China has a pyramid shaped government structure. President Hu Jintao heads its government. The cabinet of China is composed of State Council. The State Council has the responsibility of making national policies. National People’s Congress passes key laws that govern operations in this country. It is the duty of China’s ministries to ensure that government policies in the country are carried out (Liu, 2011). The state level bureaus and agencies carry out China’s economic activities. They have the responsibility of regulating financial matters in the economy of China. In addition, they regulate the amount of imports entering China and the amount of exports moving from the country. They also handle issues dealing with intellectual property laws. Currently, China is not a market economy. The state is greatly involved in how business activities are conducted in this country. It discourages foreign investors from conducting their operations in this country. In addition, the government of China does not readily allow free business activities since businesses have to adhere to the strict policies set by the Central Government (Li, 2008). However, the Ņentral Government has been considering options of devolving power so that local authorities can control businesses policies.
b)Economic Analysis of China
The economy of China has been growing for the past 30 years. Its GDP grew by 10.456 percent in 2010. Its total GDP was $ 5,745.13 billion in the same year. However, in 2011, its GDP growth reduced to 9.2 % (Appendix 2). Statistics from economic analysts revealed that the total GDP in 2011 was $ 7.26 trillion (Lardy & Subramanian, 2011). Economic analysts are confident that the GDP will rise in 2012 because China is urbanizing at a fast rate. In addition, the development of the market economy and industrialization will favor the economic growth of this country. The unemployment rate in China has also reduced because of the strong economic growth. In 2010, the unemployment rate of the country dropped to 4.2% compared to the unemployment rate of 4.3% recorded in 2009. Factors that have contributed to China’s strong economic growth include policies that have facilitated the independence of businesses previously owned by the Central Government. Such businesses are given the mandate of making their own decision without being controlled by the Central Government. Moreover, the government has adopted strong fiscal policies that have led to the development of banking sector in the country. Chinese manufacturing sector is also strong and it encourages foreign investors to set their operations in this country. Economists however argue that the economic growth of China will depend on several key factors. One of these factors is inflation. In July 2011, its inflation rate stood at 6.5 % reducing the purchasing power of its consumers (Appendix 1). However, Chinese government adopted many policies and they successfully reduced the inflation rate to 4.2 percent. Moreover, its economic growth will depend on housing prices. Since China needs construction of more houses for the middle class people, there is a risk that the real estate market might collapse due to the many houses built. European crisis also threatens to hinder China’s economic growth (Back, 2012). China exports about 20 percent of its global exports to the European market. If the European debt crisis continues, there is a high risk that its export market might reduce.
The judicial system in China lacks independence. This is because Communist Party of China (CCP) has a great influence on most of the court appointments. The judicial system in the country has People’s Courts, Supreme People’s Courts, the People’s Procuratorates, Supreme People’s Procuratorates and Military Procuratorates (Yu, 2011). The highest court in China’s judicial system is the Supreme People’s Court, followed by Higher People’s Court, Intermediate People’s Court and Basic People’s Court. The commercial law in the country has been undergoing reforms to encourage foreign direct investments (Khan, 2007). The legal system in China has adopted strict measures to deal with any form of business disputes. Such disputes include labor disputes, copyright infringement and unlawful business transactions. This country has many lawyers experienced in commercial law and they help in protecting the rights of majority of businesses in this country. China also has alternative systems where citizens might forward their complaints in case their rights are violated. Examples of such alternative systems include protests, mediation and petition system. Using China’s petition system, citizens forward complaints about wrong treatment received from individuals, businesses or the Central Government. However, the petition system in China has not been that effective because most of the cases filed in this system are not put into consideration.
Cultural peculiarities of China can be investigated using Hofstede’s five cultural dimensions. China has a low score in the individualism dimension. It shows that Chinese people love to work as a group and live as a family. China has a high score in the power distance index. It proves that there is inequality in wealth and power distribution in the society (Colson, 2012). The score of China considering the masculinity dimension is average. It shows that gender differentiation is not common in this country. Chinese score in uncertainty avoidance index is low. This score proves that China is a liberal society. It has a high score considering long-term orientation dimension. It demonstrates that this country has a strong will to overcome obstacles. Most Chinese people value politeness. It is common for Chinese people to greet strangers proving their great value for respect. They use chopsticks to eat their meals. Circumcision, alcohol abuse and smoking are not accepted readily in this culture (Guillan, 2008). Chinese people mainly value Confucian ethics. Confucian ethics focus on the characters and traits of an individual. They also value the importance of molding ones character. These people also value Mohist ethics. Mohist ethics emphasize on the importance of doing good to everybody without considering family relationships.
Market demand for fast foods in China is high. American fast food companies are expanding to this country because there is a demand for sandwiches, pizza and fried chicken. It proves that if Sonic Drive In expands its operations in this country, the sales of its products will be high. The restaurant industry in China has been experiencing tremendous growth. One of the reasons that make the restaurant industry in this country to earn high revenues is that Chinese culture encourages people to eat in restaurants (Kwok & Yip, 2007). Traditionally, the Chinese people meet and spend time with friends in restaurants. Major competitors selling fast foods in this country include McDonalds, KFC, Café de Coral, Fairwood Fast Food and Maxim MX. The main strengths of McDonald’s and KFC are that they have a wide brand portfolio. In addition, they have branches in many countries making them to earn significant revenues. McDonald has a huge capital base and it has helped it to expand in many countries (Watson, 2006). Fairwood Fast Food, Café de Coral and Maxim MX sell local Chinese foods and it makes them to have a wide customer base. In addition, they have a qualified workforce. McDonalds and KFC also face several difficulties. Most consumers are abandoning their products because people are adopting the trend of consuming healthy foods. In addition, high taxes they pay in this country reduce their revenues. Maxim MX and Fairwood Fast Food do not have chains in many countries and this prevents them from earning significant revenues.