Explain some of the forman and informal business rules in China

Essay by stella2004cn May 2004

download word file, 5 pages 3.7

Downloaded 87 times


There are different business rules in different countries, same as China. As usual, business rule was divided into formal rules and informal rules. In the essay, I will try to explain some of the formal and informal business rules in China.

Formal Rules

Formal rules refer to the rules made by laws or government regulations, according to which firms must do or cannot do in doing business. More importantly, government often plays an important role in formulating formal rules. In China, different government carries out completely different formal rules in different times. The changes of businessmen are a good example of formal rules.

During the period of Mao's rules, China experienced two violent political mass movements, the Great Leap and Cultural Revolution, which inflicted great suffering on the nation. At that moment, Mao Zedong carried out the policy was "everything were belong to the Communist Party, belong to the country".

In other words, the government controlled every industry lines. Nobody can be allowed to do business. However, at that moment, China government has lack of experienced people in running business, the sales volume of these firms were not as good as they owned by the previous family. And these families have escaped to overseas already, or they will be taken into jail.

After Mao Zedong died in 1976, Deng Xiaoping became the most influential political official in China. Beginning in 1978 Deng took steps to repair the damage of the Cultural Revolution and initiated the Reform and Opening. The reform and Opening can be divided into three stages. The initial stage of reform took place between 1978 and September 1984. The reform in this stage was focused on the rural area. In the urban areas experiments on expanding enterprise power were carried out, and enterprises were required to pay...