padlet.

com/nguyenthiquynhngacs2/ol3epmjjzebg4jvb

IB course
Made with fortitude
NGUYỄN THỊ QUỲNH NGA AUG 10, 2021 01:00AM

The Only 1 International Players

1. Three compelling economic reasons to invest in China:
Members:

- Market Potential: with 1.34 billion citizens Nguyễn Thị Diễm Quỳnh - 1911155073
- Market Performance: rapid economic development catapulted Võ Hải Nhi - 1911155066
China from an also-ran in 1980 to the world's second largest Nguyễn Ngọc Cát Hân - 1911155029
economy in 2012
Bùi Lê Phương Hoa- 1911155035
- Resources: China's well-educated population creates an Nguyễn Phúc Lam Kiều - 1911155041
immense pool of productive labor. Wage rates for unskilled labor Nguyễn Ngọc Tường Vy - 1915535623
are less those in many other countries.

Question 1:

Three compelling political reasons to avoid investment in *Three compelling economics reasons to invest in China are as
China:
follows:
- China practices "State Capitalism" whereby the government - China has a great economy:  the current improvements in
manipulates market activities to achieve political goals. China economy's  makes its risks free to investment.

Consequently, MNEs doing business in China often find - A leader in science and technology:  the technology, research
themselves at a disadvantage. Western firms purchased big and development of China make the small business growth
stakes in Chinese companies. Political problems and legal rapidly with large interest.
difficulties short-circuited their plans. Eventually, like many - China’s well educated population creates a pool of productive
others, they sold their stakes and reset their strategies.
labor, at rates that are often less than those in many other
- Lack of effective protection of intellectual property rights can countries

be a particularly damaging issue to American companies.

* Three compelling political reasons to avoid investing in
- Political risk is the likelihood that political decisions, events, or China:

conditions will affect a country's business environment in ways - Negotiations with the Communist-led government can be
that,
difficult: it has a political system with a reputation for a lack of
+ Cost investors some or all of the value of their investments,
transparency and intolerance for dissent. Standards and
+ Force them to accept lower-than-projected rates of returns, conformity assessment. Rules stating how products are
and
designed, manufactured, sold, used and disposed of exist in
+ Threaten the sustainability of local activities.
China which all products must comply with before entering the
market. This can be a very foreign procedure to many
2. Operating safeguards for a company to adopt to better companies, and can impact the appeal of the country.

manage the risks of China’s legal environment:

- The nation has significant rules about the inflows and
Success in China requires a strong understanding of your outflows of capital that can change without public notice.

business capabilities, development of long-term relationships, - Corruption is pervasive in China. Transparency of

and in-depth knowledge of this market. Before making a government procedure and corruption are chief concerns of
decision to enter China, companies should consider their own companies moving into China, although as the new leadership is
resources, past experiences, and willingness to commit a ushered in, this is likely to change. 
significant amount of time assessing and cultivating * One criterion that could be traded off: The risk of suffering
opportunities. Successful entry strategies need to be targeted, from corruption when doing business in China is a criterion that
require well-qualified partners, measures to minimize non- foreign companies have to trade off for the opportunities of
payment risks, and a program for protection of intellectual doing business in this thriving economy, which offers the
property rights.
business a global environment to develop their market scale,
enhance tech level and invest in high profit generating sectors.
Members:
On the other hand, government has been taking measures to
- Cao Ngọc Quỳnh Hương – 1911155037
cope with the corruption issues so the risks of suffering from
- Huỳnh Khánh Linh – 1911155044
the problems will be mitigated.
- Nguyễn Thị Ánh Linh – 1911155045

- Phạm Thị Quỳnh Mai – 1911155047

Question 2: China is the complex legal and political
- Nguyễn Hoàng Tuyết Nghi – 1911155056
environment. Companies can minimize legal risk by applying
- Nguyễn Long Nhật – 1911155060 these operational safeguards:

- Conducting due diligence on the legal and financial - Lengthy negotiation with the government to do business:
background and reputation of key joint venture (JV) partners, Incorporating in China requires telling the government—in
acquisitions, senior managers, vendors, and suppliers before excruciating detail—who you are, what you want to do, how you
entering a formal relationship.
plan to do it, how much you intend to invest, and how many jobs
- Hire qualified and trustworthy managers and employees.
you will create. At each stop of the long march, national,
- Check the reputation of local government officials before provincial, and local officials ask how the investment encourages
committing to a particular locale.
capital formation, promotes exports, creates jobs, and transfers
- Prepare thoroughly its business plan and assess the risks of technology.

the activities supported by the company and the sector’s - Bureaucracy: Regulates activity based more on arbitrary
Chinese regulation
agendas than objective standards. Connections, not
- Conduct thoughtful and extensive investigation before competencies, often matter more.

