China Consulting


Stage Characteristics

Government control level

Modern marketiztion level

Average GDP Growth

Consumer % in population

Business practice characteristics

IP protection level

1979 - 1985

Start Economic Reform from rural area. gave farmers responsibility for land. Farmers started to make money for themselves

85 %

10 %

9 %

0.1 %

Chinese in business barely knew market economics and capitalism. Low end commercial activities

Literally no IP knowledge or protection measure

1985 - 1995

Economy reform expanded to cities. Private businesses started to prosper, mostly focused on low end consumer goods, light industrial manufacturing. Social security reform started, property market started to open.

70 %

45 %

10 %

10 %

Market is characterised with tri-angle debt problem. Long receivable collection period and high bad debt write-off rate. Credibility of business was low.

Poor IP regulation. Pirate products of Western countries popularize with unmatched speed.

1995 - 2000

Further opening to International market, privatisation of heavy weight, unprofitable state owned companies speeds up

50 %

55 %

8 %

30 %

Market practice started to migrate toward conforming to Western business etiquettes. More commitment to quality and delivery. Credibility started to be paid attention to.

With the preparation of WTO entry, China government started to overhaul the IP legislation and tightening pirate practice penalties.

2000 -

Joining WTO in 2001 was the milestone of China’s economy development. The process of integrating into world economy speeds up, most of state-owned companies are being privatised, and went listing in Hong Kong and Nasdaq stock markets. The state-owned biggest banks’ bad debts are backed up by the government’s $45 billion cash injection in 2003.

17 % (this rate is decreasing fast)

70 %

9 %

50 %

Market is more mature in terms of business practice. Chinese companies realise the importance of quality and reliability in order to build long term relationship with their customers.

IP protection is strengthened with high speed to conform to WTO ruling. YAMAHA won a court case to get $ 110,000 compensation in 2002.

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