation, may be around 3.7 percent in 2011 as a result of rising agricultural product prices, higher labor costs and resources prices as well as ample market liquidity amid massive bank lending.

China's CPI settled at 3.3 percent last year after peaking at a 28-month high of 5.1 percent in November.

On the property front, the academy estimated that nationwide home prices would average 5,711.51 yuan per square meter this year, up 12.77 percent from 2010. Meanwhile, investment in the property sector is expected to increase 30.57 percent year on year to 6.34 trillion yuan.

The price growth will slow down while some first-tier cities should see price drops amid the central government's harsh policies.But demand still outpaces supply.

RELIGION

China is a country with a great diversity of religious beliefs. The main religions are Buddhism, Taoism, Islam, Catholicism and Protestantism. Citizens of China may freely choose and express their religious beliefs, and make clear their religious affiliations. According to incomplete statistics, there are over 100 million followers of various religious faiths, more than 85,000 sites for religious activities, some 300,000 clergy and over 3,000 religious organizations throughout China. In addition, there are 74 religious schools and colleges run by religious organizations for training clerical personnel.

CULTURE

Confucianism was the official philosophy throughout most of Imperial China's history, and mastery of Confucian texts was the primary criterion for entry into the imperial bureaucracy. China's traditional values were derived from various versions of Confucianism. A number of more authoritarian strains of thought have also been influential, such as Legalism.

There was often conflict between the philosophies, e.g. the Song Dynasty Neo-Confucians believed Legalism departed from the original spirit of Confucianism. Examinations and a culture of merit remain greatly valued in China today. In recent years, a number of New Confucians (not to be confused with Neo-Confucianism) have advocated that democratic ideals and human rights are quite compatible with traditional Confucian "Asian values".

With the rise of European economic and military power beginning in the mid-19th century, non-Chinese systems of social and political organization gained adherents in China. Some of these would-be reformers totally rejected China's cultural legacy, while others sought to combine the strengths of Chinese and European

cultures. In essence, the history of 20th-century China is one of experimentation with new systems of social, political, and economic organization that would allow for the reintegration of the nation in the wake of dynastic collapse.

LANGUAGE

Most languages in China belong to the Sino-Tibetan language family, spoken by 29 ethnicities. There are also several major linguistic groups within the Chinese language itself. The most spoken varieties are Mandarin (spoken by over 70% of the population), Wu, Yue (Cantonese), Min, Xiang, Gan, and Hakka. Non-Sinitic languages spoken widely by ethnic minorities include Zhuang (Thai), Mongolian, Tibetan, Uyghur (Turkic), Hmong and Korean.

Classical Chinese was the written standard in China for thousands of years, and allowed for written communication between speakers of various unintelligible languages and dialects in China. Written vernacular Chinese, or baihua, is the written standard based on the Mandarin dialect and first popularized in Ming dynasty novels. It was adopted with significant modifications during the early 20th century as the national standard. Classical Chinese is still part of the high school curriculum and is thus intelligible to some degree to many Chinese.

GLOBALIZATION:

China’s economy is much more open than Japan. China’s trade in 2004 was equal to 70% of its GDP, Japan’s to 24%. China received $60.6 billion of foreign direct investment in 2004, while Japan, with an economy several times larger and in a phase of restructuring that should have attracted disproportionate foreign investment, received only $20.1 billion.China’s globalization is not confined to opening the economy but more importantly to globalization of institutions. Here the development strategy of contemporary China bears a striking resemblance to that of early Meiji (mid-nineteenth century) Japan, when the Japanese government was sending missions around the world to choose for emulation the best foreign navy (Britain), the best foreign education system (Germany), and so forth. In the intervening century and a half, Japanese practice has become more inward-looking, while China has evolved from Qing defensiveness and Maoist peasant xenophobia to an assimilative cosmopolitanism. Today China is the country that sends missions throughout the world seeking best practice. It adapts not just foreign technology and foreign corporate management techniques but also a wide variety of foreign institutions and practices: international accounting standards; British, U.S. and Hong Kong securities laws; French military acquisition systems; a central bank structure modeled on the U.S. Federal Reserve Bank; Taiwan-style regulations for foreign portfolio investment; an economic development strategy adapted from South Korea, Singapore and Taiwan; and many others. Among the most important of these changes are the decision to adopt the Western concept of rule of law; adoption of competition as a centrally important economic practice; and adoption of English language as virtually a second language for the educated Chinese population.

