Sample Paper on Business Environment in China

Starting a Business Consultancy firm in China

One of the major considerations before venturing into business is the availability of market.  A business that does not have adequate market cannot survive its infancy. It is important to carry out adequate research before venturing into a particular business. The other consideration is the extent to which the target market needs the services or the demand of the products to offer. A start-up business flourishes in a location that it is required. A business idea may be viable but if it is implemented in an unsuitable environment it fails.

The other factor to consider is the level of competition in the industry. The more firms that operate within an industry the easier it is for the new firms to enter the market. It is easier to enter such a market because the barriers to entry such as high capital are minimal as compared to a case where there a monopoly in the business (Ambler & Xi). A business start up also requires the owner to have clear definitions on the type of market promotion methods to employ in their business. This requires a consideration of the available mediums, the target market and the cost involved. The failure to carry out adequate research prior to establishing a start-up is a leading cause of the business failure.

This paper examines the Chinese business environment with respect to business consultancy start up. The paper justifies the reason for having the start up in the country and the market entry strategies that the company will adopt. Further, it highlights the ethical considerations that will be observed in enhancing the success of the business. The paper also discusses the strategies that the human resource will use to enhance positive culture in the workplace as well as the financial management activities.

 

Overview of the business environment in China

The ability of the Chinese government to create and enabling business environment has made it possible for local and foreign investors to invest heavily in the economy. One of the factors that have led to the success of business in the country is the political stability that attracts even the foreign investors into the country. Business cannot thrive in an environment that is characterized by political chaos and other instability issues. From an economic perspective, a rise in demand raises the level of productivity in an economy. The level of productivity in the environment is very high due to the increase demand of the nation’s products in other countries. Every country has its own conditions for the companies wishing to establish their businesses in the country, either locally or foreign owned companies.

The government requires that the company must have its name approved prior to making any more steps in registering the company (Hill, 2008). The company seal must be obtained and the approval to make it is obtained from the police. The companies are required to observe all the conditions necessary before establishing the business. Most of the companies operating in the country complain that the cost of doing business is high due to the high cost of labor. The companies are faced with a shortage of qualified manpower and this makes it necessary for them to increase the salaries of the existing employees so as to retain them. In 2012, more than 32% of the companies operating in the country reported to have increased the cost of labor by 10 to 15 percent. There is also high competition between the local and foreign companies in the country especially when it comes to licensing and approval of the business. The local companies also access government contracts more easily than the foreign companies.

The business and management industry in the country started over two decades ago but the market is yet to be saturated. There is ease of entry into the market as the many players join and leave the industry for various reasons. Most of the companies that provide business consulting services in the country obtain their customers online. In a study carried out in 2014, about 649 million of the Chinese population uses the internet. The development in the business consultancy sector in the country has largely been contributed by foreign firms that are still active in the industry.

The demand for business consultancy services in China is high due to the high number of entrepreneurs, some who do not understand the dynamic field of business.  This justifies the need to have the consultancy in the country. To make the best out of a business, it is crucial for one to concentrate on providing a solution to an existing problem. This is the case in the Chinese market because there are a high number of businesses that are started only to end before actualizing their objectives. This is an indication of poor planning and can be solved through the services of business consultants.

Business entry strategy

In defining the business entry strategies, it is important to consider the level of competition in the industry. This is determined by the number of players in the sector in that, the more firms in a particular industry the higher the level of competition. The competition level enables one to define the best way to acquire a large market share by defining how they can satisfy the customers better. The business consultancy industry in china faces a competitive market structure implying that there are a large number of firms in the market selling similar products. It is therefore important to define ways of delivering the best services and products to reach the target market.

The firm will use the joint venture marketing strategy where it will ensure that one of the business partners is a Chinese individual operating in the country. This will aid in the growth of the business, as the partner will help introducing the Chinese culture into the firm. It will also be easier to market the business using the market entry strategy. The firm will use the cooperative joint structure as it is recognized by the Chinese laws and it is also easy to operate.

