Essay Question: Briefly compare the political regime type in China and the United States. Which of the two would you prefer to do business in and why? (If you want to you may specify the business)
POLI 3001 – Short Essay
Within all nation-states, a political regime is imposed which attempts to protect the individual interests of that country, however, it can also have the potential to limit that countries economic development and the United States and China are no exception to this rule. This essay will discuss, analyse and contrast the distinct regimes of each nation with regard to their positive and negative aspects from the viewpoint of a potential foreign investor wishing to do business in either of these states. Each…show more content… In contrast, the PRC, operating under a single party does not have the same incentives to bow to popular political pressures. However, it was displayed clearly during the Global Financial Crisis (GFC) and noted by (Curran and Von Acker 2010, 185) that in times of crisis the PRC will tend to “retreat from the privatisation of the economy for a significantly increased state intervention”, including such measures as ordering the mainly state owned banks to cut the size of loans granted to private enterprises (Wang and Iftikhar 2010). This kind of government control can have negative impacts on business but are sometimes considered as an acceptable trade-off, as in the case of the compulsory minimum wages set and tightly controlled in the United states by the federal government and set in the PRC by autonomous provinces and municipalities, which allows for corruption and abuse by domestic and international business. While the Chinese market promises cheap land and labour, it must be understood that recklessly abusing such activities will tarnish that rare commodity that is brand image. For some, such as Hitachi the offer is simply too tempting to refuse and they take advantage of what Barboza (2006) describes as the “cheap land and labour” and the “factory system where young workers essentially march to their jobs every 8 hours, often from company owned dormitories nearby”.
Another important consideration when deciding where to locate a business is the