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Сhanges in China’s Economic System
Different sectors of the Chinese economy are facing a shift with new reforms coming into place. The agricultural sector has shown a tremendous increase in output. A similar increment is evident in the income for agricultural products, which is an advantage to the farmers and peasants. The industrial sector is receiving high turnovers with the increased reverence from the global market. In a global market, China is considered a top manufacturer of concrete, steel, ships, and textiles.
In addition, China has a leading automobile industry rivaling that of other countries including the United States and Japan. Trade and foreign investment has also increased in China with a major production and service delivery industries.
The service sector in China is also gaining dominance with the increased number of local businesses and banks. Through these funds collected within the country, the Chinese government has been able to fund its activities without external support from other countries. In this regard, China has developed tax policies that ensure a steady collection of levies and tariff charges.
Cultural Differences Between China and the United States
The Chinese are collectivists who operate through group co-operations while Americans are individualists who prefer self-reliance and promotion as ways of becoming successful. The Chinese prefer formal relationships and consider family or blood relations as a strong element in fostering social relations. On the other hand, Americans prioritize social class when defining social relations.
The Chinese are attentive to history that is used to determine future deals while Americans have less regard for the same. In order to strengthen relationships, the Chinese prefer knowing their business partners at a personal level, official and professional places of work. On the other hand, Americans socialize with people only in the work environment but not in a personal level. The Chinese consider trust as the firsts step in achieving business success while Americans consider business as a factor to developing trust.
The Differences in the Ratio of Labor to Capital
A comparison between China and America shows that China has a low capital to labor ratio compared to the latter. China has a high growth rate in the different sectors of its economy, which in turn increase the GDP (Gross Domestic Profit) and, as a result, leads to low capital to labor ratio.
On the other hand, the capital to labor ratio is estimated as 0.5 percent in the United States. In contrast, China is estimated to have a capital to labor ratio of 0.02. From these ratings, it means that many workers use a single machine in China while a comparatively low number of employees use the same in the United States.
The Impact of External Factors That Affect Profits for a Chinese Manufacturing Firm
The company in China faces a great challenge in selling its products to a market that is largely dependent on technological products. Meanwhile, a company in the United States enjoys equal market opportunity compared to China. A firm in the United States stands an advantage of accessing the global market because of the intense publicity given to the American products.
On the contrary, a firm in China will lose its access to the global market due to lack of awareness for its products and low publicity. However, the company in China will incur low expenses for the legal processes and registration processes compared to a firm in America. Apparently, a company in the United States is subjected to strict legal regulations before commencing any operation.
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