Rise of China and Case Study of Veolia and Colgate-Palmolive

Contents

1.0 Section One1

2.0 Section Two

- 2.1 Introduction

- 2.2 Veolia

- 2.3 Colgate-Palmolive

3.0 Bibliography

Appendices, A

1.0 Section One

China is emerging as a growing economy, which is becoming more attractive for foreign investors and in particular, large multi national companies. It is seen as the fastest developing country, and is emerging as the new superpower. There are many factors that have led to China becoming a more appealing country for foreign investment.

The People’s Republic of China is a State of Asia and was founded in 1949 by Mao Zedong. Since then it has been controlled by the Chinese communist party (CCP). It is actually the most populated country in the world with over 1.3 billion people.

The history of Chinese politics has always been temperamental. After the death of Mao Zedong, the 1980’s was an era of political unrest. During Mao’s reign, he had managed to stabilise the country which had been severely damaged from two generations of war and social conflict. He undertook a massive economic and social reconstruction and started to try and restore the economy. Before his death, there had been a massive power struggle, culminating in the death of Lin Biao, a prominent rival of Mao. After Mao’s death, the ensuing power struggle caused civil unrest in the country.

Throughout the decade, there was an improvement in the general standard of living, but political dissent was rife in this time. When Zhao became General Secretary, he championed economic and political reforms that were heavily critical. This coupled with growing economic hardship, led to the Tiananmen Square massacre, where students campaigned against corruption and defences of freedom. It caused martial law to be declared and military units to be used to clear the demonstrators.

The CCP always wanted a progressive opening of the Chinese market in order to create a middle urban class (15% of the actual population) and improve the standards of living (which happened as annual income increased a lot, more consumers, better healthcare leading to longer life, improved educational system.) Other key elements of the strategy included the creation of small to medium sized companies in light manufacturing and services, more investment and an increasing trade with foreign countries. The outcome was that for the last 20 years, China managed to keep rates of 10-11% of sustained high economic growth each year.

Though many criticize those reforms for the increasing amount of pollution, a ‘creeping’ corruption, unemployment rising and a bad gestation of the state enterprises. This situation is potentially threatening for the stability of the regime. Even though the country has entered a global economy, the CCP keeps an exclusive control of it and maintains a repressive political aspect towards groups against its ideas.

Corruption and unfairness is a worry as a foreign investor, as they could be vulnerable.

An important point to demonstrate the extent of corruption in China is that “97,260 party members were disciplined for pocketing bribes, gambling with public money, abusing land rights for other charges, according to the party commission” (Financial Times Feb 14th, top of pg 7). If they treat public money in this manner, then foreign money is likely to be treated in the same way, and this can be very worrying for any potential foreign investors. However, China is setting up agencies to fight this corruption.

Throughout the 1990’s to the present day, the Chinese government reduced its control over the private life of the Chinese people and have moved away from communist and socialist ideologies