investing in a Chinese company, buying property or creating a - Conflict between the central and local authorities: As Chinese
joint venture with another enterprise.
folklore warns, “The mightiest dragon cannot crush the local
- Implement internal control procedures and insist on the snake.” The center (located in Beijing) has no control over the
strict following of the legal and internal rules by the employees.
provinces due to the vastness of the country (9.597.000 km²).
- Both Chinese and foreign companies suffer as a result of weak When it sends people to investigate illegal pirating of CDs, local
IP protection in China. So, the key for any company seeking to governors block access to the factories.”

sell products in China is to create and implement a practical - State Capitalism: The government manipulates market
and effective action plan which including: Evaluate what activities to achieve political goals. Consequently, MNEs doing
intellectual property is important to the company; Review the business in China often find themselves at a disadvantage. Exxon
company's product portfolio and take action to register the Mobil, ABB, Caterpillar, and Vodafone purchased big stakes in
patents and marks that have not been properly registered in Chinese companies. Political problems and legal difficulties
China (subject to eligibility standard under Chinese law); short-circuited their plans, and they eventually had to reset
Register both the English and Chinese versions of the marks. their strategies.

Also, a company should take precautionary measures within its

organization and that of its Chinese business partner to protect
its intellectual property. Criterion:

One criterion that we can based on to make a trade off between

Another team ( ☞ﾟ∀ﾟ)☞ compelling economic reasons and political reasons: Market
potential

Members: 

Nguyễn Hồng Trang - 1911155089 With near 1.4 billion people, China market represents a big part
Đinh Quỳnh Vi - 1911155101
of the pie and this part also has a strong buying consumption
Nguyễn Nam Phú - 1911155068
power. This will result in larger revenue and lower production
Châu Đỗ Ngọc Uyên - 1911155094
cost which will increase marginal profit.

Nguyễn Đoàn Hiền Thục - 1911155086

Phan Thu Thảo - 1911155078

2. Operation safeguards
1.
- Be clear about the cocept of legal system in Chinese society.
Three compelling economic reasons to invest: In contrast to some Western countries where legal systems rest
on the rule of law and its legitimate regulations transparently
- Market Potential: most populated country with buying power administered by public officials, China practices the philosophy
steadily increases.
of the rule of man, seeing the right of the “man” (once in the
- Rapid economic development: double real incomes per capita person of the Emperor, today in the form of the CCP) to act free
in just 9 years.
of checks and balances. Rarely does the Chinese criminal court
- Resources: the pool of productive and low-cost brainworker, end with anything other than a guilty verdict. There is really no
has doubled its number of universities over the previous decade, rule of law here, CCP make a decision ahead of time to make a
focus heavily on hi-tech education.
point.

- Strategic Positioning China represents the biggest growth - Business should establish information and IP securities when
opportunity in the history of capitalism. The country is doing business in China. China is well-know for being the theft
experiencing roughly ten times the economic acceleration, on of intellectual property—patents, trademarks, copyrights, and so
more than 100 times the scale, resulting in an economic on. So the U.S. authorities, noting the rarity of legal punishment,
transformation that carries over 1,300 times the force of change charge Chinese officials with tolerating, if not encouraging,
than seen during the Industrial Revolution.
pirates. As following collectivist orientation, rule-of-man legacy,
and dubious enforcement of ambiguous laws—conditions that
create a political and legal morass. China is the premier
Three political reasons to avoid investing:
counterfeiter in the world.

-  Investigate in the requirements and targets of the

government to get the the project approved.   Incorporating in
China requires telling the government—in excruciating detail— versus the risks of doing so:

who you are, what you want to do, how you plan to do it, how - The cost of operating business in China, including legal and
much you intend to invest, and how many jobs you will create.
economic costs.

- Prepare thoroughly its business plan and assess the risks of 2. Suggested operational safeguards:

the activities supported by the company and the sector’s - Fully understand the environmental laws, regulations, and
Chinese regulation. In China, the rules often change standards of the host countries, as well as the key environmental
unexpectedly and create unclear regulations, obligations or risks for their projects.

prohibitions for companies.

- Prepare thoroughly its business plan and assess the risks of
the activities supported by the company and the sector’s
Chinese regulation.
– Conduct thoughtful and extensive investigation before

💋💋
investing in a Chinese company, buying property, or creating a
Yêu đi học chi joint venture with another enterprise.

- Implement internal control procedures and insist on the strict

Members:
following of the legal and internal rules by the employees.

- Lê Nguyễn Minh Hằng 1911155031;

- Businesses should work with their home governments to
- Nguyễn Quang Phúc Hảo 1911155033;
press the Chinese government to honor its commitment to open
- Trần Thị Minh Hương 1911155038;
markets, institute basic economic rules of the road, enforce
- Nguyễn Ngọc Minh 1911155051;
those rules it does have, and protect intellectual property rights.

