Expanding Business into China... Good or Bad?

China is the third largest country in the world (Underwood, 2002). Mandarin is the predominant dialect spoken by its people. The government encourages its citizens to be atheist however, freedom of religion given. They have a population of over 1.2 billion people. China is thought to have the most powerful of all communist governments that exist.

The People’s Republic of China was established in 1949 by the Communist Party of China after the Third Revolutionary Civil War. Their government includes and executive, legislative, and judicial branch and the positions and powers of the President and Vice President are established in the Constitution of the People’s Republic of China.  This Constitution, which was adopted by the country in 1982, is their source of law.

            China’s population increases at a respectable rate of 1.3% per year. The rate of growth is unsurpassed by any emerging country in the world. In 2008, the real growth rate of China’s GDP reported at 9.8% (Travel Document Systems, Inc.). These economic factors have lead to a rapid surge in energy demand. By 2003, China had become the second-largest worldwide consumer of oil (Travel Documents Systems, Inc.).

As the third-largest producer of energy in the world, with expected electricity consumption growth of over 4% through 2030, there is a vast potential market for any energy sector company (Travel Documents Systems, Inc.). 20% of China’s generated electricity is foreign supplied. It is expected that 15,000 megawatts of generating capacity will be added per year (Travel Documents Systems, Inc.). If that’s not convincing enough, 70% of China’s energy consumption comes from coal (Travel Documents Systems, Inc.).  They are also the largest producer and consumer of coal.

            Thomas A. Edison founded General Electric Company in 1878.  They are extremely innovative as well as environmentally conscious. General Electric would benefit immensely from the potential market in China. They offer services pertaining to numerous aspects of the energy sector including electricity, oil, gas and coal. With the rising demand for electricity, light bulb sales will be steadily increasing. GE extracts oil from tar sands and provides customers with “clean, economical, coal-to-power solutions” (General Electric Company, 2011).  They also dabble in hydropower, water control, gasification, rail, nuclear energy, and solar energy, all of which China has a potential market for.

            “The leadership of the (Communist Party of China) is stressed and solidified” (Underwood, 2002) in the Preamble of the Constitution of the People’s Republic. The countries case law differs from our own primarily because there is a lack of strict precedential concept. The previous verdict of one court holds no weight in another court room. In regards to administrative law, citizens have the right to challenge administrative actions however; court review is not permitted in affairs pertaining to national defense or foreign affairs by the state.

            The involvement of government in China’s economy is a lot greater than what we are used to in the United States. Interactions between Chinese officials and those doing business in China are inevitable. “Each significant economic sector (is) supervised and controlled by one or more of these organizations, which included the People's Bank of China, State Planning Commission, State Economic Commission, State Machine-Building Industry Commission, and the ministries of agriculture, animal husbandry, and fishery; coal industry; commerce; communications; finance; light industry; metallurgical industry; petroleum industry; railways; textile industry; and water resources and electric power” (U.S. Library of Congress, n.d.).

The economic activities sheer volume is the only thing that limits the extent of government control. Fortunately, this is leading towards a shift to more indirect guidance from government as well as more of a dynamic economy. Such factors also mean that further consideration of taking advantage of the potential in China’s energy market would be ideal. Such emerging markets could be instrumental to the continued success of companies such as General Electric.

           

               

Work Cited

General Electric Company. (2011). Imagination at work. Retrieved from http://www.ge.com/products_services/energy.html.

Travel Document Systems, Inc. (n.d.) Economy. Retrieved from http://www.traveldocs.com/cn/economy.htm.

U.S. Library of Congress. (n.d.). Roles of the Government and the Party. Retrieved from http://countrystudies.us/china/93.htm.