Political regimes between China and India

Topics: Investment, Foreign direct investment, Mobile phone Pages: 10 (1550 words) Published: August 25, 2014
When people are seeking new opportunities in other countries, China and India is popular choices for investor as the two most populous on the Earth. Both are emerging economies that have illustrated average GDP growth greater than 7 percent over the few years*. Noticeably, both India and China are largest avoided by the global economics crisis in 2010,maintaining above GDP growth when western countries are suffering economics contraction.

Despite of successful changes, we still need to consider further elements for our investment. It includes regimes, laws, economy environment and population.

However, if I want to do a mobile game company, I will choose China. In this essay, I will discuss above elements in China and India and also describe why China is better to do a mobile game company.

At first, the regime background and regulation are two basically part to decide investment. Over the past 30 years, China has witnesses a continuing transition a capitalist political economy with a highlighting on market competition, international economic integrations and capital accumulation. In other words, It has opened its door to the direction of liberalization. Therefore, China requires to join the WTO for the demand to open its markets in anticipation, which is a new program of legal reform motivated. Thus, Chinese government is reducing to control business whose ownership is government-dominated or state-owned enterprise (SOES) but consolidate SOEs in some sectors to be global leader in their areas. As a result, foreign company can enter these fields but difficult compete. On the other hand, China is encouraging foreign direct investment (FDI) in almost sector, especially germinated industry. It is a great opportunity for e-business. However, in this stage, of approximately 130.000 SOEs four thousands are privatized per year.

For regulation, while destination of investment will strictly limited or altogether closed, the law allows foreign inventors to decide a diversity of investment entities in China. Chinese regulatory agencies have divide business actions and sector in three categories: encouraged, prohibited, and restricted. It also sets out that sector or industries fall in to the encouraged, restricted and prohibited sectors. It is not only determining how much and through what legal entity the investment can take place, but also foreign investment is allowed (Sweeney, 2010). A further point is that if we specify these polices in e-business, we will find that e-business is easy to enter and also be encouraged by Chinese government. In addition, in e-business this sector, the tax remains vague, generally lower than other nations, because China has developed their e-business later than others and is immature. Yet it also means more intellectual property issues.

Similarly, a process of market liberalization is also building in India. Some have claimed that (Vollmer, and Sabine, 2013) that, prior to 1991, FDI was extremely regulated and was banned in almost sectors by Indian government. Yet a second wave of reforms has forced the liberalization process from 1991. It has opened the India economy for foreign investment in almost categories. A variety of measures were taken by India government, such as current account convertibility, allowing foreign institutions to invest in securities and shares of India companies. However, foreign investment in some sectors of economy was restricted by India. The Foreign Exchange Management Act (FEMA) Regulations, which is most import law for foreign invertors, has banned some sector like atomic energy and banking. In other sectors, such as mining, telecommunications, and pharmaceutical, the proportion of investment in a company is covered by the FEMA regulations. Lately, many FDI has required Foreign Investment Promotion Board (FIPB) approval. Obviously, industries are requiring a license to operate, and to need for approval for restricted industries.

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