- Đặng Thị Thảo Ngân 1911155054;

- Foreign Corporates should clear with the Chinese
- Hoàng Thị Phương Bảo Nhi 1911155062.
government (and within their own boardrooms) on what they
will and will not accept as the price of admission to China’s
1.
marketplace.

Compelling economic reasons to invest in China:

- Release existing computer code and patents for public use,
- Marker potential: 1.34 billion citizens, steady expanding form alliances with Chinese partners for joint production, and
market scope, reduced number of the poor, domestic markets in intensify their lobbying efforts with influential Chinese
early high-growth stages, etc.
government officials. Involving Chinese stakeholders in the
- Market performance: rapid economic development, the benefits that flow from technical innovation may over time
second-largest economy in 2012, etc.
promote greater enforcement protection.

- Resources: well-educated population creating an immense - China has political institutions that minimize the long-term
pool of productive labor (both factory and brain-workers), a risk of sweeping political change. Therefore it should have an
current five-year economic plan to study alternative energy, exit strategy also.

energy efficiency, environmental protection, biotechnology,

advanced information technologies, and high-end equipment
manufacturing, etc.

- Strategic Positioning: biggest growth opportunity in the

Dream team
history of capitalism, high economic acceleration (100 times the
scale), etc.
3.1.
Compelling political reasons to avoid investing in China:

- China practices “State Capitalism” whereby the government 3 COMPELLING REASONS TO INVEST IN CHINA:

manipulates market activities to achieve political goals.

Consequently, MNEs doing business in China often find + Market factors: highly populated - growing income -> increase
themselves at a disadvantage
in spending; “good” economic situation; good economic
- Political and legal systems make business operations a performance 
nebulous and frustrating process. Hence, many Western firms + Factor endowment: tremendous progress in infrastructure
sold their stakes and reset their strategies as purchasing big investment (still far to go), well-educated population
stakes in Chinese companies.
+ Strategic positioning: biggest growth opportunity in the
- Bureaucracy: its political and legal systems impose many
history of capitalism
time-consuming tasks. Moreover, China tends to stack the odds
against foreigners who are bold enough to forge ahead in the 3 COMPELLING REASONS TO AVOID INVESTING IN CHINA

face of an elaborate government bureaucracy and a fledgling

legal system. A bureaucratic system that regulates activities + Connections, not competencies, often matter  more. The 
based more on arbitrary agendas than objective standards. vastness  of  the  country leads to center authority has no
Connections, not competencies, often matter more.
control over the provinces. That means local officials, wherêver
- The long-running conflict between central and local Chinese they are headquartered, are often left alone by their comrades in
authorities further confuses issues. Even though the central Beijing
authorities in Beijing may appear to be all-powerful, the politics + The theft of intellectual property—patents, trademarks,
of powerful local fiefdoms often subvert their authority.
copyrights,  and  so  on. Relentless,  widespread,  and 
- IP rights: the theft of intellectual property—patents, sophisticated  robbery  of  their  intellectual property fuels
trademarks, copyrights, and so on.
China’s economic surge. MNEs can  lose  hundreds  of  billions 
A criterion to trade off the opportunities of operating in China annually  to  counterfeiting
+ Legislation is chock-full of ambiguities. Rarely does the  
Chinese criminal court end with anything other than a guilty Market Potential: With 1.34 billion citizens, China resets
verdict conventional analytics. Consider that the Walt Disney
Corporation is building a $4.4 billion theme park and resort in
A CRITERION TO TRADE OFF Shanghai where 330 million people—more than the population
of the United States—live within a three-hour drive or train ride.
People’s factor: Huge opportunities in consumer demand due to China’s market scope steadily expands. Its economic growth has
overpopulation, when FDI has its affiliate in China, there is a rich reduced the number of poor by more than a half-billion since
source of labor. 
1981. Hundreds of millions more, though poor, see a brighter
future.
3.2.   
The operational safeguards that we would recommend Market Performance: Rapid economic development catapulted
companies adopt in order to manage the risks of China's legal China from an also ran in 1980 to the world's second largest
environment are as follows economy in 2012; analysts see it becoming the world’s largest
+ Should register and apply Intellectual Property in order to sometime between 2016 and 2036. Growing income spurs
protect the trademark, image, copyright of the business from consumer spending. During the U.S. and British industrialization
the theft of intellectual property in China. Meanwhile it is in the nineteenth century, real incomes per capita doubled in 50
complained that  there is relentless and widespread  robbery  of  years. China did the same in nine years. While China’s GDP
intellectual property and counterfeit goods, China rarely puts a growth is slowing, it remains among the top performers in the
legal punishment. Therefore, businesses should use an IP world. In response to this growth, exports to China have
securities assistant when doing business in China. increased
+ Foreign companies need to avoid political problems and legal  
difficulties relating Chinese socialist market economy while Infrastructure: In a multiyear program, China is investing
doing business in China trillions on housing, offices, highways, airports, seaports,
+ Foreign companies and the Chinese government must waterways, dams, power grids, high speed trains and
incorporate, work together in forming a corporation in China to communication networks.
have the same vision and mission.   
Resources: China's well educated population creates an
Vương Tú Vy -1911155107 immense pool of productive labor. Wage rates for unskilled labor
Nguyễn Quang Sĩ - 1911155075 are less than those in man' other countries —perhaps 5 percent
Lê Ngọc Thanh Vân - 1911155100 of comparable costs in the United States, Japan, and Europe and
Nguyễn Thành Vinh - 1911155103 a third of those in Mexico and Turkey. Besides efficient factory
Nguyễn Phạm Thu Uyên - 1911155098 workers, China boasts a large and growing number of
productive, lower-cost brainworkers. China’s current five-year
economic plan directs millions to study alternative energy,
energy efficiency, environmental protection, biotechnology,
advanced information technologies, and high-end equipment
Butterfly Players manufacturing.
 
