Global Enterprise and Innovation (in China) Essay

Global Enterprise and Innovation (in China) - Essay Example The legal condition of the country is extremely crucial factor which decides the foreign investment. For making a good investment situation there must be a reliable and efficient legal system and the system must be transparent. This will help the investors to perform their business activity without any concern. Despite the above factor several legal problems have been encountered in China which affects the foreign investment and business enterprises (Bulcke & Beule, 2010). The Legal Environment Affecting Business of China China has a good and established legal condition that encourages the foreign investment of different companies and protects their interest to invest in their country. By various rules, regulation, legislation and joint agreement the country has strengthened their legal systems. In order to spread their business in the whole world China is taking part in many global trade activities. For maintaining a good legal environment condition for business, China has repeatedl y modified the existing law and conducted new laws. Moreover, 30 government departments have changed their regulation towards law in approximately 2300 files. By these changes in law and policies on foreign investment activities China has steadily developed a legal environment which is convenient for foreign business interests. For implementing the law there has been a series of actions and procedures regarding the management, establishment, purchase, investment, reinvestment, liquidation, reform and termination of foreign company. By the help of those policies and guidelines, China seeks to attempt the foreign capital entry. In the year 2002 China established ‘Directory of Guidelines for Foreign – Capital Investment’ for motivating foreign company to invest in their construction industry, agriculture industry and technology industry and resource development sector. China also provided permit to the telecommunication industry, insurance industry, financial indust ry, service industry and foreign trade sectors. ‘The General Agreement of Science and Trade’ showed 142 services and business enterprises which are grouped under 11 activities. Foreign investors always want a sound legal condition because it allows high return on investment and they want a system which allows them to withdraw their investment capital according to their strategic plan. There are various methods by which the investor can withdraw their capital investment which are: initial public offer, equity transfer, management takeover, liquidation and purchase share back (Feng, 2010). The Political Environment Affecting Business of China Any country’s political condition has a significant impact on business. There are several factors which a country must consider if it wants to expand the business and investment of foreign companies because a political environment of a country is unstable and can change rapidly. The power of political party and government repr esent the opinion of the country’s citizen. The rules and regulations created by politician have great impact on business. Political condition creates advantages and also disadvantages for certain companies. For example, the policies of Chinese government drove out few U.S. technology