Implications of Outsourcing to China - Essay Example

2005). The business culture of china is totally different from that of the western countries. However due to the recent developments the business culture is coming in terms with the traditional practices. Most of the Chinese business contacts are referrals. Normally a business relationship develops on the basis of recommendations. Best prices and deals come from strong recommendations. However due to the advancement of technology, now internet, cold calls and direct contacts also influence the business culture of China.

All business relationships in china which has an individual nature gradually develop into a social one very shortly unlike in the case of western culture where the relationship is truly professional. The concept of seniority is of very much importance in China especially when it comes to dealing with state run enterprises. High respect and rank is given to seniority (Understanding Chinese business culture and etiquette.2011). In the organizational culture front, there is fierce competition that is prevailing in China particularly in the technology industry like outsourcing.

Constant innovations are a book mark for sustainability. Leveraging of intellectual capital and strong linkage between human resource management practices and knowledge related outcomes are other features (Chow.& Liu.2007). China is rapidly moving towards a fully established market economy. It is slowly emerging as a leader in outsourcing business. But still the state is responsible for monitoring this transition. For outsiders, the economic decision making looks confusing because of the related patchwork of competing geographical and sectarian authorities operate in the country.

There is imposition of taxes, rents as well as regulations all done by the authorities before the project is undertaken and during its lifetime. The economic decision making is made at the central level as well as the state level. Now there is a growing willingness from the part of the authorities to devolve the executive powers to local authorities for the smooth decision making (Political environment. 1986). The economic environment of china with regard to outsourcing in particular is some what encouraging now.

With deflationary pressures not in the anvil since 2003, the only worrying factor is the inflationary rate which the Chinese government claims to keep within three percent this year. Moreover entering the WTO as well as economic development coupled with rich economic resources provide bright future for the country (The economic environment in China. 2004). Overall the monetary environment in China looks favorable. China has taken giant leaps to improve the environmental and labor conditions in the outsourcing business area.

This has made to bring down costs to a considerable extent. But since 2008, the outsourcing in china is not that cheap when compared with previous years. There was an increase of around 20% in costs in the outsourcing industry over the years. The concept of low cost manufacturing is fast disappearing in China. It is becoming an expensive place to do business. This is because of the strict environmental and labor laws enacted by the Chinese government (Maltby.E. 2008). The legal environment in China is strictly regulated.

All business entering Chinese market is required to establish a legal entity under the Chinese law. In some areas