Group Member:
Strategic Positioning: China represents the biggest growth
 
opportunity' in the history' of capitalism. The country is
Trần Thuý Hằng - 1911155032
experiencing roughly ten times the economic acceleration, on
 
more than 100 times the scale, resulting in an economic
Nghiêm Mai Yến Nhi - 1911155064
transformation that carries over 1,300 times the force of change
 
than seen during the Industrial Revolution.
Tôn Nữ Thục Oanh - 1911155067
 
 
Nguyễn Tấn Tấn - 1911155076 Three compelling political reasons to avoid investment in
  China.
 Nguyễn Thị Minh Hoàng - 1911155036
   
Question 3-1: Identify three compelling economic reasons to China practices “State Capitalism” whereby the
invest in China. Then identify three compelling political government manipulates market activities to achieve
reasons to avoid doing so. Recommend a criterion one could political goals. Consequently, MNEs doing business in
use to trade off the opportunities of operating in China versus China often find themselves at a disadvantage.
the risk of doing so.  
  Western firms purchased big stakes in Chinese
companies. Political problems and legal difficulties are
Three compelling economic reasons to invest in short-circuited their plans. Eventually, like many others,
China.
they sold their stakes and reset their strategies.
 
 Political risk is the likelihood that political decisions,
events, or conditions will affect a country’s business Minimizing legal risk: Companies can minimize legal risk by
environment in ways that: Cost investors some or all of conducting due diligence on the legal and financial background
the value of their investments, Force them to accept and reputation of key joint venture partners, acquisitions, senior
lower-than projected rates of return, and Threaten the managers, vendors, and suppliers before entering a formal
sustainability of local activities. relationship. Companies should also conduct pre-employment
  screening of all employees and hire firms to screen and audit
China relies heavily on export growth, and for this reason vendors. Finally, companies may also wish to check the
the government still seeks to protect local firms, and reputation of local government officials before committing to a
especially state-owned enterprises from imports, while particular locale.
encouraging exports  
  Question 2: Operation Safeguards
Lack of effective protection of intellectual property
rights can be a particularly damaging issue to American In order to succeed in China, you must have a complete
companies,  awareness of your company's strengths, the ability to develop
long-term relationships, and a thorough understanding of the
Recommend a criterion one could use to trade off the market. Companies should consider their own resources, past
opportunities of operating in China versus the risk of
experiences, and willingness to commit a significant amount of
doing so
time assessing and cultivating opportunities before deciding to
enter China. Targeted entry strategies, well-qualified partners,
 The criteria used to trade off here is the cost that foreign
measures to reduce non-payment risks, and an intellectual
investors must endure to minimize their risk of investing in
property rights protection program are all required for
China and to develop their business in this prospective market.
successful entry strategies.

Areas that will cost foreign investors are listed below:

When founding and ending a firm, companies must follow

Labor force: China is attractive to foreign investors with more
domestic regulations. Recruitment of personnel, mutual
than 1.3 billion consumers and a labor force of just over 800
protection of current workers, getting financing, safeguarding
million workers. However, the population is unevenly
investors, paying taxes, cross-border commerce, and contract
distributed. The vast distances between seats of authority helps
execution must all be done in compliance with relevant
local officials evade the watchful eye of faraway bosses.
regulations. Companies from throughout the world must be aware
 
