Walters and Samiee (2003)

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Chinese issues

Although in the WTO, there is a great deal of organisational inertia in the Chinese institutional structure. Local support in the implentation of the agreement is not always forthcoming in many regions, as local firms are put under pressure if faced with competition.

For example product standards are manipulated, so that only local firms pass the requirements.

Guanxi is very important to Chinese business, as it helps develop good relationships, particularly in a place there the laws and rules are non-transparent. China's bureaucracy is not fully codified and rules are not consistently enforced, meaning corruption often occurs.

The toughest competition that western firms will face is local competition. SOEs have support from the government and banks, meaning they have better networks and there has been little rationalisation in the industry, meaning SOEs can undercut competitors to a loss, as the government will support them.