Jacob creek is one of the major wine organization in Australia that aims to offer standard contemporary Australian wine along with high verity in expressing their service. In this context, the organisation was first launched in the year 1976. However, the name of the company is based on the Creek that passes through the Barossa Ranges located in South Australia. The company is founded by Orlando Wines in the year 1847 that began its tradition of wine manufacturing more than 160 years ago. The company offers different variety of wines such as Shiraz, Sauvignon Blanc and several other exclusive variety.
On behalf of marketing group for Jacobs Creek we are planning to extend in China.
The purpose of the country report is to understand the economic, political and legal aspects of the environment. In addition to this the report also highlights the impact of inflation and trade on the economic progress of the organisation along with the impact of trade policies and foreign currency policies. It contains detailed information, research, and data required to internalize Jacobs Creek wine in the country and how the company can establish their product in China.
The methodology used is task analysis, data collection from various websites, referring journals, collection of information by referring business reviews.
The data and information collected from various websites might not be accurate. Methods used in this research were limited by resources.
Time constraints: – There has been limitation on the start and end time of this report thus has been generated in a specific time limit.
Economic policy of the Government
Economic policy refers to policy making process, in which approach companies look for to impact the monetary developments to attain communal, financial and political objectives. Planning is the important factor in deciding results and financial execution. Eventually, approach is shaped by legislative issues, which sets out arrangement objectives, and characterizes the guidelines and educate inside which strategy is made. Approach layers working inside this political situation decide how arrangements are expressed and actualized.
China’s economic policy has pulled in around the world consideration, like additional progressed economies, Australian authorities have incredible level of direct exchange with the Chinese government within the areas of regional and international activities. and conferences that take place annually
The Chinese economy emerged during the past few years with advanced increase of 6.7% each of the year. In the year 2018, their growth increased to 6.8% from the prior year with the matching market growth. It has been estimated that the country’s gross domestic percentage is going to increase at 6.5% due to its incredible business performance and its economy is going to grow 6.6% in the year 2018 that is 0.1% more than the previous year forecast.(Cdn.tspace.gov.au, 2018)
The Chinese economy emerged from 6.7% in the second quarter of the year 2018 to 6.8% in the year that is higher than the previous year. However, it has been the weakest phase of expansion from the third period of the year 2016 due to the intense fight over the tariff tax with US and its extensive effort to leverage the dues and financial crisis. In this context, the Chinese GDP have been seen to increase with 6.8% in comparison to the year 2017 that contained financial issues. On the contrary, the industry production of GDP increased by 6% every year along with the rate of retails sales that increased 9% from the previous year with an increase of 8.5% in the last month (Tradingeconomics.com. 2018). Apart from these, the country’s fixed asset increased by 6% with CNY 29.73 trillion during the first phase of the year in comparison the prior months. (Ceicdata.com, 2018).
The per capita income was recorded at 7329.09 US dollars in 2017, considering the change over the years there has been quick development in the per capita income of each family in the China. (Tradingeconomics.com, 2018)
There has been growth in the income earned per person. It is calculated by dividing the area’s total income by its population.
CPI refers to the cost paid by customers in exchange of goods and services within the market. In this context, CPI in China has been fluctuating over the past five years considering this fact, the Central bank increases the rate of interest to make the prices stable. This cause the rise in the value of currency which makes it more desirable.
It has been seen that China’s CPI has increased to 1.9% in the month of July, 2018. Chinese government’s target at 3 percent for 2018 whereas they can maintain desirable inflation rate. (Tradingeconomics.com, 2018)
There has been decrease in unemployment rate of China over the period, which is generating more job opportunities for the people thus jobs are creating a virtuous cycle of development and a stronger economy.
According to (Newell, 2018) China is coming up with nine biggest mega construction projects being worked on around the world.
The near-50km long project will link three major cities in China’s Pearl River Delta and will be the world’s longest bridge. (Tradingeconomics.com, 2018)
Reports sources identified that China is building three Canals with 44.8 billion meters of fresh water from Yangtze River located in china each of the year along with industrialized areas in the north part of country. It will connect China’s four main rivers thus, will help in increasing import export amongst the countries as well as they can make optimum use of natural resources. (Tradingeconomics.com, 2018)
China has operated under the single political party since the birth of communist China called
The people republic of China is ruled by the Communist Party since the year 1948 when it first made its victory against the Chinese Civil war by defeating the national government. Under the authority of constitution, it is the communist party that has the entire political power and governing authority for democratic centralism (Wang et al. 2016). In this context, the government encourages open discussion over policy making decisions in collaboration with all the members of the government for upholding collective decision making. However, there are several small composition of political parties such as United Front, who do not have the power against the communist party.