of China's culture. Furthermore, China must broaden its horizons
Piracy and Intellectual Property robbery: A sensitive tripwire is
in order to adopt the new culture. It is possible to achieve
the theft of intellectual property—patents, trademarks,
successful collaboration between enterprises and countries
copyrights, and so on. MNEs complain that relentless,
through knowing each other's cultures.
widespread, and sophisticated robbery of their intellectual
property fuels China’s economic surge. Aggressive estimates link
nearly a third of the Chinese economy to piracy. To combat that
problem, the strategy for targeting organized piracy was
developed to stop the trade in these goods around the world, Cộng Đồng
and help businesses secure and enforce their rights overseas. Nguyễn Hồng Gia Hân - 1911155028
Moreover, foreign investors are well advised to evaluate the Lê Yến Nhi - 1911155063
types of manufacturing operations they wish to bring to China. Chung Ngọc Nhã Thi - 1911155079
Investors that must bring in technology will need to develop Nguyễn Đan Thi - 1911155080
robust IP protection programs and apply information security Nguyễn Quý Thương - 1911155087
technology to separate sensitive information that could be used Lê Thanh Tùng - 1911155093
to create competition from other information required to run
the business. In addition, employees who routinely come into Question 1:
contact with intellectual property (IP) or financial information 3 compelling reasons to invest in China including:
should receive a summary pre-employment screening to verify Significantly increasing market potentials in China
their resume details. China’s market scope steadily expand. Moreover, its economic
  growth has reduced the number of poor by more than a half-
Legal and regulatory advice seekment: The principle of forming billion since 1981. Based on that basics, China’s market
a corporation “for any valid business purpose” does not exist performance has rapidly developed from an also-ran in 1980 to
there. Incorporating in China requires telling the government. the world’s largest sometime between 2016 and 2036. Therefore,
MNEs endure protracted negotiations in obtaining permission to the real income per capita also increases overtime to improve
open local operations. Foreign-invested enterprises that plan to the standard of living and economic development. Furthermore,
operate or invest in China or partner with a Chinese company Chinese population ranks 1st place in the world, which possibly
need to understand how the regulations apply to them before create a large potential buying market.
entering into any agreements. Therefore, they need to wisely High-standardized infrastructure and technology
seek legal and regulatory advice from experienced professional China has invested a great deal on its infrastructure including
firms in China. airports, offices, highways, etc., which creates a good basis for
attracting foreign investors due to the convenience of Thẩm Quỳnh- 1911155074
transportation and setting up infrastructure. Moreover, the Phương Uyên - 1911155097
technology is also developing greatly in China, which Thúy Vy - 1911155106
consequently could create a good base for foreign investors Nguyễn Khánh Trinh - 1911155091
without having to spend too much capital on reconstructing. Phan Đỗ Quyên - 1911155072
Abundant resources
China has an immense pool of productive labor based on Chia Câu 1:
well-educated population, with a wide range of literacy, 1.1 Three compelling economic reasons to invest in China
technical skills and wages. Market potential & performance: China's market scope
steadily expands. Most domestic markets are in early
3 political reasons to avoid investing in China including: high-growth stages. Many MNEs that came for low-cost
Copyrights are inconsistently protected: Intellectual workers stay for increasingly well-off shoppers. Also,
property is the legacy of a business. Legal vacuum and growing income in China spurs consumer spending.
lack of transparency in China are likely to lead to IP China's real incomes per capita doubled in 9 years.
problems. Resources China’s  well-educated  population  creates 
The financial system is murky and favors state-owned an  immense  pool  of  productive  labor.  Wage  rates  for 
entities, which, despite all the private-sector growth, still unskilled  labor  are  less than those  in  many  other 
make up 40% of China’s economic activity, according to countries. Besides  efficient  factory  workers,  China 
the OECD boasts  a  large  and  growing  number  of  productive, 
China - US trade war: has an impact on equity price and lower-cost  brainworkers. China’s current five-year
investment growth. The war resulted in a decrease in economic plan directs millions to study alternative
equity price, loss in market capitalization and eroded energy, energy efficiency, environmental  protection, 
investors’ confidence. The war is going to continue  biotechnology,  advanced  informa-tion technologies, and
high-end equipment manufacturing.
A criterion one could use to trade off the opportunities of Infrastructure: China is investing trillions of renminbi on
operating in China versus the risks of doing so is the cost. housing, offices, highways, airports, seaports, waterways,
Although the basis of technology, labor and mass production in dams, power grids, high-speed trains, and
China can help to reduce cost when operating in China, some communication networks.
political reasons above can also raise the cost. Therefore, when 1.2 Three compelling political to avoid doing so
operating in China, there is a must to consider the cost, which is Difficulty from China’s State Capitalism : the
the most important criterion possibly used to trade off. government manipulates market activities to achieve
political goals. Consequently, MNEs doing business in
Question 2: China often find themselves at a disadvantage. Ambitious
Regulatory risk in China is high. Although many sectors of Western firms such as Exxon Mobil, ABB, Caterpillar, and
China’s economy have become more market oriented, numerous Vodafone purchased big stakes in Chinese companies.
restrictions and a massive bureaucracy still hinder full Political problems and legal difficulties short-circuited
implementation of regulations and make the approval process their plans. Eventually, like many others, they sold their
unpredictable. Here are some operational safeguards stakes and reset their strategies.
recommendation to improve the risk management of the legal Bureaucratic system: regulates activity based more on
environment in China arbitrary agendas than objective standards. Connections,
Work with the Chinese government to honor its not competencies, often matter more. 
commitment to open markets, institute and enforce basic Unfair treatment between local and foreign firms: China
economic rules, and protect intellectual property rights. relies heavily on export growth, and for this reason the
Diversification can reduce risk  government still seeks to protect local firms, and
Prepare an exit strategy under bad circumstances. especially state-owned enterprises from imports, while
Tailor the global approach to compliance and invest in encouraging exports. Therefore, foreign firms and local
more localized procedures and specialist teams firms are treated unfairly.
Having a strong understanding of your business
capabilities, development of long-term relationships, and Câu 2:
in-depth knowledge of this market