Services to be provided

Organizational change management

A business consultancy firm in China would offer a wide range of services aimed at helping the entrepreneurs develop their skills in various aspects. Among the services that the business will offer include advising the clients on the organizational change management. In the modern era, change is inevitable and if it is not well managed, it may lead to huge losses by the business. Most of the employees and the management are not resistant to change due to their human nature and this may affect the success of their businesses. At times, the organization may need to change its structure to accommodate the changing needs in the business environment but this may be a challenge to the company. Some of the aspects of change that the business consultants include the behavioral change to allow the employees relate with the stakeholders of the company in the right way. The behavioral change has the impact of enhancing professionalism in the organization.

The other aspect is business development change and this enables the company to achieve a competitive advantage of the other firms providing similar products and services. Business development allows the organization to maximize its profits through increased efficiency. The other area that the companies are advised on with respect to change management is communication. The efficiency of the communication channels put in place by an organization determines the pace at which the company grows. Good communication enhances the flow of information within the organization and this influences the performance of the company positively.

Customer relationship management

The other service that the consultancy firm will offer is customer relationship management. The high level of competition in the market requires companies to be better than their competitors especially in terms of customer service. The success of a company is determined by the extent to which its clients are able to get satisfaction that exceeds their expectations. To achieve this, the company needs to learn how to identify the changing demands of the customers so as to satisfy them in a better way than the competitors.

The customer relationship management involves understanding the reactions of the customers to various changes in the organization and identifying the best possible way to meet these needs. It involves designing methods o f dealing with the current customers and focusing on the future trends in their behavior. Companies that get this service from the consultancy firms benefit from improved business relationships with the customers. This enhances the growth of sales as well as retention of the existing customers.

Supply chain optimization

Supply chain optimization is the other service that the firm will offer to the Chinese entrepreneurs. This will help them improve their efficiency in factors such as distribution of goods, forecasting performance and planning. It is important for companies to be able to manage its operations with regard to the supply of its raw materials and distribution of the finished products. Supply chain optimization helps the companies in achieving good relations with the suppliers and this enhances the efficiency of production. It helps the companies determine the level at which they should make an order so as to avoid running out of stock or having unnecessary stock.

Business and IT strategies

The firm will also advise the clients on the most suitable business and IT strategies. This will help the clients maximize the net worth of their businesses. In the modern business world, it is crucial for companies to identify the best strategies to employ in business so as to operate under minimum costs (Humphery-Jenner & Suchard, 2013). One of the ways that businesses maximize the efficiency of the business is by applying the appropriate information technology strategies. The business strategies are also important in directing the business towards the most appropriate ways to attract new customers as they retain the existing ones.

Legal status of the business

The start-up will be a partnership between two individuals who have the business studies background.  It is important to consider the strengths that the partners have in terms of skills and knowledge. The nature of the start-up requires individuals with academic qualification in business studies preferably the master’s level. This is because such individuals are likely to be able to contribute positively to the business. The partners will be in a position to provide the expertise needed to carry out the business even if they will still need to employ more people.  The partners will contribute capital equally and the losses and profits will also be shared equally.  Having a partner in a start-up is economical in terms of capital contribution, sharing of ideas and greater capacity to access loans. The partnership helps in contribution of a larger amount of capital tan it would be if it was contributed by a single person. This boosts the financial stability of the business and it increases the capability of the business in accessing loans from financial institutions. Further, in case there are changes in the structure of business in future, it is easy to dissolve the partnership (Li-Hua & Khalil, 2006).

 

Human resources and financial management strategies

The two departments will work towards a common goal that is, enhancing the success of the business. However, each department will have its unique roles that will enhance its productivity. The human resource department will have the role of handling all the issues concerned with the employees. The department will be responsible for ensuring that the organization is a good place for the employees to work. This entails carrying out regular research on the changing trends in the work environment in the country. The human resource department will also be expected to enhance a positive culture within the organization and work towards achieving the best out of the employees.

The department will also facilitate various activities in the organization such as team building and training. It will also ensure that the company attracts and retains the best skills and talent applicable in the business consultancy field. To enhance diversity in the workplace, the human resources of the firm will ensure that the firm will employ people from different races, religions and age groups. The department will need to invest in the management of diversity but it is likely to reap maximum gains from the diversity. The different perceptions that a diverse workforce has is important in enhancing problem solving in an organization. The human resource will work to ensure that the firm incorporates the Chinese culture in its operation because most of the clients will be Chinese.