It is the politburo standing contention that supervises and authorizes the communist party and the military. The committee consisted of almost 9 members wherein the majority of government authority is focused in one position of the paramount leaders. On the contrary, the legislative branch of Chinese government is comprised of the highest department of the communist members that is known as the national people congress (Zhang et al. 2014).
The legislative board is comprised of 50 members within the Chinese people republic, the central people authority that helps to shape one among the three interlocked branches of management. The other party is the communist party and the people’s freedom force.
China maintains consistent banner of peace, progress and unit with the independent foreign trade that is prevalent with the emergence friendly relation with the other neighboring nations present on the five standards of peaceful existence. In this context, the country maintains mutual respect and territorial understanding of non-aggression towards their neighboring countries (Su and Liu 2016).
China is a unique part of the United Nations that represents one among the five permanent members of the security councils. In this context, china is responsible for acknowledging the irreplaceable role of the UN in terms of international affairs. China also assists the activities taken by UN council for tackling the fragile and complicated issues with the UN structure in different varieties such as arms, disarmament and nonproliferation of atomic equipment’s. China also have relation with countries like Australia, India, Japan, North Korea, Singapore, South Korea, U.S.A. (Al.china-embassy.org, 2018)
Over the past 25 years, the Chinese Communist Party’s monetary changes have opened the entryways to perpetual streams of outside venture, generated nearly marvelous development, lifted hundreds of millions of people out of desperation, and impelled Chinese companies onto the global stage. (Harvard Business Review, 2006)
As per Transparency international, China secures 41 out 100 in the year 2017 in the corruption perception index. In China the foreign companies would like to invest in fourteen special trade zones because they are free from corruption.
The legal system of China is based on socialist system of law based on the civil law model. In this context, the people’s republic of china constitution is highest legal authority in China (Lardy, 2016). There are focus major level of Chinese legal court, the grassroots, and intermediate, higher and Supreme Court, specialized court including military, railway and forestry legal system.
Government rules and regulations for establishing a foreign business
China has been depending on foreign investment of business since long period in order to establish major sectors of their growing economy. There are several business sectors that has to face restrictions and prohibitions due to foreign investment. In this context, for doing business the company has to pass through government implementation measures for amending approval of the opened branches. On the contrary, a branch if opened in china by the overseas company, it is not qualified as a legal business. (King & Wood Mallesons, 2012)
The Government has proceeded to actualize a range of policies endeavoring to control property costs in China. (Uk.practicallaw.thomsonreuters.com, 2018) These approaches include:
Tightening bank credits.
Increasing the supply of low-cost housing.
Imposing punishments against holders of sit still land.
Imposing confinements on non-residents obtaining real estate.
It has been found that China’s workforce market is comprised of nearly 900 million staffs, however, the percentage of working employees fell down in the year 2012. The unemployment rate in China is comparatively low with 4.02% according to present report (Chen and Funke 2009). it has been found that the number of employment and labor conflicts event have increased by 1.77million in the year 2016 that is 2.9% more than the previous year. The existing legal trend of china is to develop the employees along with their duty of rights (Becker & Lofstrom, 2010).
Tariffs – relevant (if any)
Chinese Customs authorities are exceptionally precise about import documentation being given completely and precisely. Any mistake can cause major issues, risking delays or seizure of goods. Documentation prerequisites can be broad and may incorporate commercial receipt, certificate of origin, bill of filling, packaging list and special certificates. Exporters ought to work with their traditions broker, cargo forwarder and Chinese accomplice to affirm the narrative necessities for their item earlier to trading to China. (Austrade.gov.au, 2018)
The present account trend of china has narrowed down highly to USD 5.8 billion during the second phase. of 2018 from USD 52.6 billion in the year 2017. On the contrary, the foods trade surplus of the country has been reported as USD 104.2 billion whereas the service deficit came down at USD 73.7 billion. During the first half of the year china reported an existing account deficit if 28.3 billion in contrast to the surplus of USD 68.3 billion during the same year 2017. The average current account of china is seen to be 394.59 USD since the year 1998 till 2018 that reached its highest with 1330.85 in the fourth quarter and recorded the lowest with -341USD in their first phase of 2018 (The Economic Times, 2018).