Conducting investigations on the legal and financial China's legal system is not well protected. Rules are not enforced
background and reputation of partners before entering a properly. Government is also biased towards local companies.
formal relationship For foreign businesses to operate well in China, they need to:
Conduct thoughtful and extensive investigation before
investing in the China market. For a clear and detailed
view of this market
Prepare thoroughly its business plan and assess the
Sixy risks of the activities supported by the company and the
sector's Chinese regulation.
Members
Prepare for transferring risks: For political risk, the risk
Lê Thị Mai Trinh - 1911155090 transfer can basically be achieved in three ways. The
 most common way to deal with political risk today is Strategic Positioning: China is experiencing an economic
through insurance. The second way is to hedge the risk acceleration higher than any country in the world. Most
through a bank or other high value companies are now venturing to relocate to
financial institution.The third way is to transfer the activity or China, aiming at the high-income population.
activity exposed to the risk through different forms of => China represents the biggest growth opportunity in the history
unbundling. The latter signifies contractual arrangements such of capitalism. The country is experiencing roughly ten times the
as joint ventures,franchising and various forms of counter trade, economic acceleration, on more than 100 times the scale, resulting
shifting part of the risk to an outside entity in an economic transformation that carries over 1,300 times the
IP protection programs and apply information security force of change than seen during the Industrial Revolution. 
technology: In order to minimize the risk of *Political Reasons
counterfeiting in China, foreign investors are well advised China practices State Capitalism: The Chinese
to evaluate the types of manufacturing operations they government manipulates the market activities just to
wish to bring to China. Investors that must bring in achieve political goals. This being said, the government
technology will need to develop robust IP protection has its own standards in accepting any company to
programs and apply information security technology to operate.
separate sensitive information that could be used to => China practices “State Capitalism” whereby the government
create competition from other information required to manipulates market activities to achieve political goals.
run the business. They must also regularly monitor Consequently, MNEs doing business in China often find
supply and distribution networks and the marketplace. themselves at a disadvantage. Ambitious Western firms such as
Exxon Mobil, ABB, Caterpillar, and Vodafone purchased big stakes
in Chinese companies. Political problems and legal difficulties
short-circuited their plans. Eventually, like many others, they sold
their stakes and reset their strategies.
(Some observers argue that, when it comes to doing business in
China, the number one rule is to throw away the rulebook. Sage
foreign investors abandon the notion that Western ideas
Chợ Nhỏ automatically work in China. The principle of forming a
corporation “for any valid business purpose” does not exist there.
Members:
Incorporating in China requires telling the government—in
- Lăng Ngọc Thúy Hằng _ 1911155030
excruciating detail—who you are, what you want to do, how you
- Lê Nguyễn Bình Mình _ 1911155048
plan to do it, how much you intend to invest, and how many jobs
- Lê Nhật Quyên _ 1911155071
you will create. MNEs endure protracted negotiations in obtaining
- Trần Trúc Thiên _ 1911155081
permission to open local operations. At each step of the long
- Nguyễn Ngọc Anh Thư _ 1911155083
march, national, provincial, and local officials ask how the
- Nguyễn Thị Minh Thư _ 1911155084
investment encourages capital formation, promotes exports,
creates jobs, and transfers technology. If you hit the right targets,
1. Identify three compelling economic reasons to invest in only then does the government green-light your project).
China. Then identify three compelling political reasons to Questionable political channels: It is challenging enough
avoid doing so.  to even get accepted to operate in the country but once
*Economic Reasons the operations have started, the issue of city and
Market Potential: China has a market scope that is provincial officials’ power trip can now be an issue as
steadily expanding. China has more than a large well. A lot of authorities have different rules and can
population and citizens have high income and are being involve a lot of issues when running a business.
updated to the latest version of any kinds of goods. That's => Foreign investors often navigate mysterious political channels.
why their spending ability and buying power have The long-running conflict between Chinese central and local
skyrocketed in recent years. authorities further complicates matters. Because of the country's
=> FDI in China in 2019 was $137 billion this number shows that vastness, local officials, whether based in the smallest town or the
many enterprises invested in China due to its market potential, greatest metropolis, are frequently left to their own devices by
and as we knew, investors tend to commit capital to higher-end their Beijing counterparts. There are national regulations, but
industries like healthcare, information technology, engineering, how they are implemented from Beijing to the provinces is another
and luxury goods =>One special thing ab china economics follow matter. “The central frequently lacks authority over the provinces,”
“success domino effect." => the more FDI a region attracts, the observes one observer. Local governors prevent access to the
more it grows factories when the government sends investigators to investigate.
Market Performance: The country has rapid economic The concept of legality: The country doesn’t have a clear
development. They were able to generate such wealth in basis on what is legal, even what is right or wrong. It is
just 9 years and now have incomes doubled which is instead based on the right of the man, which in this case
astounding. This is still at their early stages and yet the is the CCP. This means that anything can be right or
results are highly visible. wrong depending on their decision. 
=> China has reported high single-digit economic growth over the =>Political risk is the likelihood that political decisions, events,
past two decades, especially with Tencent or Xiaomi, which makes or conditions will affect a country's business environment in
it the fastest-growing major economy in the world. these following ways:
 Cost investors some or all of the value of their headquarters outside the country to switch to some
investments Chinese available platform too since there is no way to
Force them to accept lower-than-projected rates of break its Internet system.
return
Threaten the sustainability of local activities. 
=> China practices the philosophy of the rule of man, seeing the Công chúa ngủ trong rừng Thành Nam và
right of the “man” (once  in  the  person  of  the  Emperor,  today 
Nhật Trường
in  the  form  of  the  CCP)  to  act  free  of  checks  and  balances. 
Besides being the law, the CCP is seen as above the law and given
Members
the legitimacy bestowed upon it by its ostensible “mandate from
heaven.”. Rarely does the Chinese criminal court end with anything Nguyễn Thị Trà My - 1911155052

