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Transcript of business envt in china
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BUSINESS ENVIRONMENT INCHINA
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Introduction Capital : Beijing Largest City : Shanghai
Official Written Language :Vernacular Chinese
Government : Single partySocialist State
Area :9,569,961 km2nd
Population (2012) :1350695000
GDP (2014) : $14.625trillion
Currency : Renminbi
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History
China dates back as early as 4000 B.C. Here we
take a brief look at the ancient Chinese dynastiesto modern day China can trace her culture backto a blend of small original tribes which haveexpanded till they became the great country we
have today.
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TraditionalChinese Culture
One of the worldsoldest civilizations
Varies greatly between provinces, cities andeven towns
Imports Components of Chinese Culture:Literature, Music, Visual Arts, Martial arts,
Cuisine Chinese Religion and Philosophy:
Major influence. Confucianism, Taoism andBuddhism are the three great thoughts. Mostsocial values are derived from these.
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Religion & Philosophy
Confucianism: Key objective of an intellectualshould be to make full use of his ability,personality and intelligence to do good for
the state, society and the world Taoism:A balanced relationship between human
beings and nature. People must performaccording to inherent rules in order to establish a
harmonious and orderly world where everyone isequal and kind
Buddhism: Promotes code of conduct in life.That is what they call Five Precepts of avoidingkilling, stealing, indulging, lying and alcohol
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People
About a fifth of the world's population live in China.
74 per cent of live in villages and small towns. Mostare in densely populated eastern China. Western
China has less than 10 per cent of the totalpopulation.
By law, men marry not until 22 years old, and women
until 20. Late marriage is encouraged and notmore than one child is allowed.
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Geography
Chinas geography takes an important placein its development.
China is guarded from all the sides with manynatural borders. Mountains, deserts, riversand seas formed natural barriers for explorers
and invaders.
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Gobi Desert
It covers much of the northern side of
China.
It is a natural border defense against
attack from nations.
It is important as a possible mineral
resource area with finds of gold and
copper located and possibly oil.
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Himalayas
These extend much over the
southwestern China.
They form a strong natural barrier.
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Plains
Towards the East there are low lying
plains that form the fertile region for
farming.
This region was formerly known as
Manchuria
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Rivers
Two great rivers flow across China :the Yellow River in the north and the
Yangtze River to the South.
It is the water of Yellow river that
nurture the whole Chinese nation
Yangtze Basin is home for 1/3rd of
Chinas population. It is most
important river for agriculture,
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Economy
Industry and agriculture are the largest sectors,producing more than 60 per cent of China's GDP,and employing over 70 per cent of the work force.
China exports $1.2 billion U.S. in consumer
electronics, office machinery, and apparel, as wellas some agricultural produce each year.
The per capita GDP is $2,000.
The official poverty rate is 10 per cent.
Today, China's economy is 43% agriculture, 25%industrial and 32% service related.
Industry is focused on raw mineral processingand the manufacturing of a wide variety of items.
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Major Business in China
China is the global hub for manufacturing and isboth the largest manufacturing economy in theworld as well as the largest exporter of goods.
Major industries in China includes: mining and oreprocessing, metals (iron, steel, aluminum etc),
coal, petroleum, cement, textile, fertilizers,consumer products, food processing,transportation and telecommunicationequipments.
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Contd
Despite the dominance of industries in thecomposition of Chinas GDP, Service Sector iscatching up quickly.
China's services output in 2010 ranks thirdworldwide (after US and Japan)
Services tend to be labour-intensive, theirexpansion may also encourage faster jobcreation, higher wages and greater household
spending.
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Power Industry
Thermal, Hydro and nuclear power industrieshave developed very rapidly in China.
Presently, China is the world's second in theinstalled capacity of generators and generatedelectricity.
The sufficient power supply in China is mainlybecause of the rapid growth of the fuel coaloutput.
In 2001 China exported over 80 million tons ofcoal, becoming the second largest coal exporting
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Contd
Petroleum and natural gas are China's importantenergy resources.
The development of oil industry has accelerated the
growth of local economies and relevant industries,such as manufacturing, iron and steel industries,transport and communications.
In 2003, China's nuclear-power-generatedelectricity topped a historical record with anincrease of 120 percent over 2002. By 2020, Chinaplans to build 27-million-kw nuclear power facilities,
in addition to the 8.7-million-kw nuclear powereneration ca acit alread in roduction and under
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IMPORT EXPORT POLICIES OFCHINA
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In China they enjoys the freedom of undertaking allthe import and export activities includinginternational trade, with the exception of someforbidden by state laws and regulations.
Most of the import businesses in China aretransacted in FOB( Freight on board) prices. Only avery small minority of the import commodities are
transacted on CIF( Cost, Insurance & Freight) terms.The majority of means of payment are in letter ofcredit (L/C).
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General import procedures transactedunder the terms of FOB include:
writing down an effective contract.
writing L/C, booking space, pushing forshipment.
insurance. checking documents.
making payment.
customs declaration.
receiving the shipment. inspection.
goods delivery.
claiming import indemnity.
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Contd
1. The establishment of an effective importcontract
A contract comes into effect once the price is quotedbased on a written agreement, or the contractbetween a Chinese import enterprise and a foreignsupply businessmen is accepted or the price quotedby the foreign supply businessmen is accepted.
2. The writing of a Letter of Credit (L/C)
Buyers have to fill in an application according torules & regulations in the contract so as to write outa letter of credit once the import contract is signed.The content of the L/C must conform with the
articles in the contract.
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Contd
3. Booking space and pushing for shipment
If the import contract is signed under the FOB priceterms, the buyers are responsible for bookingspace. At present, the space booking of China's
import trade is generally entrusted to ChinaNational Foreign Trade Transportation Corporation.
4. Insurance
The insurance of import contract under FOB andCFR terms is on the purchasing side.
http://www.icbs.in/china-trade-guide/import-export-policy-china.htm -
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Contd
5. Checking documents and making payment
The Bank of China will check the number of documentsand contents by referring to the regulations in the Letterof Credit after receiving bank drafts and documents. Ifthey are found correct, the Bank of China will make thepayment to the overseas enterprises.
6. Customs declaration and receiving shipment
Import enterprises, after retiring documents, shouldprepare for receiving the imported products. Once theproduct reached the port of arrival, they should startcustoms declaration and receiving the import articles.
http://www.icbs.in/china-trade-guide/import-export-policy-china.htm -
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Contd
7. Checking, receiving, and goods delivery
Imported goods must be inspected by commodityinspection organizations. If the import goods are foundmissing, damaged or in short, import enterprises can
claim an indemnity with proof from commodityinspection organizations.
8. Claiming an indemnityClaiming for an indemnity often happens in cases inwhich foreign sales parties cannot deliver products, orcannot deliver them on time or the quality, packaging,
amount cannot fit those prescribed in the contract.
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Continued
II. China Export Procedures
In China's export business, BOF terms apply only ina small number of countries and regions whichhave signed agreements with China on the same
delivery terms.Export procedures usually include:theestablishment of an export contract, preparingexport commodities, push for documents, checking
and changing documents, booking space, customsdeclaration, commodity inspection, insurance,loading, writing documents and settlement ofexchange.
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