US Regional Bank operating in China

US Regional Bank operating in China

Introduction

This paper intends to explore a case that a regional bank of US decided to set up an office overseas at a country where several firms are attempting to expand across the border. Thus, for this purpose China has been chosen, as China has one of the largest financial center and it has great potential to grow in future. Further, this paper also discusses the culture, social and ethnic characteristics of China that may pose beneficial for the US regional bank to prosper. In addition to this, the economic system of China and its history of development are also discussed. The involvement of china government in international trade and intervention in the private sector is also analyzed.

Discussion

According to Needham the Chinese societal, cultural, scientific, and technological knowledge and development have contributed directly to the development of foreign firms operating in China (Buckley, 2010). The basic question is to know why china has been overtaken by the western firms in science and technology despite its earlier success. There are significant attributes of the impact of Confucianism and Taoism on the pace of Chinese scientific discovery. Needham emphasizes the "diffusionist" approach of Chinese science in contrast to an independent inventiveness in the western world. According to him, the Chinese script has inhibited the rational thoughts. A steady scientific and overall progress manifested itself in the Chinese society, but it was overtaken violently by the exponential growth of the modern science after the European renaissance. According to him, china was homeostatic, but never stagnant (Needham, 2004).

The political stability plays a vital role to the development of foreign businesses. Nobody wants to invest in something that is unstable, and the same goes for countries. Investors have been seen to pull out of countries in political turmoil, further causing havoc on the foreign exchange rates (O'Sullivan, 2003).

China introduced economic reforms (free trade) only 30 years after the introduction of communism (socialism) in 1949. China is a country more or less homogeneous in terms of race, and this gives some stability. The Han is the majority race, with 90% of its total population, and then there are 55 nationalities (such as Manchuria, Inner Mongolia, Tibet, etc, Russia and particularly the Soviet Union). Russia was a bankrupt economy when the start of its reforms, but China was not (Hessler, 2007).

China's economic reforms were introduced, but there has been reform of the political system. The CCP still has a monopoly of political power. China introduced economic reforms gradually, first in the field of agriculture, then in industry, and in coastal areas inland. Russia in exchange first began privatizing its public enterprises and unemployment (Needham, 2004). Furthermore, the absence of a legal and institutional system to operate the free market or an entrepreneurial class also proved to be resistance to the process. The privatized companies were taken over by the elite of former Communist bosses which became an oligarchy with mobster's components. An advantage with china was that it ...