other than a guilty verdict. Rather, explained an FBI Special Agent

Liêu Võ Khánh Huy - 1911155039

and legal attaché at the U.S. Embassy in Beijing, “there is really no

Trần Minh Luận - 1911155046 

rule of law here . . . they (CCP) make a decision ahead of time to Nguyễn Nhật Trường - 1911155092

make a point.”
Vũ Thành Nam - 1911155053

Nguyễn Duy Minh - 1911155049 

2. What sort of operational safeguards would you advise to a

Bùi Thị Thùy Liên - 1911155043
company to adopt in order to better manage the risks of
China’s legal environment? 3.1
Since China's legal system is not well protected. Rules are not
enforced properly. Government is also bailed towards local Three compelling economic reasons to invest in China
companies. Here are some safeguards recommended:
China is a State Capitalism country, which sometimes Market Potential
might lead to negative impacts like monopolism and the A population of 1.4 billion people and GDP of $12.2
government will do all to protect their local firms. trillion have earned China a reputation as a
Therefore try not to disrupt the local business economic powerhouse of the world.
environment by lowering the price, pushing promotion... Its market scope steadily expands
in the long term.  Its economic growth has reduced the number of
Consult the CCP and possible sources. This is to have an poor by more than half- billion since 1981
understanding to prevent risks in such an unstable Most domestic markets are in early high-growth
country from arising... stages
It should work with their home governments to ask the Market Performance
Chinese government to honor its commitment to open Analysts see it becoming the world’s largest 
markets, institute and enforce basic economic rules , and sometime  between  2016  and  2036
protect intellectual property rights. Insist them to follow During the U.S. and British industrialization in the
the world trade organization's rules.  nineteenth century, real incomes per capita
It should understand competition prevailing. Chinese doubled in 50 years
companies are protected by the government. but are not Strategic Positioning
skilled with the knowledge of distribution and marketing.  China  represents  the  biggest  growth 
It should diversify risk by not only concentrating in China opportunity in the history of capitalism
because the relationship between China and some of the Infrastructure 
countries are not going well, especially the US. In  a  multiyear  program,  China  is  investing
Considering risks arising from these relationships would trillions  of  renminbi  on  housing,  offices, 
help the businesses in China to minimize the risks when highways,  airports, seaports,  waterways,  dams, 
they look for partnership outside the country. power  grids,  high-speed  trains, and
China has political institutions that minimize the long communication networks
term risk of sweeping political change. Therefore it Three compelling political reasons to avoid investing in China
should have an exit strategy also. 
Bureaucratic system
Internet censorship in the People's Republic of China
Connections, not competencies, often matter
(PRC) has made some controversial events censored from
more.
news coverage, preventing many Chinese citizens from
Chinese leaders regard state control of business
knowing about the actions of their government, and
activity as the most reliable path toward
severely restricting freedom of the press. Moreover, the
harmonious prosperity
Chinese government prohibits or strictly licenses wholly-
The long-running conflict between central and
or partially owned foreign firms seeking to provide value-
local Chinese authorities. The center often has no
added telecommunications services such as Internet-
control over the provinces.
based calls, video conferencing services, online search
Underdeveloped formal legal system
and data processing, or virtual private network (VPN)
Legislative gaps, hazy interpretation, lax
services. Therefore, doing business in China means the
enforcement, and philosophical disagreements
directors along with employees having to switch to the
Chinese network. In some cases, it is necessary for the
 China practices the philosophy of the rule of man. China is spending trillions of dollars in homes, offices, highways,
The CCP is seen as above the law and given the airports, seaports, rivers, dams, power grids, high-speed trains,
legitimacy bestowed upon it by its ostensible and communication networks over a multiyear period.
“mandate from heaven.”  
The world’s premier counterfeiter Three compelling political reasons to avoid investing

