Social Effects
Economic development has progressed further in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work. One demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the north - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development.
China demographic information
Demographic statistics can provide valuable information about potential customers and their spending patterns. Statistics such as the population make-up, per capita income and spending patterns can be important indicators of market potential.
China is currently the most populous country in the whole world with a total population of 1.321 billion as at 31 Dec 2007. With the "one-child campaign" in place, the rate of population growth has slowed down significantly. However, China will face the issue of aging population with more elderly group of people that need care from the working group.
Over the last 10 years after the economic reform, people from all over the country travelled in to the hottest developed area to earn more money and to achieve higher education. However, it is still a long way before China reaches 70% urbanization which is an average for developed countries. The Chinese government continuously come out with polices to improve urbanization and has been successful over the years.
Education in China also improved due to the enforcement of the nine-year compulsory education in 1990s. According to the Fifth National Population Census 2004, the illiteracy rate of population of age 15 and above was 6.72%, down 9.16% from the rate of 15.88% in the 1990 census.
From these sections below, you are able to find details of on China's demographic:
1. China total population trends.
2. China population by regions - provinces and cities.
3. Industrialization and urbanization.
4. China population by age groups.
Business Cultural Environment
Given China's distinct culture differences from the rest of the world, understanding China's business culture is extremely crucial. What works in one's country will not be applicable at all in China. Understanding how the local people think and their business practices can allow one to engage better and faster with them.
Original organizational culture and practices may have to change in order to accustom to China's practices. Thus flexibility and adaptability is the key for any organization to be successful in China.
How do I deal with the Culture Difference?
1. Have clear understanding of China
It is essential to understand the culture of the country before investing in it. Understanding China is vital as China is a land of vast diversity. As such it is important for the company to understand the culture and the society’s values before establishing operations in China. Only through understanding the culture and values strong foundations can be built and higher chance of success can thus be achieved.
2. Understand local business practices
Given China's distinct culture differences from the rest of the world, understanding China's business culture is extremely crucial. What works in one’s country will not be applicable at all in China. Understanding how the local people think and their business practices can allow one to engage better and faster with them. Original organizational culture and practices may have to change in order to accustom to China's practices. Thus flexibility and adaptability is the key for any organization to be successful in China.
3. Acquire local knowledge and establish local presence
A. Establishing a representative office in conjunction with a powerful domestic private sector partner that has access to all necessary information and contacts in their field is the widely practiced formula practiced by foreign firms who already enjoyed success in China.
B. Another way will be through setting up joint venture. Most importantly it has to be the selection of the correct partner. Finding the right partner may require more time, patience and experience but it is never a hassle to spend more efforts in choosing the partner because a wrong partner will definitely guarantees failure.
C. Chinese expertise and local talent must also be incorporated into management or consulted during decision-making since local knowledge is essential as a source of information, access to networks and social and cultural learning, especially in China.
How to make Cultural Coordination?
1. Nurture sound business relationships
Guanxi (relationship) is an important element in achieving successful business in China. Top management must learn to nurture close relationships with their local counterparts. This not only helps them to understand the Chinese domestic market, but also creates avenues for help in times of trouble or in need of assistance. Building strong relationships with business partners can aid in mitigating strategic and operational risks.
2. Establish close relations with government officials
Because the China government plays an important role in influencing market movement and administering foreign investments, a strong government relationship remains an important factor to do business successfully in China. Fewer hiccups may be met during paperwork applications or achieving local authorization if a strong relationship with government officials is in place.