ORGANIZATION STRUCTURE:-

Chinese organizations are the formal types of organizations. Here are some of the major properties of Chinese Organizations.

Ø As there is formal hierarchy and centralization decisions in the organizations, so the objectives are said by the top management and then implemented throughout the organization. The top management set the clear defined goals, so that subordinates put their efforts to achieve these goals in the positive manner. As there are defined goals, so management put their best efforts to achieve these goals.

Ø As there is formalized organizational structure so top management makes the decisions in the hierarchical manner. So there is concept of centralization of decisions in the organizations. Meanwhile the State enterprises also have the upper hand over the decisions of the other organization.

Ø Each worker or manager is expected to be independent and not rely on anyone else. The tendency, therefore, is toward simple line organizations and broad spans of control.

Ø The decision-making power of State-owned enterprises has been delegated to the management prior to it in certain areas management has to take permission from the ministry of trade Corp. State Council for such Decision-making.

Ø In Chinese culture feed back is given indirectly, for example through the withdrawing of a favor, or via an intermediary person trusted by both superior and employee.

Ø In the State owned enterprises, the policies are said by Giant State enterprises with the help of State economy trade commission, while in the private sector firm it said the policies keeping in view the policies of State owned enterprises.

Ø Many companies have offered employees lifetime employment in China, however, the effect that these employees have on the overall operations of a company is very critical when one of these employees joins a company, and they actually become part of it. They have planned of them including the method of advancement. This trend is currently changing due to the reason that many organizations in China are privatized. The workers or other members of these organizations have been laid off.

ENTRY MODE:

As my business type is “Hotel Business” it is better to go with “Franchising”. Since starting business in China is highly costly, Franchising would be the better choice.

Franchising is a mode of entering into the international market, it means Licensing the privates in the other country to start business under our Brand name and the ingredients to produce the goods what we produce in the Home market by taking some royalty and periodical profits.

MERITS:

1. Your business is based on a proven idea. You can check how successful other franchises are before

committing yourself.

2. You can use a recognised brand name and trademarks. You benefit from any advertising or promotion by the

owner of the franchise - the 'franchisor'.

3. The franchisor gives you support - usually including training, help setting up the business, a manual telling

you how to run the business and ongoing advice.

4. You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same

territory.

5. Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with

a good reputation.

6. You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in

the network.

7. Relationships with suppliers have already been established.

DEMERITS:

1. Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing

management service fees and you may have to agree to buy products from the franchisor.

2. The franchise agreement usually includes restrictions on how you can run the business. You might not be able to

make changes to suit your local market.

3. The franchisor might go out of business.

4. Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough

5. You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor.

6. All profits (a percentage of sales) are usually shared with the franchisor.

CHINA’S FOREIGN TRADE:-

China has made a very swift performance in foreign trade and foreign relations due to its strict and stable foreign policies. Following are the main principles of China’s foreign trade policy. These are extracted from official web site of The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) of China.

Major Principles of Chinese international Trade:-

Following is the extract of the major principles that are followed by the Chinese Govt. in order to control its international trade. These have been Clearly defined on the official Chinese web site.

I. “Stick to the policy of opening up in all directions and expanding foreign trade in all forms.”

The first principle relates to speeding up the pace of opening to the outside world, fully utilize the international and domestic markets and these two resources. It also emphasizes the need to continue to move ahead with the

opening drive in the special economic zones, coastal open cities, coastal open areas and key cities along borders, rivers and in inland areas, and fully bring into play the influencing and driving role of the open areas. It encourages speeding up the development and opening of areas along major transport lines. It also Encourage the mid-western areas to expand opening both externally and internally.

II. “Stick to the policy of deepening the reform of the foreign trade and economic cooperation regime and, with the momentum of the reform, promote the sustained, rapid and healthy development of the foreign trade and economic cooperation sector.”

This reform calls for compliance with the requirements of establishing the socialist market economic system and adaptability to international economic and trade norms in the course of establishing an operating mechanism satisfying globally prevalent economic rules. China sticks to the reform direction characterized by uniform policies, liberalized operations, equitable competition, self-responsibility for profits or losses, combination of industry and trade and pursuit of the agent system. The State will mainly resort to such economic tools as the exchange rate, tariff rate, taxation and credit in regulating foreign-economic activities.

