Question

How do you plan for an international business with changing rules and taxes in a Communist government like China?

Answer 1

In a communist government like China, it would be better to take entry within such countries in the form of joint ventures, partnerships or licensing. This is because of the risk involved in conducting business in a highly controlled economy. Large investments in the country directly can be very risky and sudden change in taxation and business policy from the side of government can have a sharp impact on business and its profitability. China is a huge market and therefore can not be ignored, however, it is essential to understand the dynamics of Chinese market and level of government control on different businesses. It becomes easier for companies if one can partner with existing Chinese businesses in the form of joint venture or licensing etc. This will give my company and business a exposure of Chinese markets without actually bearing whole of the risk involved. The top leaders of the company should be aware of all the aspects of country like China before pouring large investments and locking large deals in the region.