Major Favorable Business-Climate Factors in China

Factors Influencing Multinationals Expanding into China
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Factors Influencing Multinationals Expanding into China
Introduction
The sudden emergence of China as a dominant nation in foreign direct investment worldwide has made the country essential in advancing globalization. China has become the largest nation in the number of multinational corporations that invest in the country. China is the world’s second-largest economy after the United States and is a vital consumption and manufacturing market with numerous innovations aligned with its business models (Chen, 2017). The paper will highlight several favorable business-climate factors encouraging multinationals to start their businesses in China.
Analysis
Market Size and growth potential
The enormous market potential and its massive economy have ensured that numerous multinationals set up factories in China to produce for the domestic market and, as a result, generate huge profits. This has been fostered by China’s openness to outside investment which has led to the rapid growth of its foreign trade (Zhang & Corrie, 2018). Furthermore, special economic zones established in the Guangdong province have allowed corporations in this area to enjoy autonomy in their investment policies. This has attracted multinationals to expand into such areas since businesses are offered preferential income tax treatments and exempted from import licenses.
Developed infrastructure
China has outpaced countries such as India and numerous other emerging nations regarding its capabilities in establishing the critical components for business growth. The development of infrastructure has been an essential determinant in this area. A highly integrated transportation network for numerous regions in the country has positively led to increased investments made by multinationals (Wang & Wang, 2015). Cities such as Shanghai and Beijing have the best technology infrastructures globally, making business management for multinationals seamless.
Conducive government regulations
The Chinese government has proactively enforced positive interventions for local and international enterprises. Some of these measures include the provision of subsidies, supporting innovation and creativity, and low taxation rates for businesses. Such measures have made the country conducive for both local and foreign entrepreneurs leading to the growth and development of manufacturing and transportation industries whereby multinationals can easily acquire raw materials for their enterprises affordably (Chen, 2017). Furthermore, investment and taxation policies in China, especially in its inland regions, have lower tax rates, encouraging multinationals to expand their businesses in rural China.
Facilitative entrepreneurial environment
China is a key global economic leader as it has opened its market to international trade and its overall economy. It has massively transitioned from being agriculture-dependent to one driven by technology. Due to favorable government regulations, it has become easy for multinationals to identify and formulate meaningful partnerships and find investors in China (Zhang & ...