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International Corporate Finance - Essay Example
Since China initiated its 'open door' policy at the end of the 1970s, numerous overseas pharmaceutical companies have entered the economy of this populous country. This report analyses current pharmaceutical industry trends in China from the perspective of the foreign investor…
Then the advantages and disadvantages of entering the Chinese market are described and analysed. Finally the comparison of benefits and drawbacks leads to a certain recommendations. The result of the analysis is that Chinese market is extremely attractive for investors; however it contains certain risks and dangers, which should be considered during the strategy development.
China has succeeded in strengthening its economy in recent years. The growth of about 8% annually has become a trend in the last 5 years. Assessment of the year 2004 has shown that overall measures are even better than in previous years. "Gross domestic product growth in the People's Republic of China accelerated from 9.3% in 2003 to 9.5% in 2004, the highest level since 1997, even though the Government took several steps to damp sectors that it considered overheated" (Asian Development Bank, 2005, p.20). The country continues to improve its economic measures rapidly, which of course must be seen as a positive factor when considering investment.
Further on the development of external trade in China is seen by analysts as an extremely positive trend. China has already outrun the Japan to become the third largest merchandise trading country right after the USA and Germany. "Merchandise exports rose by 35.4%, with production at foreign-funded enterprises estimated at about 58% of exports. ...