The Foreign Investment Environment in China: The Soft Environment (II)

Abstract

In the last chapter, the historical, political and social backgrounds of China’s reform and opening up to the outside world were examined, and a key factor for doing business in China - guanxi (connections and networks) - was analysed. Within this broad context, this chapter examines some operational problems encountered by foreign investors in the aspects of foreign exchange, legal framework, labour relations, human resource supply, social security and welfare, and bureaucratism and corruption in local and central governments. After two decades of reform and opening up in China, problems in some of these areas have been greatly relieved today. In the meantime, new problems have emerged. A discussion of these evolving problems will give the readers some ideas about the main features of the rapidly changing soft environment for FDI in China.