Managing Multinational Operations

Expansion of business operations is one of the emerging issues in the business environment. It involves diversification of operations and investing in foreign countries. This leads to increased market and income. Managing international operations requires the company to have a number of countries it wants to invest in, carry out a cost-benefit analysis, and determine the strengths, weaknesses, opportunities, and threats of investing in those countries then choose the best region. It should study the internal operations of the country including the import and export restrictions, labor restrictions, and tax rules.

Managing International Operations in China

China has stringent import and export restrictions that are aimed at improving her internal security and ensure a positive balance of payments. A multinational enterprise intending to invest in China must abide by these rules. Ching (2008) asserts that if one is visiting for less than six months, only two bottles of alcohol beverages can be imported and a maximum of six for one visiting for more than six months. One can only import perfumes of a reasonable amount. Individuals are prohibited from importing guns and ammunition, weapons such as knives and radio transmitters. The company would require permission to import electronics such as computers and television sets. Small animals such as cats and dogs will need vaccination before they are allowed into the country. Once in the country, they cannot export recorded instruments that could pose a threat to national security. Precious jewelries can only be exported if there was an initial agreement to that effect. Beef and other valuable food cannot be exported. Any visitor should be vaccinated against yellow fever if he arrived within six days of his departure. In essence, China has stringent import export rules that would have to be adhered to for smooth operations and ultimate profitability.

Labor rules stipulate that any multinational company intending to carry out its operations in China must include some Chinese in their workforce in order to build a robust rapport within the business environment. Workers shall only participate in and organize trade unions if it is in accordance with the law. These trade unions will fight for the rights of the laborers. The law prohibits discrimination of workers based on their race and gender. It is illegal for the enterprise to employ people below the age of 16 as they are considered minors. Raymond (2005) reported that state regulations require the employer to compensate the workers in case they revoke a contract between them. This should be done in accordance with article 24 of the law. The state council has a department called the labor management department, which is in charge of the management of labor in the country

The company will have to register for taxation. The income tax charged on the firms include business income, income from leasing of property, interest income and income from dividends and bonuses. Capital gains because of sale of fixed assets are taxed at 20 percent while the sale of real property involves the payment of land value added tax. If the company were involved in currency trading through the internet, it would have to pay a 20 percent tax. Entering into contracts with other corporations and industries attracts stamp duty tax with rates varying depending on the contract signed. Employees would be liable for personal contributions deducted from their incomes such as medical insurance, contribution to pension schemes and housing funds. Reuvid (2008) reports that deductions and allowances for wages and salaries for foreign nationals include RMB 4800, which is 2000 less that paid by individuals in the PRC. Interest on bank deposits, which was previously charged at 5 percent, is temporarily not taxed.

China Development bank is one of the financial institutions concerned with the development of the country. It offers short term and long-term loans to individuals and companies at an affordable interest rate. They require security for the loan depending on the amount borrowed. The company can issue debentures to the public to finance its operations. Ordinary and preference shares can be issued be issued to the public for subscription with a view to raising maximum capital. Other non-banking financial institutions offer loans at a lower rate though they may not lend as much money as banks could. The company would just need a higher level of creditworthiness in order to access long-term loans from all institutions.

It would be vital to include this information in the final report. All details relating to labor relations and employee welfare must be included into the report, as this would help in making appropriate adjustments. Hong Kong Trade Development Council (2012) reports that by including the information, the CEO would be informed, and he would be able to adopt the country’s policies. It is ethical to include the information because it would help in maintaining the entire company’s image all over the globe. The company would work according to the internationally recognized standards and would remain a strong, competitive force to reckon with. Ethics provides that one should provide all the details relating to a given investment as it would help the company to remain firm in the market. The omission of this information would lead to usage of unacceptable policies by the company hence leading to its ultimate closure and litigation.

In conclusion, China is one of the considerable investment hot spots that many companies are anticipating. It is vital for any company to put into consideration the policies for operations of business in a country before making investments. The success of a firm depends on the political, social and economic structure of the country. China is referred to a working nation due to the hard working nature of its citizens, and this provides a favorable working environment for any multinational company.