BUSINESS ENVIRONMENT IN

CHINA
Introduction
Capital : Beijing
Largest City : Shanghai
Official Written Language :
Vernacular Chinese
Government : Single party
Socialist State
Area :9,569,961 km
2
nd
Population (2012) :
1350695000
GDP (2014) : $14.625
trillion
Currency : Renminbi
(Yuan)


History
China dates back as early as 4000 B.C. Here we
take a brief look at the ancient Chinese dynasties
to modern day China can trace her culture back
to a blend of small original tribes which have
expanded till they became the great country we
have today.









In 1949, Chinese Communist Party established the
People's Republic of China, driving Kumingtang Party
to Taiwan Island.
In 1978, China adopted the Open Door policy, ending
the 5000 thousand's history of self seclusion
Traditional Chinese Culture

One of the worlds oldest civilizations
Varies greatly between provinces, cities and
even towns
Imports Components of Chinese Culture:
Literature, Music, Visual Arts, Martial arts,
Cuisine
Chinese Religion and Philosophy:
Major influence. Confucianism, Taoism and
Buddhism are the three great thoughts. Most
social values are derived from these.

Religion & Philosophy
Confucianism: Key objective of an intellectual
should be to make full use of his ability,
personality and intelligence to do good for
the state, society and the world
Taoism: A balanced relationship between human
beings and nature. People must perform
according to inherent rules in order to establish a
harmonious and orderly world where everyone is
equal and kind
Buddhism: Promotes code of conduct in life.
That is what they call Five Precepts of avoiding
killing, stealing, indulging, lying and alcohol
drinking. It leads to self-understanding

People
About a fifth of the world's population live in China.

74 per cent of live in villages and small towns. Most
are in densely populated eastern China. Western
China has less than 10 per cent of the total
population.

By law, men marry not until 22 years old, and women
until 20. Late marriage is encouraged and not
more than one child is allowed.
Geography

Chinas geography takes an important place
in its development.

China is guarded from all the sides with many
natural borders. Mountains, deserts, rivers
and seas formed natural barriers for explorers
and invaders.


Gobi Desert

It covers much of the northern side of
China.

It is a natural border defense against
attack from nations.

It is important as a possible mineral
resource area with finds of gold and
copper located and possibly oil.




Himalayas

These extend much over the
southwestern China.

They form a strong natural barrier.
Plains

Towards the East there are low lying
plains that form the fertile region for
farming.

This region was formerly known as
Manchuria


Rivers
Two great rivers flow across China :
the Yellow River in the north and the
Yangtze River to the South.

It is the water of Yellow river that
nurture the whole Chinese nation

Yangtze Basin is home for 1/3
rd
of
Chinas population. It is most
important river for agriculture,
industry and inland travel.
Economy
Industry and agriculture are the largest sectors,
producing more than 60 per cent of China's GDP,
and employing over 70 per cent of the work force.
China exports $1.2 billion U.S. in consumer
electronics, office machinery, and apparel, as well
as some agricultural produce each year.
The per capita GDP is $2,000.
The official poverty rate is 10 per cent.
Today, China's economy is 43% agriculture, 25%
industrial and 32% service related.
Industry is focused on raw mineral processing
and the manufacturing of a wide variety of items.



Major Business in China

China is the global hub for manufacturing and is
both the largest manufacturing economy in the
world as well as the largest exporter of goods.

Major industries in China includes: mining and ore
processing, metals (iron, steel, aluminum etc),
coal, petroleum, cement, textile, fertilizers,
consumer products, food processing,
transportation and telecommunication
equipments.
Contd

Despite the dominance of industries in the
composition of Chinas GDP, Service Sector is
catching up quickly.

China's services output in 2010 ranks third
worldwide (after US and Japan)

Services tend to be labour-intensive, their
expansion may also encourage faster job
creation, higher wages and greater household
spending.


Power Industry

Thermal, Hydro and nuclear power industries
have developed very rapidly in China.

Presently, China is the world's second in the
installed capacity of generators and generated
electricity.

The sufficient power supply in China is mainly
because of the rapid growth of the fuel coal
output.

In 2001 China exported over 80 million tons of
coal, becoming the second largest coal exporting
country in the world.

Contd
Petroleum and natural gas are China's important
energy resources.

The development of oil industry has accelerated the
growth of local economies and relevant industries,
such as manufacturing, iron and steel industries,
transport and communications.

In 2003, China's nuclear-power-generated
electricity topped a historical record with an
increase of 120 percent over 2002. By 2020, China
plans to build 27-million-kw nuclear power facilities,
in addition to the 8.7-million-kw nuclear power
generation capacity already in production and under
construction.
IMPORT EXPORT POLICIES OF
CHINA


In China they enjoys the freedom of undertaking all
the import and export activities including
international trade, with the exception of some
forbidden by state laws and regulations.

Most of the import businesses in China are
transacted in FOB( Freight on board) prices. Only a
very small minority of the import commodities are
transacted on CIF( Cost, Insurance & Freight) terms.
The majority of means of payment are in letter of
credit (L/C).






General import procedures transacted
under the terms of FOB include:
writing down an effective contract.
writing L/C, booking space, pushing for
shipment.
insurance.
checking documents.
making payment.
customs declaration.
receiving the shipment.
inspection.
goods delivery.
claiming import indemnity.
Contd
1. The establishment of an effective import
contract
A contract comes into effect once the price is quoted
based on a written agreement, or the contract
between a Chinese import enterprise and a foreign
supply businessmen is accepted or the price quoted
by the foreign supply businessmen is accepted.

2. The writing of a Letter of Credit (L/C)
Buyers have to fill in an application according to
rules & regulations in the contract so as to write out
a letter of credit once the import contract is signed.
The content of the L/C must conform with the
articles in the contract.


Contd
3. Booking space and pushing for shipment
If the import contract is signed under the FOB price
terms, the buyers are responsible for booking
space. At present, the space booking of China's
import trade is generally entrusted to China
National Foreign Trade Transportation Corporation.

4. Insurance
The insurance of import contract under FOB and
CFR terms is on the purchasing side.
Contd
5. Checking documents and making payment
The Bank of China will check the number of documents
and contents by referring to the regulations in the Letter
of Credit after receiving bank drafts and documents. If
they are found correct, the Bank of China will make the
payment to the overseas enterprises.

6. Customs declaration and receiving shipment
Import enterprises, after retiring documents, should
prepare for receiving the imported products. Once the
product reached the port of arrival, they should start
customs declaration and receiving the import articles.


Contd
7. Checking, receiving, and goods delivery
Imported goods must be inspected by commodity
inspection organizations. If the import goods are found
missing, damaged or in short, import enterprises can
claim an indemnity with proof from commodity
inspection organizations.


8. Claiming an indemnity
Claiming for an indemnity often happens in cases in
which foreign sales parties cannot deliver products, or
cannot deliver them on time or the quality, packaging,
amount cannot fit those prescribed in the contract.



Continued
II. China Export Procedures
In China's export business, BOF terms apply only in
a small number of countries and regions which
have signed agreements with China on the same
delivery terms.
Export procedures usually include: the
establishment of an export contract, preparing
export commodities, push for documents, checking
and changing documents, booking space, customs
declaration, commodity inspection, insurance,
loading, writing documents and settlement of
exchange.