Editor's Note: Peter Kusek is an Investment Policy Officer with the of the World Bank Group. Has just published its seventh annual report for 2010. As in the past, it includes its flagship rank, which is once again led by high-income economies such as Singapore, New Zealand, Hong Kong (China) and the United States. That’s not a surprise. What some of us might however not expect is to find countries such as Georgia, Saudi Arabia or Mauritius among the top 20. Does this mean that these countries are amongst the world’s 20 most desirable and attractive business destinations? Well, yes and no, depending on how you define attractiveness. Let’s do the following quick business exercise together: I am an investor looking to expand my enterprise and venture beyond the borders of my country. All my buddies are telling me that China and India are the places to go, but before I follow their advice I decide to snoop around the Internet and see what other folks are saying. As I expect, information abounds so I decide to restrict my search and only check out various lists of countries which rank the world markets based on their business attractiveness. Still, there are too many so I zero in on the following six lists which seem to come up most often in my search: • from the World Economic Forum • from the Doing Business project at the World Bank Group • from the Heritage Foundation • of the Economist Intelligence Unit • from A.T. Kearney • by IMD I am curious how China and India compare on these rankings, and I will throw in Brazil and Russia to cover all four BRICs. Find 30 listings related to Better Business Bureau in China on YP.com. See reviews, photos, directions, phone numbers and more for Better Business Bureau locations in. Mar 05, 2012 Everyone is opening shop in China because “it’s the place to be.” Before you sign the lease, read this. Find the best selection of better business here at Dhgate.com. Source cheap and high quality products in hundreds of categories wholesale direct from China. Make friends first, do business later. Americans pride themselves on getting straight to the point. We want to cut to the chase. We haven't got all day. This is not the Chinese way at all. The Chinese like small talk and pleasantries. They want to learn more about you. Initial meetings are rarely expected to produce results. The answer is simply because there turned out to be so few options for a buyer who has been done wrong by a Chinese supplier. As an example, If you Google “Better Business Bureau China Equivalent” you're led to a question being asked: “Is there a Better Business Bureau in Changzhou, China? As a busy businessman I don’t have the time to correlate or standardize the data, so I am just going to create a simple table showing the position of the countries on each of the ranks. What do I see? Well, a rather confusing picture. On one hand, the FDI Confidence Index tells me that there is no better place in the world to go than China. On the other hand China is towards the bottom of the Index of Economic Freedom, and Doing Business puts it somewhere in the middle of their distribution. Russia is a clear loser on most of these ranks with the exception of Doing Business, which places it above both India and Brazil. India scores worst on the Doing Business rank, yet all other ranks think it’s the second best BRIC country to go right after China. In several of the rankings China is at the top and Russia at the bottom. In EIU’s Business Environment rankings, these two countries are in the middle and Brazil is the best and India the worst performer of the four countries. So who is wrong and who is right? They are all right in their own way. The thing is that we are sort of comparing apples and oranges. While our six ranks all measure some aspect of business attractiveness, they all come at it from a different angle and it’s these differences in methodology that are really key in interpreting results. Some focus specifically on foreign investment while others examine the quality of business conditions for all enterprises. More specifically, • Global Competitiveness Index is the most comprehensive of our indices and includes hard data as well as business opinions on a range of issues including institutions, labor, infrastructure and health. It does not have a specific business focus, but rather it assesses the ability of countries to provide high levels of prosperity to their citizens. • Ease of Doing Business Index measures the quality of regulations and efficiency of business-government transactions for domestically owned small and medium-size enterprises (SMEs). It does not measure macroeconomic conditions, corruption, cost of labor and capital, or other factors which affect the likely profitability of new business ventures. • Index of Economic Freedom covers ten areas including trade freedom, business freedom, investment freedom, and property rights. It relies on secondary sources of information rather than business interviews. • Business Environment rankings examine ten separate criteria covering the political environment, macroeconomic environment, market opportunities, policy towards free enterprise and competition, and others. • FDI Confidence Index is based on a survey of top executives who are asked about the future prospects for foreign direct investment (FDI) in each of the measured countries. • World Competitiveness Yearbook looks at five main areas of economic performance, government efficiency, business efficiency and infrastructure. So what are we learning from all this? One key lesson surely is that we should not blindly trust any set of indicators and country rankings that might result from them. Indicators are exactly what their name says they are—data which are only indicative, rather than definitive in measuring a particular issue. Each of the six indices we looked at has its own unique methodology and target audience, and conflating all of them together will usually muddle the picture instead of adding clarity. Business people, governments and academics should be prudent in using these numbers beyond their intended purpose and in extrapolating far-reaching conclusions about how countries actually compare to one another. So is China still the place for my business? I might have to do a little more research on that. In my opinion India is a better bet. China has shown good growth so far but India has much deeper and stronger roots. This has time and again been proved by India's ability to remain largely unaffected by global down turns where china has always stumbled. So, your investment is safer in India than in China. Moreover, the greater number of billionaires and millionaires in India is indicative of the fact that there are no restrictions imposed (directly or indirectly) on the growth of a business in India and this is directly related to the open economic structure that India has. Other factors: - Indian consumers spend a greater part of their income towards non essential commodities, fashion accessories, and luxury items. - Media, Journalism and, most importantly, Judiciary are independent and uncontrolled by the government unlike China. Let me know your thoughts. • Submitted by Marcio Silva from Brazil on Tue, - 16:40. Just for curiosity's sake, I have dealt with the above numbers in a statistical way and found the following ranking for median and standard deviation: 1. China: median = 54.7 and sd = 48.8 2. Brazil: median = 62.7 and sd = 45.7 3. India: median = 66.5 and sd = 51.8 4. Russia: median = 74.2 and sd = 50.1 As for relation between median