At the beginning of the 21st century, China becomes one of the promising countries for investments and market entry. China provides economic opportunities to Southeast Asia, and the competition that China presents is a natural component of the international political economy. Inflation rates, balance of payments, exchange rate stability, government budgets, and the record of growth are considered to evaluate the prospects for economic instability or crisis. GDP per capita growth rate is the highest in China (8.8%) in contrast to other Asian countries (GDP per capita, 2001). The average rate of population growth is lower than in India and Indonesia, thus it is expected to be about 1,476.0 ml in 2025 (2004 World Population Data Sheet, 2005). Demographic factors, taken into account together with measures such as disposable income per head, show that China and India are two potential markets for market entry and such products as Crisp Potatoe Chips. According to the statistical results, China expects liberalization of the market, and that is why the possible economic risks will be minimized. However, during the late 1990s, ethnic Chinese did begin to realize their potential as a bridge as economic relations between China and the ASEAN states made great strides forward (Kwan 2004). The increase in investments in China by ASEAN influences trade especially exports from the ASEAN states to China. At the same time, China’s trade with the world increased 2.8-fold. In contrast to other Asian countries, China has a stable political situation and high rates of economic growth. According to the survey, “China was the largest FDI destination in the world in 2003, overtaking the US” (FDI Confidence Index, 2004). Geographically FDI covers Russia, India, South America (Brazil), Middle East, and North Africa. Nevertheless, China remains the leader in FDI. For instance, in 2003, FDI inflows in China were over $53.5 billion. The economic prognosis says that 40% of the world’s investors “expected a more positive outlook on China’s economy” (FDI Confidences Index, 2004). According to the legislation, the tax rate of incomes for domestic-funded and foreign-funded companies in China is 33%, but the actual average tax burden of foreign-funded enterprises is 11-13% (Kwan 2004).
Taoism and Buddhism are the main forms of religion in China. The official language, Chinese, has many variations and dialects. Mandarin is considered the official spoken standard of the Chinese language. The population of China is about 1315.84 million people with 0,7% of the average population growth rate. This is about one-fifth of the world’s population. Characteristics of an Overseas Chinese business enterprise include an autocratic, centralized style of management. Authoritarianism is a primary value in Eastern cultures in general. The Overseas Chinese management style is both a function of the family character of management and a response to the hostility so often experienced in the external environment (Kwan 2004). Chinese culture is complex based on unique behavior patterns and a particular social setting. The combination of the Chinese language and religion creates a unique culture and traditions which differ greatly from the Canadian traditions and should be taken into account by the Crisp Potatoe Chips management team. Overseas Chinese enterprises appear to have a tendency to retain this patriarchal character, or extended family structure, even if they grow. The patriarchal founder-owner in a Chinese enterprise is generally surrounded by an internal network of clan members who occupy all key positions.
A joint venture will be the best mode of entry for Crisp Potatoe Chips. A joint venture with a local company will help Crisp Potatoe Chips to overcome cultural problems and compete with large suppliers. The commonality of respective goals (the resources and technology that each player) is crucial to the future success of the two firms. A joint venture will help Crisp Potatoe Chips to improve a firm’s potential profitability through the use of or sharing another firm’s expertise (Angwin, 2007). The first step will be to find similar businesses in China interested in growth and development. The next step is the restructuring of the corporation and opening of the office in China. The third step is the development and implementation of promotion and advertising campaigns. The particular assets an acquisition will bring to the parent firm, whether they are in personnel, technology, products, or facilities, must be supportive and complementary to the firm’s strategic goals and mission.
Angwin, D. (2007). Mergers and Acquisitions. Cambridge University Press.
“FDI Confidences Index” The Global Business Policy Council, 2004, Web.
GDP per capita annual Growth rate. (2001). Web.
Kwan, Ch. H. China in Transition. (2004). Web.