The finance department will work closely with the human resources department to ensure that the employees are paid on time and the right amount. The country is faced with a shortage of skilled employees and the company will have to pay high salaries to attract the best talent. The identification of the talent will be the work of the human resource department but the payment will be done by the finance department (Gaba, Pan & Ungson, 2002). The department will carry out research on the benefit and cost analysis and offer advice to the human resource department on the best salaries to pay.

The department will also work together with the human resources department in facilitating various activities such as training of the employees. To enhance the accountability in the company, the finance department will provide reports to the senior management on the performance of the business every month. The firm will adopt sound financial management strategies by employing qualified personnel in the finance department who will be accountable to the company with regard to performance.

Ethical considerations

The extent to which an organization respects the ethical standards of a given society determines its success. The ethical standards differ from one region to the other and it is therefore crucial for the businesses to understand the prevailing standards.  People from different regions give different meanings to similar activities and this brings about the need to be keen on ethical considerations (Dunfee & Warren, 2001). One of the ethical considerations that the firm will undertake relates to carrying out research. The nature of research that the company will need to carry out may involve human respondents and this raises ethical concerns.

To contain the situation, the firm will make sure that the respondents understand the need for their input in the study. They will only be required to take part in the research after they consent to the activity. The confidentiality and autonomy of the respondents will be guaranteed. The firm will also observe high ethical standards by making sure that it abides with the laid down regulations regarding business such as tax compliance. It is important to abide with the laws of a country as they reflect the moral philosophy of the citizens.

There is a high level of competition in the consultancy industry and the business will be required to use aggressive measures to market the business (Dornberger & Zeng, 2009). The business will ensure honesty in the advertisements in respect to the quality of the services provided. The company will desist from engaging in exploitative activities such as overcharging the services provided. The customers will pay for the services at the prevailing market prices. In dealing with the ethical dilemma that may arise in the business, the company will make use of ethical decision making to arrive at the best solution.

Discrimination of the employees based on their religious, racial or gender background will not be allowed in the organization. The employees will also be required to observe high ethical standards by keeping time and ensuring that they meet their expected roles effectively.  The working conditions of the employees will be improved so as to avoid ethical issues within the organization. The business will also ensure that it establishes strong relationships with parties such as suppliers, customers and creditors.

Conclusion

The success of any business depends on the availability of factors such as qualified personnel, financial resources and the market. These factors determine the viability of the business ideas. The market share of a business determines its success and the ability of the company to acquire a large share of the market depends on the duration it has been n business. Business start-ups are faced with the challenge of attracting new clients because a large part of the market may be loyal to the existing firms. This makes it hard for the start-ups to penetrate the market and it may even lead to closure of the business. It is therefore crucial for start-ups to establish the best strategies to attract and retain their customers. One of the best strategies involves ensuring that the company provides superior quality services to the clients compared to the competitors. It is also important to consider the business entry strategies prior t establishing a start-up to gain maximum benefits from the market.

In the modern business environment, a business must take into account the ethical standards in the region where it operates. Strong ethical standards create a good image for the business and may help the company in attracting more customers. Further, the failure to observe some ethical standards may lead to financial losses by the company in cases where they are sued for misconduct.  The financial losses can be avoided through observing the ethics and laws that govern the country. To enhance service delivery it is important for businesses to observe high ethical standards for the company to realize maximum benefits.

 

References

Ambler, T., Witzel, M. & Xi, C. (2008). Doing business in China. Routledge.

Dornberger, U. & Zeng, X. (2009). The locational factors and performance of the high-tech startups in China. International Journal of Entrepreneurship and Small Business7(3), 312-323.

Dunfee, T. W. & Warren, D. E. (2001). Is guanxi ethical? A normative analysis of doing business in China. Journal of business ethics32(3), 191-204.

Gaba, V., Pan, Y. & Ungson, G. R. (2002). Timing of entry in international market: An empirical study of US Fortune 500 firms in China. Journal of International Business Studies, 39-55.

Hill, C. (2008). International business: Competing in the global market place. Strategic Direction24(9).

Humphery-Jenner, M. & Suchard, J. A. (2013). Foreign VCs and venture success: Evidence from China. Journal of Corporate Finance21, 16-35.

Li-Hua, R. & Khalil, T. M. (2006). Technology management in China: a global perspective and challenging issues. Journal of Technology Management in China1(1), 9-26.