III “Stick to the principle of equality and mutual benefit and " Honoring Contracts and Standing by Reputation"”

In all foreign trade and economic cooperation activities, China has always upheld the principle of equality and mutual benefit and made consistent efforts to respect each other and consult with each other on an equal footing. China opposes the attachment of any unfair and unreasonable conditions. China believes on maintenance of pricing that should be as fair as possible and beneficial to both parties. All economic and trade activities must meet the needs and capabilities of the parties concerned. This principle opposes any party to use certain advantages to gain unreasonably huge profits. Trading terms and conditions, methods of payment, commodity inspection, customs, transport, insurance and arbitration should follow international norms and practices. While placing importance on the development of economic and trade relations with the developed world, China also actively forges economic and trade ties with the developing world and work with these developing countries towards the establishment of a new international economic order. The Chinese government requires all departments, enterprises and individuals engaged in foreign trade and economic activities to follow the principle of Honoring Contracts and Standing by Reputation¡ and set up sound regulations and rules to ensure the implementation of this principle.

IV “Stick to the principle of success through quality.”

This principle means that all foreign trade and economic cooperation activities must center around the idea of quality first in order to attain a good reputation on international markets. It mean that China will choose well-performing enterprises as designed ones, organize production, perfect quality check and acceptance system, implement total quality management, improve the quality of export goods, and realize economic benefits by way of quality and variety. Projects with foreign investment should comply with the State's industrial policy, increase the percentage of technologically advanced and export-oriented enterprises and the ratio of success of these projects. In contracting overseas engineering projects, it is imperative to execute the quality standards as stipulated in the contract so as to foster a bigger number of quality projects; it is also necessary to enhance training of labor services personnel to improve their quality.

V. “Implement the " Macro Foreign Trade and Economic Cooperation"

Since the adoption of the reform and opening policy, China's foreign trade and economic cooperation sector has gradually formed a multi-channel, multi-layer and multi-modality pattern combining commodity, technology, capital and labor services. China adheres to the principle of combining bilateral economic and trade relations with multilateral economic and trade relations to tap the international marketplace in different forms so as to facilitate the sustainable, rapid and healthy development of China's foreign trade and economic cooperation.

VI. “Enhance the uniformity and transparency of policies.”

The legislation system for foreign trade and economic cooperation applies on all types of foreign trade and economic operations. All trade is to be administered in accordance with laws and regulations. Foreign trade and economic departments, enterprises and professionals shall enhance their legal awareness, level of law enforcement and consciousness of abiding by laws and regulations. A uniform nationwide foreign trade and economic policy is also necessitated by the objective requirements of the establishment of a unified domestic market and is in line with the international norms.

Policies on International Trade and Economic Cooperation:-

Following are the main points of the china’s policy on international trade and its policies on international economic cooperation.

Ø With regard to the relations with international organizations for multilateral economic and trade cooperation, China’s principle is to strengthen trade and economic contacts with all members of international multilateral organizations on the basis of mutual respect, equality and mutual benefit so as to promote common development. China is of the of the view that economic development and common prosperity can not be achieved without constantly strengthened cooperation and coordination as well as exchange of needed goods and complementing each other on the basis of equality and mutual benefit. China believes on strictly abiding by this principle in the relevant activities in GATT, WTO, UNCTAD and APEC.

Ø .With regard to the development of regional blocs in the world economy, China’s view is view that regional economic blocs should be open rather than exclusive and be conducive to the establishment of a new international economic order. Given the different conditions in the countries and regions, it is impossible to have just one form of cooperation, the countries and regions concerned may choose a suitable mode of cooperation in the light of their actual conditions.

Ø With respect to the resumption of china's GATT contracting party status, China is willing to enjoy the equal rights that it is entitled to and to perform the obligations commensurate with the level of economic development. Main purpose is participation in multilateral trade system, introduce proper competition mechanism into our country and to deepen the reform of the domestic economic and trade system.

Ø The Asia-Pacific region is the most dynamic region in the world economy today. As a member in APEC, China attaches great importance to the activities of this Organization. In November 1994 at the informal meeting of APEC leaders held in Bogor, Indonesia, President Jiang Zemin clearly stated that diversity and interdependence were the reality of the Asia-Pacific region. Based on this perception, he put forward five principles for the future development of economic cooperation in the Asia-Pacific region which are as follows.

1- Mutual respect

2- Consensus through consultations

3- progressive and steady development

4- extensive cooperation and mutual benefit

5- Narrowing differences and achieving common prosperity

These five principles are also China's principles for dealing with other regional economic organizations. China's principal for bilateral and multilateral assistance is "give and take". In 1982, China began to receive the economic assistance from some developed countries and international organizations. China Takes into account the capacity of the donor countries and priority needs in the economic construction and does utmost to obtain more grants and advanced technologies so as to promote the economic development in our country.

