China predominantly is a communist country with centralized economic decision making. However in 1978, market oriented reforms were introduced to open the markets in china up for investment and growth.
The economic condition and working environment is very attractive to foreign investors, therefore increasing FDI in the company at an accelerating pace. Recently in 2002 a policy has been passed whereby the Chinese market has been furthered opened by restricting government intervention and increasing promotion of private investments by foreign parties. This has also come about due to the entrance of China into the World Trade Organizations (WTO) in 2001.
The Chinese market and the economy is one of the fastest growing economies field by low cost of operations and abundance of human resource. The country has observed immense incremental growth since the 90s, which is mostly attributed t the investments made by foreign companies in mainland china. In the first nine months of the 2002 financial year, the direct foreign investment increased by 14.7 percent from that in 2001. It is predicted that the GDP of China will surpass that of France by 2005 and by 2020, the country will be boasting its position as the third super power of the world. Such an environment is a promising environment for the operations of Starbucks.
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