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1. State Sector
The state economy includes all
enterprises that are funded by governments at various levels. It also
includes such companies and business entities that once were funded by the
state but no longer receive any state funding. The state economy is the
largest segment of the Chinese national economy. Due to the socialist system,
most of the companies in this economy are responsible for state planned
production, financial support of the workers' and life long security. In the
case of a female worker even pregnancy related costs, retirement, and funeral
expenses are the responsibility of the state As a result, along with other
reasons, more than half of such companies are currently not profitable. The
reform calls for the re-organization of small state-owned companies into
collectives or the sale of such companies to private entrepreneurs thus
transforming large ones into joint stock companies; however this is not done
over-night. 2. Collective Sector Today, the collective sector is the
most dynamic sector in China's economy. Companies in this sector are called
Xiangzhen Qiyie or towns and village enterprises. A village or a neighborhood funds such collectives. There are business enterprises, also in
this sector, which are funded by a group of individuals. However these
individuals willingly forsake their ownership so that the company can be
approved as a collective enterprise.
More often than not, these individuals take every advantage of such
enterprises to enjoy, get benefits and make more money than if they were the
actual owner. Collective enterprises exist at all levels: city, county,
township, and neighborhood. The ones in the rural township and villages have
been an eye-catching phenomenon because they transform the poor farmers into
affluent consumers. This sector generates almost half of the country's
taxable income. 3. Private Sector In spite of the rapid growth in these
collective enterprises, the quasi-private concerns and the true private
sectors are growing but not as conspicuously. Due to a variety of
disadvantages related to company registration: taxation, sheer jealousy, and
over scrutiny, from the government businesses’ in this sector, tend to be
small and focus on sales, catering, and other service activities. 4. "Three Funds" Foreign Related
Enterprises Like other developing nations, China
has consistently preferred foreign investment in manufacturing and industries
in which export involves technology new to China. From the late 1980s, the
government began introducing special incentives to channel investment into
these areas. Because foreign investment is relatively new, there still are
not many laws in place to protect these investments. Past practices and/or policies formulated
by the government still exist where there are no laws yet. Therefore, to venture into China, one must
bear in mind not only the laws, but also past practices that are still in
effect. Office Hours (USA) Monday – Friday (8 AM – 5 PM EST) Office Hours (CHINA) Monday – Friday (8 AM – 5 PM Chinese
Time) M. CRISPI INTERNATIONAL, LTD. P.O. DRAWER 804 E. SETAUKET, NY
11733-0614 TEL: (001-631)
246-9683 FAX: (001-631)
689-8606 Email: Info@M-Crispi.com |