In china, corporate governance has received much attention in the recent years and there have been debates on how china can develop an effective corporate governance system that can improve the number of listed companies in the country. The issue of corporate governance finds its roots and effect in the stock market which is responsible for listing companies. Before a company is listed in the stock market, it usually undergoes a rigorous process of scrutiny on issue of corporate governance. (Berle and Mean 2003, p. 286)
This paper will look closely at the corporate governance in china and relate the practices to one of the company, Sainsbury PLC to see how it can adopt such measure and to look at the extent in which it has been able to integrate such measures in its operation. It will first start by looking at the corporate governance in china and later look at Sainsbury PLC and how the aspect of corporate governance can be implemented in the company. Let us first look at the corporate governance landscape in china.
The mandate to improve corporate governance in china has been one of the aims of the government for along time. It started with the making of the stock market which came into being after the opening of the economy about one and a half decade ago. The need to improve the corporate governance landscape has been one of the mandates that the government has taken in developing a financial market that serves the country and the business community alike. In recent past, china has made great strides towards the issue of corporate governance which has been through the relationship of the government and the players in the private sector. Government agencies that have been handling this issue have given various laws, rules, regulation and standard that are aimed at putting in place a firm foundation and a framework for corporate governance in the country. (Kim and Giles 2003, P. 51)
In order to understand practice of corporate governance in china, we have to accept that china has been undergoing through a transition process which has seen the development of market-oriented economy from a planned economy although this pace of transition has varied with various sectors. But the biggest challenge that the country has been facing has been on the ground that it has taken to development of the concept when most of the important functioning financial market structures like a well defined legal system, regulatory agencies and others have not been put in place or have not been functioning to the required standards. (Clarke 2003, p. 53)
Reports coming from survey on Corporate governance (CG ) in the country shows that there have been marked willingness by many companies in china and many businessmen to develop accepted standard of CG not only for the domestic market but also they have been casting their sights higher than the domestic market. They have shown willingness to improve CG practices like shareholder rights, environmental control, improved level of transparency, empowering of boards, and other practices which are aimed at improving the business landscape of the country. There has been a general recognition that improved CG makes an organization more attractive to the investors and more profitable. Let us look at some of CG practices in china and the recent efforts by