Policies Concerning Overseas Contracts:-

Following are the main points of the policies that China follows while making international contracts.

1.China follows the guideline of equality and mutual benefit, pursuing practical results, adopting various ways and seeking common development in developing overseas contracting projects and labor cooperation undertakings.

2.Enterprises which satisfy the following conditions are eligible to apply for the rights in dealing with overseas contracting and labor cooperation:

1-Economic entities which exercise independent management, assume independent accounting and be solely responsible for profits and losses.

2-Economic entities equipped with relevant personnel, adequate funds and technology in conducting overseas business activities

3-.Economic entities blessed with the track record and credibility of conducting cooperation with those enterprises already granted with the said rights to develop business activities abroad.

3.China practice an organized manner in dispatching its personnel to undertake overseas contracting projects and labor cooperation. People return to China after the fulfillment of the contracts and therefore and expected not to bring social problems or employment pressure to the host country. The government has established the training and examination system for these people and requests departments and enterprises concerned to examine the ethics, technical level and health condition of these dispatched people so as to raise their quality and the government strictly prohibits illegal emigration and unlawful activities by using the channel of official labor service provision.

4.The government constantly improves the coordinating administration mechanism, and strengthens the coordinated service for the enterprises engaging in overseas contracting and labors cooperation via intermediate organizations such as chambers of commerce.

5.The Chinese government actively supports and encourages the development of overseas contracting and labor cooperation undertakings and has formulated corresponding preferential policies and measures in providing preferential loans, tax exemption or reduction and guarantee.

6.The Chinese government actively supports and guides the enterprises which undertake overseas contracting and labor cooperation to develop various forms of international economic cooperation.

Policies Concerning Overseas Investment :-

China's principle in making overseas investment and setting up enterprises abroad is equality and mutual benefit , pursuing practical results , conducting various forms and seeking common development .

In establishing overseas enterprises. China sticks to the principle of equality and mutual benefit, respects the sovereignty of the host country. China does not interfere with the internal affaires of the country and attaches no political conditions. Overseas Chinese-invested enterprises and staff working abroad abide by the local laws, respect local customs and habits. The Chinese take full consideration of the possible conditions and the actual needs of both sides and fully exploit their respective advantages and potentiality..

STRATEGIES TO BE SUCCESSFUL:-

To succeed in China, companies need to do many things well. Aside from the four generic approaches a number of specific critical factors can spell success in China’s current consumer-driven marketplace.

Ø Put the most competent executive in charge.

The China market presents more challenges—including unfamiliar culture, rapidly shifting consumer tastes, and less developed business infrastructure—at a faster than any other environment your organization is working in. To make a business work in China, business executives need to multi-talented. They need to play the role of a diplomat, strategist, manufacturing expert, and distribution expert all at the same time.

Ø Explore underlying values and trends.

Everything in China moves fast. Strategist must learn to see past the typically dramatic symptoms of trends and aim for the underlying trend, and constantly renew their products and services to suit the sustainable underlying trends. Companies must be proactively prepared for rapid change. Coca-Cola is one example within decade of market entry into China. Coca-Cola had already sensed the limitations of its carbonated drinks for the increasingly health-conscious Chinese consumers. So the company brought out a line of natural juice-based, non-carbonated drinks with a local joint venture partner—a move that took Coca-Cola almost a century in North America to make.

Ø Provide real and unique value.

Bristol Myers-Squibb has been very successful selling vitamins in China, in spite of the fact that China is the world’s largest vitamin manufacturer. The key is the galenic formulation of the vitamin, which assists in the absorption of the medication’s chemical component. China is still behind the rest of the world in its galenic technology.

Ø Adopt Chinese values.

The consumption behaviors of Chinese consumers are far more determined by their social and cultural background than any influences from outside. For example, the Japanese manufacturers dominate the color television market in almost every country around the world. However, in less than 20 years after the introduction of color TVs from Japan into China, the market is now dominated by Chinese domestic brands.

GUIDELINE FOR WORKING IN CHINA:-

Many aspects of doing business in China can be highly stressful, especially if a company’s expectations are not in line with what the economy is able to support. To keep the Chinese business environment in a proper perspective.

