China has a domesticated market since even upon entering a joint venture, the foreign company is not allowed to have more than 50% stake in the business.Chinahas advantages that pulls every business towards the market but passing through the corporate governance code of the country is a Herculean task to achieve initially in order to operate withinChinaand reap the benefits of low costs and high production that no other economy in the world can provide. Previously, a new product had to be approved by government agencies in order to be floated in the market but this clause has been removed afterChinaearned the WTO membership in 2001 (Clarke, 2003, pp. 494-507).
The political front has changed with WTO reforms that have invited immense foreign direct investment in the country and the economy’s change to being a free market economy has pushed politics to a more democratized form than the one man rule that existed in China previously (Eugene & Michael,1983). The legal system of China has improved and modernized since the judiciary was not independent previously but this body had to be modernized in order to serve to the legalities of foreign investors enteringChina.Chinahad to lower its tariffs as a requirement of entering WTO and this has givenChinaan opportunity to avail international trade; as a result,Chinahas increasing exports that pose a threat to ASEAN-5, other Asian countries,USAand Japan (Shleifer, Andrei & Robert Vishny, 1994).
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