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How to Do Business in China, Outsourcing to China

Everything you want to know about doing business in China

China, with a population of more than one billion people, is a country full of marketing potential. With so many possible consumers, it would seem like any product could reach its target audience. However, with a country so rich in history and culture, there are many factors to be considered by marketers. Some of the most important and influential elements (the monetary policy, currency system, market agreements, and environmental factors of the country) must be further examined.

Monetary Policy: A brief history of China's financial system is necessary at this point. In 1949, the Chinese Communist Party (which had been established about thirty years beforehand) overthrew the Kuomintang government and subsequently seized control of the economic and financial markets in China. The first major change made by the CCE, and was a unification of financial and economics affairs. Until 1950, these two sectors were handled individually. For financial purposes, the Chinese central government created two plans.

The first of these was a state physical plan, which consisted of the expenditures and budgets of all government departments, state-owned enterprises, cooperatives, and communes. The second was a credit plan, which contained specific blueprints as to how the implementation of certain projects in the physical plan would take place. The People's Bank of China effectively served as a liaison in matters of the credit plan. The Bank distributed funds to economic sectors based on information revealed by the credit plan, and acted as a symbolic auditor to ensure that the budgets matched the amount of funds spent during that time period. The People's Bank also had the responsibility of ensuring that unspent cash was deposited in a state bank, and maintained supervisory status over most financial matters. Although the specific procedures regarding the physical and credit plans changed, most of the principles described above went unchanged until the 1980s.

In 1983, the State Council of China issued a resolution, decreeing that the People's Bank of China was to be "a national institution through which the State Council directs and administers financial operations of the whole country, and it is the central bank of China" . The State Council indicated that there were four main functions to be performed by the PBOC. First, the PBOC was to provide money, credit, and other finances for the purposes of macroeconomics. Second, the PBOC was required to enforce any and all...

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