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Recognising the growth of chiness economy and political influence in the world but nothing also the potential for internal social unrest,discuss the implication that theses factor may have on strategy development of container shipping company engaged on route between china and europe.in your discussion also consider the influence that europe currency union may have on the stability of the economic s of individual european countries.

1.0 Introduction

Chinas economy is now growing stronger and faster than ever. After being in a stand still for two decades under the rigid authoritarianism of early communist rule, China now has the worlds fastest growing economy. China is everywhere these days. The words Made in China are as universal as money. China has become the worlds largest maker of consumer electronics, pumping out more TVs, DVD players, and cell phones than any other country. China is rising even higher still, moving quickly and expertly into biotech and computer manufacturing. No country has ever before made a better economic development all at the same time.

However, the purpose of this assignment is to identify and evaluate the growth of Chinese economy and the remedies involved strategic development of container shipping company in between China and the European Union as well as the influences on individual European nations.

2.0 Social & political influences of China

Many accuse the Chinese communist government of not promoting human rights among its people. Human rights abuses by the government remained numerous throughout recent years. One area criticized by the international community, is Chinas legal system. The government is also criticized because of the lack of political freedom in China. The strict rules regarding speech have grabbed international attention. Ironically, during a visit by a U.N. human rights expert, officials arrested several critics of the governments attitude towards the freedom of its people under arrest. This attitude has caught foreign attention. The U.N. has ordered China
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to improve its judicial system by separating it from the political party (Elezabeth J. Perry & Mark Selden, 2010, pp-31). During recent years, the government has slowly transformed the formerly dominant communism to a free, privately held, economy. Capitalism has brought new wealth to the Chinese people, but still needs to progress more to end human rights abuses. Today, private business accounts for thirty to forty percent of Chinas gross domestic product. In recent years, the communist party has allowed for greater internal debate among its selected members. Moreover, child labour has flourished in recent years, especially in rural areas. There, wages are less and so many families cannot afford to send their children to school. A recent labour shortage in the southern, rural provinces has prompted many businesses of seeking alternate sources of workers. Estimates for the number of child labours are up to tenmillion. Although, Chinese law forbids employment of anyone less than sixteen years in age, it is rarely enforced. Because of the advancements in Chinas economy, the international community is focusing more attention on trade and its human rights practices. The economic progression is expected to develop China into a modernized nation by 2050. Debate has arisen over trade with China. Many believe trade sanctions cannot solve the serious abuses by China. Trade with China is now about 95 billion dollars, an amount that benefits both parties. Trade supports million of hard-working Chinese who depend on industrial employment. However, many also support the World Trade Organizations rule that prohibits trade with communist nations (Gregory C. Chow, 1987, pp-41). All stress that China should be dedicated to improving Human Rights within its borders.

However, for many years, the international community has attempted to assist the abused people through aid and diplomacy. Though the international community has achieved great progress in human rights, many still live in appalling conditions. Until the government of China is improved and poverty abolished, human rights abuses will continue.

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3.0 Growth of Chinese economy

The growth of Chinese economy is comparatively rapid in the history. China is relentlessly positioning itself for even higher levels of industrialization. There are giant capital flows from industries to China in present days. China is the right place for business where the world is investing in. For example, Chinas phone system is more wire less than wired and many of its big cities will soon have the most advanced rapid transit system in the world. In the past, Chinas enormous population was hard to feed and employ. Now this enormous population are the greatest asset of global market ever.

Surprisingly, China is not home to the cheapest workforce in the world. Even at 25 cents an hour, Chinese workers cost more than labours in the poorer countries of Southeast Asia or Africa. Lately, immigration of hundreds of millions of peasants from the countryside is happening now because the government allows them to leave. This migration is the largest in human history. The estimates of the number of people who have left to find work in the cities range from 90 to 300 million, numbers that even near the lower end match the entire workforce of the United States (Gregory C. Chow, 1987, pp-3). Move up to the higher range and the number tops the U.S. and European workforces combined. What these numbers mean is that the productive power of Chinas vast low cost manufacturing machine, along with the growing appetites of its billion plus consumers has turned Chinas people into what is arguably the greatest natural resource on the planet. How the Chinese and the rest of the world use that resource will shape our economy and every other economy in the world, as powerfully as American industrialization and expansion have over the last hundred years.

