KFC International in China

KFC International in China

The social values and history have shaped and formed the economical developments and the current environment of business in the People's Republic of China. They have determined the patterns for negotiation and the Chinese perceptions of business, and their feelings towards westerners. The implicit and explicit rules that the Chinese society has on the development of businesses, and the economy in general, are very important issues for any person going into China to understand and consider. In order to achieve a successful partnership between Chinese and Western cultures it is essential to have a basic understanding of history and cultural developments that have shaped the current environment of business. The three pillars of China are economy, culture, and society.

Economy

The Chinese economy has been formed as a result of centuries of history and development, which reflect the philosophy of China and its current economical position. China started as a mainly agricultural based society with the subsistence group; the family. For more than 2000 years the Chinese economy operated under a type of feudal system; land was concentrated in the hands of a relatively small group of landowners whose income depended on rents from their peasant tenants. Agricultural taxes levied by the imperial government and crop yields subject to drought and floods kept agriculture relatively underdeveloped and organized in small units with the use of primitive methods for basic subsistence.

The conclusion of the Opium War of 1840 formally initiated a period of Western penetration of China from the coastal treaty ports. Railroads and highways were constructed, and some industrial development began. Such activity had little impact, however, on the overall Chinese economy. In effect, China was carved up into a number of competing colonial spheres of influence. Japan, which tried to attach China to its East Asia prosperity Sphere, was able to create only isolated nodes of a modern economy.

The Chinese Communist party emerged in the 1920s in the midst of a mounting economic crisis caused by foreign intervention and increased landlord influence in the countryside. For more than two decades, it expanded its control over large rural areas by introducing an agrarian program based on the control of rent and usury, and by giving power to peasant associations.