1-Set Big-Picture Priorities:

In China expect to make tradeoffs. A general manger may be forced to ask; “Will I have excellent manufacturing or excellent distribution?” Or “Will I have national market coverage or no major distribution headaches?” Establish your priorities at the highest order of business needs, and then stick to them.

2-Bepatient:

The most successful multinationals in China, such as Coca-Cola or Procter & Gamble, have been in the country for more than a decade. As successful as they have become, they are still confounded by basic issues in distributing their products from plants to consumers.

3-Be Aggressive:

The competitive environment is no less intense in China than anywhere else. In fast-moving consumer goods, Procter & Gambler, Kao, Unilever, and others have raised competition to the point where they now face shelf fees and advertising fees to secure access to retailers.

4-Adapt Practice To Local Conditions:

When selecting practices to adopt or technologies to utilize, managers need to consider those, which are most appropriate to the existing infrastructure; joint venture partners objectives; and the current skill level of the work force, including supplier and consumers’ employees.

SWOT ANALYSIS:

STRENGTHS:

China has witnessed the rapid development of its hotel properties over the past two decades. The strengths of China's hotel industry rest in (1) the growing popularity of China as a major international business market and tourism destination, (2) the diversity and quality of China's hotel products, (3) the efforts to standardize operations and improve service quality, and (4) increased development by global hotel corporations.

WEAKNESS:

As China's hotel industry prepares for the international challenges ahead, its operators are keenly aware of the

weaknesses that have been hindering effective management in domestic hotel operations. These weaknesses are

particularly evident in (1) certain ownership structures, (2) debt issues, and (3) financial performance.

OPPURTUNITY:

In response to the poor performance of domestic hotel operations, fundamental reforms in China's hotel industry have been initiated. These reforms are intended to transform domestic hotels into profitable and competitive operations by shifting hotel ownership from the state to nongovernment business enterprises. This reform is intended to liquidate the nonperforming assets held by state-owned banks and further reduce the proportion of bad loans. It is hoped that these reforms will make domestic hotels more competitive by late 2005, in time for China to open its hotel development under the WTO agreement. The following section discusses the current reform models and identifies potential opportunities for hotel development and management.

Several hotel-industry-reform models have been applied in various parts of the China. These include

* internal transfer of ownership,

* partnership between current management and new investors,

* exiting joint-venture projects,

* selling hotels to nonhospitality companies,

* hotel auctions, and

* creating domestic hotel holding and management groups.

THREATS:

Impediments to the future development of China's hotel industry need to be evaluated and analyzed for contingency planning. The external threats facing China's hotel industry include (1) the overprovision of hotels, (2) an economic slowdown, (3) intensified competition from neighboring countries, and (4) political disruptions in the region.

Conclusion:-

China is a country with lots of unique features. It is quite unique in many aspects. It has a very long golden history behind it. The history goes beyond even the birth of Christ. It has a very strong and deep-rooted cultural and historical background. In addition to this the country have a very different life style. Its religions, customs, and its society are much different than the other parts of this world.

Apart from its social, historical and traditional aspects China has got a unique way of managing things and doing the business. It has its own set of norms and values that are very much deep rooted in its everyday life. The Chinese way of managing the things have got a deep impact of culture on them. Chinese plan, organize and work in a very different manner. Their way of interacting with each other and their way of evaluating each other is also very much different. Chinese give more importance to known material than the material values as they evaluate and get work from others.

Chinese management style is very much different than the rest of management styles in the world. Their management style has a different criteria of managing the things, doing the things and evaluating the things. There work pattern and working environment is also much more different than the rest working environments of world. Chinese attitudes and there orientation towards management is very much specific and it has got a different way of achieving results.

Chinese are very much conscious about there values and it is very much opposite to the west. Chinese give more importance to norms and values than money. In west money is the god but Chinese will never be ready to sacrifice their any of value, norm or tradition just for the sake of money.

The present international situation presents India and China with a lot of challenges and also opportunities. If the challenges are met and the opportunities fully utilised, the two countries together can soon become a very significant and stabilising influence in world affairs. The developed countries may then have to prepare for a different future, one where they must learn to share political and economic power as never before.

With bold and imaginative thinking in both countries, India and China can agree on a working arrangement despite their different views on the issue of sovereignty over disputed areas along their border. This may still not lead to a return to the Hindi Chini Bhai Bhai relationship, but would send a very strong signal to the world that the two countries are now ready to play their potential roles as partners in the effort to develop a stable and peaceful world order.