Chinas effects on the world are so great that its been hard for people to grasp the idea. For example, executives at the Harley-Davidson plant in Milwaukee said that a cold front was blowing in from China. The United States had lost 2.9 million manufacturing jobs over the previous 5 years. Wisconsin had lost 90 thousand, or one in six of its manufacturing jobs since 2000 (More Than a Motorcycle: The Leadership Journey at Harley-Davidson, 2000, pp. 7-9). They said that China is the top issue in their economic lives. China is the worlds factory floor and its the worlds greatest market opportunity. Chinas industrial might saps opportunities from the developing world but its hungry economy pulls poorer countries upward.
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However, Chinese government statisticians declared that their official measure of Chinas economy had been underestimating its. After the statistical revision, the government expanded its estimate of Chinas GDP or Gross Domestic Product by nearly 17% and tagged the economys output at $1.98 trillion. The new numbers pushed China ahead of Italy as the worlds fourth largest economy. The economy of the United States however, is still by far the worlds largest with the year 2004 Gross Domestic Product of $11.75 trillion which is 6 time larger the size of Chinas GDP out of the worlds GDP of around $37 trillion in 2004 (Elezabeth J. Perry & Mark Selden, 2010, pp-41). In Chinas capitalist society right now, they are trying to overlook the bad side of modernization, seeing economic progress as the solution to all the countrys challenges. While many people may think that Chinas economy is going smoothly, that may not be true. Not all of China is as confident that just the desire for growth alone can ensure it. Recently, Chinese economists have been trying to discourage people from having too high of expectations and over enthusiasm as they know will lead to economic bubbles.

3.0 Strategic implications involving Container shipping companies

Container shipping companies involved in between China and the Europe has some significant implications in terms of business developments. The first and the foremost issue arises such problem like cultural and different port efficiency system.

3.0.1 Cultural implications Cultural implications mainly depend on the governments of two different countries in terms of corporate governance. The Chinese corporate Governance is completely reverse in some aspects from the Europeans corporate Governances.

Main business type is an important issue when each side performs new development in business strategies. In China most of the business are mainly stock owned on the other hand the most European countries does practices of public shares. Board structural difference is also a significant problem in term of business development. Moreover, there are some other
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issues which have to consider for developing strategies in the field of container shipping industry. Such, issues are the legal system, board structure and predominant ownership which cause serious problems in business development.

Country

Main Type

Business Predominant Ownership State

Legal System Civil law

Board Structure Dual

Important Influence Communist Party

China

State owned & Joint Stock Co.

Denmark Public or private Institutional companies limited investors by shares foundations or

Civil law

Dual

Many shares have multiple voting rights.

Germany Public or private Financial & non- Civil law companies limited financial by shares Italy companies Civil law or

Dual

Compulsory employee representation

Limited Liability Non-financial & Partnerships holding families. co.

Unitary

Board auditors required

of

Fig.1: Corporate Governance in the International Shipping Industry (Source: www.auditcommission.gov.uk/changehere/content/intro.htm)

4.0 Influences on European Countrys Currency

The European currency is almost common and comparatively almost same valued. However, if the foreign currency of European countries, get lower valued will be more profitable for them. Besides, the respective country relates to Europe is also an influence for the betterment of individual countrys economy.

However, every time the worst is predicted for Chinas economy, it seems to grow faster, create stronger industries like container shipping, import and export more and attract more foreign investment money. Since China starting reforming its economy a generation ago, it has grown at an official rate of 9.5 %. The country is closing in on a 30 year run during which
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its economy has doubled nearly 3 times over. Neither Japans nor South Koreas post war booms came anywhere close. Given United States recent rates of economic growth, it would take the U.S. 25 years to double just once. If the U.S., which boomed in the 80s and 90s, had grown at Chinas rate since 1978, the U.S. economy would now be roughly its current size plus 2 Japanese economies added on (web#2). Americans and the Europeans tend to focus on the huge inequality in trade between the two countries. Its worrying Americans that they help to create what Chinas becoming by the continual buying from Chinas factories. According to Forbes and Fortune magazine, Chinas goods are much cheaper compared to the U.S. as much by 50% sometimes (Elezabeth J. Perry & Mark Selden, 2010, pp-41).

