The Chinese corporate governance code is apt in a state controlled economy or rather a planned economy whereas, today’s world is changing dynamically, posing challenges to all organizations so the Chinese code is not effective enough to meet the challenges of the changing circumstances. This is the most pressing problem of the corporate governance code of China (Shleifer et al, 1997, pp. 737-783).
The age old policy of China does encourage transfer of technology from multinationals to home run organizations in order to develop the same state owned and controlled environment in the automotive industry. The policy of China restricts easy entry into the automobile market although it is the largest automobile market in the world. In case, some new company wants to bring down thebarriers to entry then the investment plans of the company must be approved by the agencies allotted by the Chinese government. In case, a foreign company wants to enter the Chinese automobile market then the only option is to enter a joint venture with a local company in order to enter and reap the benefits of the largest market in the world.
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