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Soon recover from the world economy crisis, China still kept an 8.7% GDP growth and continue to envy the world by the fast economy growth. But China started to come back to market economy about 30 years ago with the use of an export oriented economy growth model within which the foreign investment and demand play the decisive roles. Just about thirty years ago, China carried out the open door policy, and it takes thirty years for the Chinese people to get to know the world by Mc Donald, KFC, Nike and Adidas and get them around in the vast Chinese market. Now some Chinese brands have gone out of China and become internationally well known such as Haier, Lenovo and Huawei with the help of the government, and let the world know about China through these future world firms rather than the low end products that have a “Made in China” mark. But it is not easy for the Chinese firm to become world class companies; there are some challenges which will also be the topic of this study:
The first challenge is the loss of competitiveness of the Chinese firms. As the cost of the production in China such as the labor cost has been increasing with the development of the economy, China is said to lose its low cost advantage within the next few years to the other rising economy in the world. To keep the competitiveness in the global economy, the Chinese firms have to find their way out or else they will be wiped out in the competition.
The second challenge is for the government. To have a powerful government like the Chinese government, on one hand it will means that the government would have more influence in the economy which is against the function of the free market, but it will also means that the government could do more the help those start company to become world class firms. The problem is how to make the balance between these two extremes.
The third challenge is the culture conflict in the international business when the Chinese firms expansion their business into the foreign market. Even though the Chinese culture is a containable culture but as it is classified as a high culture system, some culture differences and misunderstanding would need to handle carefully especially in the merger and acquisition when two companies need to form a new company in which the corporate culture integration would be of great important to the success of the acquisition.