4.0.1 Benefits as a major manufacturer

The reason that China are able to keep their prices so low is because they keep their currency, the Yuan, fixed at a set rate against the dollar and is undervalued by as much as 40% (web#1). Other companies say that they can never compete with that because Chinas manipulating the rates of exchange. Republican Tim Ryan quotes that If China wants to be part of the global trade system (web#1). As good as it is that Chinas products are supplied cheaply to some businesses, it is hurting a lot of others and putting them out of business. Its strength has been sapped almost entirely by China alone. It shows how China can come after the specialty businesses of any country and destroy them in short. For other countries, China has become essential as a customer as well as a supplier.

However, Japan and Germany have recently greatly benefited from the large trade surpluses with China because they have been the worlds largest buyer of factory mach inery and it needed the equipment Germany and Japan make in order to produce the machinery and electronics. Resource rich countries do well selling China the raw materials that get reshaped in its factories, and the energy sources it needs to power them. F or example, in 2003 according to the calculations of Stephen Roach, chief economist at Morgan Stanley, the Chinese bought 7% of the worlds oil, a quarter of all aluminium and steel, nearly a third of the worlds iron ore and coal, and 40% of the worlds cement(web#2). The most intimidating thing about China is not that it does so well at low-end manufacturing industries. America and other countries are more worried that manufacturing shifts overwhelmingly to China
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from all directions including the U.S. The far bigger shift thats just happening is that China might own the infinite number and variety of components that make up everything else that is produced. China is taking on those industries too. Such components consist of for example, the hundreds of parts in washing machines, computers, and airplanes as well as the big products themselves such as cars, trucks, and ships. Also people may start switching their networks for national phone systems, factories, satellites, and rockets.

As China have world-wide business relations, their biggest market is in the Europe. So, China could be a huge profitable field for European countrys business as well as shipping companies between two different economies.

5.0 Conclusion One big reason China is growing is that the world keeps feeding it capital. According to Japans research institute of economy, trade and industry like shipping, one third of chinas industrial production was put in place by the half a trillion dollar of foreign money that flowed into the country since 1978. In 2003, foreigners invested more in building businesses in China than they spent anywhere else in the world. Every day China receives a river of Europeans, Asian, and American experts in manufacturing, banking, computing, advertising, and engineering. In 2003, the exports and imports by foreign companies operating in China rose by over 40% (web#2). No more than half of Chinas trade is controlled by foreign firms. Foreign companies have pumped up Chinas trade volume enough to make the country the 3rd largest trading country in the world behind the U.S. and Germany and now ahead of Japan. Most of the worlds countries now analyse Chinas growth as a critical engine for their own economic growth. News everywhere tells the worlds daily balancing act to keep China happy as a customer, efficient supplier and as a competitor. For this currency exchanges in between China and the European individuals brings more economical potentiality on both sides.

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References (Part B): 1. Gregory C. Chow, 1987, The Chinese Economy, 2 nd edition, World Scientific Publishing Co. Pte. Ltd, (pp-3,41)

2. Elezabeth J. Perry & Mark Selden, The Chinese Society, 3rd edition, Routledge, 2010, (pp-31).

3. More Than a Motorcycle: The Leadership Journey at Harley-Davidson, 2000, Harvard Business School Press, Rich Teerlink & Lee Ozley. (pp- 7-9).

4. Web#1, Fortune Magazine. (http://www.magazine-stand.co.uk/business) Accessed on: 01-03-11 5. Web#2, Free Reports. (http://www.elliottwave.com/club/Insights-into-China-Economy-and-JapanEconomy/default.aspx?code=43540) Accessed on: 30-03-11 6. Web#3, Chinese Economy (http://www.auditcommission.gov.uk/changehere/content/intro.htm) Accessed on: 01-03-11

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