China has the major economy of trade in the world. The top exporters to China are Australia, Japan, Germany, India, The United Sates, Hong Kong and South Korea. Key imports and exports include fashion, electronic goods, animal & agriculture products, machinery, equipment and tools, chemical, plastic and rubber, beverages and spirits etc.
China has been fruitful in mobilizing internal Foreign Direct Investment (FDI). Pulled in by the country’s venture openings and by its sheer measure and developing domestic market.
The stream of FDI into China has seen an amazing development since the 1980’s. Before these years, FDI was indeed prohibited within the nation. After the start of the open entryway approach outside venture law was actualized which allowed the influx of FDI into the household economy. To begin with these streams were restricted to segments and Extraordinary Financial Zones (SEZ’s), more steps were taken to make a more open and market-oriented economy increasingly FDI was permitted and streamed into the nation.
The Chinese developments have been liberating the financial process of china since the year 1980. In this context, a significant actors of these changes has been drastically opening the capital account. Therefore, the Chinese authorities intends to continue this system with a relatively more flexible rate of conversation.
The government of China has dramatically developed a complete legal structure that consist of the foreign investment system of policy that is incorporated of industrial approaches, regional system, tax system and financial policies. Therefore, in order to create a favorable environment and to influence the overseas organization they set up a stable government rules and policies for them to invest in China from the year 1979. (China.org.cn, 2018)
In case of exchange rate system, China has closed capital system that is used for the purpose of business, banking wherein individuals do not have the authority to move their money outside the country. These system is under strict rules authorized by the government of China. In this context, the people’s bank of China and the state administration of foreign return are accountable for regulating the flow of foreign returns and to set the rate of exchange through a process of manageable system of flow (The Economic Times 2018).
Banking system and types of banks there
The banking structure of China is more monolithic in formation consisting of the People’s bank of China that is considered as the central bank. However, during the early 1980’s the government started developing the management accounting framework for permitting the four states owned by the expertise banks for regulating deposit and banking activities.
These four specialized banks are
The Industrial & Commercial Bank of China (ICBC)
China Construction Bank (CCB)
Bank of China (BOC)
Agricultural Bank of China (ABC).
Interest Rates
There has been a significant drop down in the interest rate of the banks in China. It used to be 6% in the year 2014 and has been reduced to 4.5% in 2016, till date which has increased the trade in between the countries.
China permits FIE’S and organization that issues shares overseas to remit their profit margin, dividends and bonuses outside of China. In this context, China allows the enterprises to present required documents to make remittance directly through the banks and do not need any prior authorization from the foreign exchange supervisors.
Repatriation of profit regulations
Taxation rules
Key values/traditions
The cultural values of a country influence its uniqueness. Harmony, benevolence, justice, politeness, wisdom, trustworthiness, loyalty are the traditional cultural values that influence the Chinese people.
How business is done in the country
Cultural tips for performing business in the country includes
Showing respect and empathy.
Being on time in the meetings.
Professional business attire for men and women should be worn when doing business.
Respecting guanxi as this is the deepest root culture for Chinese people.
Hofstede’s dimensions of China in comparison to Australia
Australia & China
By 6-D Model©, we can get a good overview of the Australian culture relative to China.
Holidays
The most popular festive holidays in China are spring events, Ch’ing Ming events, New Year ’s Eve, Dragon boat events and National day.
Language and communication style
In China, Mandarin is the most popular language with the dialect with Cantonese and English.
Religion
China is a multi-religious country.
Buddhism, Islam, Protestantism, Taoism and Catholicism are culture-shaping communities throughout Chinese history. These religions are protected under the constitution.
China is one of the country that has the highest populous in the global scenario, with over 100 cities with more than 1 million inhabitants each.
One of the BRIC countries, represents a growing economic market, full of potential.
China is ranked 28 out of 138 countries, according to market size, business sophistication, innovation and financial development.
