Doing Business in China

Wanita Jones-Lott

September 16, 2012

Unit 4 Individual Project

Professor Alfred Siu

Doing Business in China

FIN630-1204A-01

Abstract

This paper will talk about doing business with China. It will discuss import/export restrictions labor relations, supplier finance, tax rules, depreciation schedules, currency properties and restrictions, and long and short term debts. Then finally it will discuss how each of these would play a role in the approach towards a new venture by explaining the short and long term status.

Doing Business in China

There are many facts and myths about doing business with china. So when it actually comes to doing business in china it is best that you learn about the country itself. Your greatest challenge to doing business in China is navigating the waters. Just like doing business anywhere, performing your due diligence and using your common sense are very important. Most importantly in order to do business in China you must be aware of how their government rules and regulations work.

Import/Export Restrictions

When it comes to imports and exports to other countries, some countries have restrictions based on their different trade policies. These restrictions are guided by different rationales and do change over time. The United States, although a proponent of free trade, and restricts some imports from China. This was to eliminate illegal trading of these treasures. Restrictions on imports and exports are also tied to considerations such as political maneuvering and changes in the balance of power.

Labor Relations

As of right now China follows behind the United States as well as Europe when it comes to job creations. China has no standards for working conditions as well as no social security. China is starting to form legal labor relations. Pensions, maternity leave, and health insurance are some of the initial phases of the talks. There is also talk of country-wide minimum wage to have everyone earning on the same levels instead of by provinces. Hong Kong is not happy about this due to higher costs. China is looking to go "green" although they are talking about creating airlines, aerospace, and environmental industries. China wants to be seen as having a value-chain not just assembly work.

Tax Rules

China's income tax and tax laws for 2011 tax an individual's income as progressive. It can be anywhere from 5% to 45%. Small companies pay 20% corporate tax. Tax rates are subject to change when you are doing business with China (China Unique, 2011). Tax rules and regulations are usually subject to the area or local interpretation. This makes it hard to know what really is the real interpretation as it may be unclear depending