The theft of intellectual property 1. No independent judiciary. 

American companies lose hundreds of billions The government manipulates market activities to achieve
annually to counterfeiting political goals, so there's no independent judiciary.

Local and provincial authorities rely heavily on

pirates to power local economic growth 2. China's political decision affects investors’ benefits. 
China excels in making high-quality knockoffs. For example, Following the G20 meeting in Toronto in 2010,
China reluctantly let the yuan rise. This made Chinese goods less
Recommend a criterion one could use to trade off the
opportunities of operating in China versus the risks of doing competitive.

so 
3. US-China trade war
Strategic Positioning: With the biggest growth opportunity
China presents, many MNEs have expanded quickly their The fact that the US and China reacted fiercely with tariff
production and sales in China. This strategic positioning point of measures on imported products into their markets, not only
harming these countries themselves but also affecting many
China helps create big growth opportunity in China, however,
other countries.
has to suffer from the great control of the Government for
national political reasons as China practices “State Capitalism”.
Therefore, China being strategic positioning is a criterion one Recommend a criterion one could use to trade off the
could use to trade off their big growth opportunity of operating opportunities of operating in China versus the risks of doing
so.

versus the risk of being not able to predict what the changes in
law for political reasons may come and affect their business. Since China has low manufacturing costs, cheap labor, and
high production capability, China is leading in the mass
3.2 production of products. This results in products' lower price
and easier access to various markets.

Operational safeguards that one should take to better manage

the risk of China’s legal environment

Prepare carefully with full information about China Question2

culture and legal environment, covering all potential
risks. China's legal system is not well protected. Rules are not enforced
Protect the digital security of your company. properly. Government is also biased towards local companies.
Put in place preventative measures and effective internal The operational structure that we would recommend companies
controls. This should ensure chops can only be accessed adopt in order to manage the risks of China's legal environment
by trusted individuals who need them as part of their job. is as follows:  
Pay attention to the arbitration system, be clear in 1. Companies must respect domestic rules when starting
contract which system will be applied. (international ones and closing a business. Activities such as recruiting
highly recommended). employees, obtaining credit, protecting investors, paying
Purchase intellectual property insurance. taxes, trading across borders and executing contracts
must comply with applicable law.
2. Foreign companies with the Chinese government must be
able to work together in opening up the market such as
Những cô gái dui nhộn
having the same vision and mission, mutual
Question1 : understanding of existing rules, and mutual protection of
existing workers. Chinese workers should be prepared to
Three compelling economic reasons to invest in China. follow foreign worker's way of working.
 1. Diversification 3. Global companies must understand the culture in China.
Unlike any other world market, this market has a lot of In addition, China must open up to accept the new
commodities that allow the investor to diversify his/her culture. By understanding each other's culture, we can
portfolio. Therefore, diversification caters to the investor’s produce good cooperation between companies and
requirements and thus he can create better avenues for earning countries.
profits.
4. A firm's director of Chinese operations should be
responsible for implementing a system that can work
2. Potential market:  around disruptions caused by public health crises,
A populous country with 1.34 billion people. China's rapid environmental calamities, or large-scale social unrest.
economic expansion propelled it from an afterthought in 1980 to 5. Though China has a large and cheap labour force, not
the world's second-biggest economy in 2012.
many of them have skilled knowledge. Companies should
create partnerships with universities and colleges to
3. Infrastructure train students in their desired way.
 6. Companies should collaborate with their home Nguyễn Ngọc Thảo Nhi - 1911155065
governments to encourage China to keep its Dương Ngọc Hồng Vân - 1911155099
commitments to open markets, implement and enforce Đặng Vũ Thúy Vy - 1911155105
basic economic norms, and protect intellectual property Châu Lê Mỹ Uyên - 1911155095
rights. Insist that they respect the regulations of the Nguyễn Quang Khải - 1911155040
World Trade Organization.

Team member: 
Nguyễn Trúc Mai Phương - 1911155069

※※※※※※