References
Al.china-embassy.org. (2018). China’s Foreign Affairs and International Relations. [online] Available at: https://al.china-embassy.org/eng/zggk/t514667.htm .
Austrade.gov.au. (2018). Doing business – Tariffs and regulations – China – For Australian exporters – Austrade. [online] Available at: https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/China/Doing-business/Tariffs-and-regulations .
Becker, J & Elfstrom, M. (2010). The Impact of China’s Labor Contract Law on Workers. International Labor Rights Forum.
Cdn.tspace.gov.au. (2018). [online] Available at: https://cdn.tspace.gov.au/uploads/sites/107/2017/11/2017-t230595-final.pdf .
Ceicdata.com. (2018). China Real GDP Growth Rate | Economic Indicators & Data. [online] Available at: https://www.ceicdata.com/en/indicator/china/real-gdp-growth .
Chen, Y-F, & Funke, M. (2009). China’s New Labor Contract Law: No Harm to Employment? China Economic Review, 20(3), 558-572.
China.org.cn. (2018). Foreign investment policy system in China — china.org.cn. [online] Available at: https://www.china.org.cn/living_in_china/abc/2009-07/15/content_18141137.htm
Harvard Business Review. (2018). Hedging Political Risk in China. [online] Available at: https://hbr.org/2006/11/hedging-political-risk-in-china .
Harvard Business Review. (2018). Hedging Political Risk in China. [online] Available at: https://hbr.org/2006/11/hedging-political-risk-in-china [Accessed 22 Aug. 2018].
King & Wood Mallesons. (2012) Overview of doing business in China
Lardy, N.R., (2016). China: Toward a consumption-driven growth path. In SEEKING CHANGES: The Economic Development in Contemporary China (pp. 85-111).
Newell, D. (2018). The world’s 9 biggest mega projects under way right now. [online] The West Australian. Available at: https://thewest.com.au/business/construction/the-worlds-9-biggest-mega-projects-under-way-right-now-ng-b88772269z .
News.bbc.co.uk. (2018). BBC NEWS. [online] Available at: https://news.bbc.co.uk/2/shared/spl/hi/in_depth/china_politics/government/html/1.stm .
PwC. (2018). Overview of PRC Taxation System. [online] Available at: https://www.pwccn.com/en/services/tax/accounting-and-payroll/overview-of-prc-taxation-system.html .
Su, Y. and Liu, Z., (2016). The impact of foreign direct investment and human capital on economic growth: Evidence from Chinese cities. China Economic Review, 37, pp.97-109.
The Economic Times. (2018). China records first current account deficit in 17 years. [Online] Available at: https://economictimes.indiatimes.com/news/international/business/china-records-first-current-account-deficit-in-17-years/articleshow/64041772.cms [Accessed 25 Aug. 2018].
Tradingeconomics.com. (2018). China GDP Growth Rate | 2010-2018 | Data | Chart | Calendar | Forecast. [Online] Available at: https://tradingeconomics.com/china/gdp-growth [Accessed 25 Aug. 2018].
Tradingeconomics.com. (2018). China GDP per capita | 1960-2018 | Data | Chart | Calendar | Forecast. [Online] Available at: https://tradingeconomics.com/china/gdp-per-capita .
Tradingeconomics.com. (2018). China Inflation Rate | 1986-2018 | Data | Chart | Calendar | Forecast. [Online] Available at: https://tradingeconomics.com/china/inflation-cpi .
Tradingeconomics.com. (2018). China Unemployment Rate | 2002-2018 | Data | Chart | Calendar | Forecast. [Online] Available at: https://tradingeconomics.com/china/unemployment-rate .
Uk.practicallaw.thomsonreuters.com. (2018). [online] Available at: https://uk.practicallaw.thomsonreuters.com/9-503-5387?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk .
Wang, S., Li, Q., Fang, C. and Zhou, C., (2016). The relationship between economic growth, energy consumption, and CO2 emissions: Empirical evidence from China. Science of the Total Environment, 542, pp.360-371.
Zhang, Y.J., Liu, Z., Zhang, H. and Tan, T.D., (2014). The impact of economic growth, industrial structure and urbanization on carbon emission intensity in China. Natural hazards, 73(2), pp.579-595.
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