and sd, we have: 1. Russia: sd / median = 67.5% 2. Brazil: sd / median = 72.9% 3. India: sd / median = 77.9% 4. China: sd / median = 89.2% Conclusions: Dispersion rate: 1. China: Although China has the lowest and best median, it has the worst dispersion rate among table variables, which might indicate low uniformity. Brazil: Second in both rankings, might indicate more uniformity. India: Third in both rankings. Russia: Last in the median ranking, but first in dispersion rate, the best uniformity of all four. Opportunity: Brazil is investing in infrastructure - heavy construction & services industries - USD 475 bi spread through 2016. For more business information regarding Brazil, send us an e-mail to [email protected]. • Submitted by James Lloyd on Mon, - 10:52. Alongside the objectives and methodologies of each of these indicators, one factor that also differs and should influence the way we interpret these indicators is the use of each of the indicators by Governments and other agents. By example, let me shed light on the case of the reform of the business environment in Saudi Arabia with which I am familiar. The Government of Saudi Arabia uses the Doing Business index as the main measure of the success of its business environment reform initiative (the 10 by 10 initiative). This initiative seeks to place Saudi Arabia in the top 10 of the countries ranked by 2010. While this initiative has advantages the methodology of the Doing Business report and its shortcomings in measuring what was needed to be measured lead to a series of relatively easy 'on paper' reforms to increase the position of the rankings of Saudi Arabia in the report. The harder areas to reform have been relatively neglected as have the severe problems surrounding the implementation and enforcement of regulations which increases the costs and risks faced by businesses significantly. Many business people in the Kingdom find it hard to believe that Saudi Arabia is the 13th easiest country in the world in which to do business. So, is it a surprise that Saudi Arabia ranks so highly in the Doing Business report? Not particularly. • Submitted by stev on Sat, - 06:39. I am just going to point out some lighter matters. One of the problems in doing business is communication, and I think India is better for an English speaker and the fact that it is a democracy gives it a upper hand. And it has a good justice department and laws in place, even though it may take some time compared to others it's better, and ya believe me it won't be easy for an outsider if they mess up with the law in chain and Saudi Arabia man! Nothing less than a death sentence. And ya in China and Saudi nothing is in your hands each day you will have a surprise and you can't own any thing there every thing is the government's only problem you would be facing is the infrastructure it's comparatively bad but if you are to look for other matters it's much better (but it's the best time to invest in infrastructure in India because the Indian gov. Is trying hard to improve it, heard they are going to build 10km of highway every day remember India has the most road connection in the world) and Indians do not have unnecessary complex • Add new comment. Inside Chinese Business A Guide for Managers Worldwide Summary of Ming-Jer Chen's Book Note: The following text is a summary of part of Ming-Jer Chen's. We recommend that you purchase the book in order to benefit from the full depth of the author's own words. Introduction: Who (and Where) are the Chinese? Many non-Chinese find the behavior of Chinese business people to be difficult to understand. To understand it, one must understand Chinese culture. While China is a diverse country, it also has a large degree of unity. While there are 200 dialects, there is a common written language. 90% of the population belongs to a single ethnic group called the Han. Perhaps the most important source of unity is Confucianism, which has endured for more than 2500 years. Confucianism governs every relationship, including business ones. Even when the Chinese emigrate from China and become citizens of other countries, most still consider themselves to be Chinese, even after several generations. Many of those who left China before the 1949 revolution consider themselves more Chinese than those in China today because the emigrants did not experience the communist assaults on their traditional values. Chinese culture and institutions seem vastly different to Westerners, but Western culture seems vastly different to the Chinese. By understanding these differences, we better can develop a global perspective. Family Businesses, Business Families According to a famous saying, when a Chinese individual is honored, his whole family is honored. When he is condemned, his whole family is condemned. The family had a practical use in China's agrarian society, but Confucius added a moral dimension and broadened it to mutually dependent societal relationships. Every person has an important role as a link in the network of society. The family is the foundation of Chinese organizations, including business ones. In the West, one often refers to 'family businesses'. For the Chinese, the term 'business families' may be more appropriate since the family comes first and the business comes second. Rather than creating wealth, the Chinese tend to see their business duties more as responsibilities to the family. For Chinese living outside the PRC, the family-based business model is strong. In mainland China, the family-based model of business diminished as communist rulers attempted to replace family loyalty with loyalty to the party. More recently, the increase in the number of non-state businesses, many of which are family-run, has helped the family model of business to reappear. Four features of Chinese business families are that they are family-directed, there is a dominant family head, it has enduring roles and family obligations, and it is family-financed and family accountable. • Family-Directed Operation As a family directed operation, the typical Chinese business family is headed by a patriarchal or matriarchal figure, often who is the founder of the business. The other family members have key positions. The extended family may have its own companies that are linked together to form a complex network. Cross-holdings are common but are not always apparent since knowledge of such holdings often is kept private. Even when a Chinese business is a publicly held corporation, it often is family controlled. The family members generally take a hands-on approach in the affairs of the business. Decision-making is informal and often occur at events such as family dinners. The organizational chart does not necessarily provide information about who actually holds the power; often a person with an influential-sounding title may be only a figurehead. Business deals may be based on family reasons, which sometimes may cause a financially attractive deal to be rejected. • Dominant Family Head Chinese business families usually are controlled by a dominant family head who has the final word on important decisions. This person may have advisors who are family members or close friends. Such relationships are more important than what the organizational chart may imply. Often a lower level manager will go straight to the head without going up through the chain of command. Western companies dealing with the Chinese will benefit if they take the time to find out who really holds the positions of power and influence in the Chinese firm. • Enduring Roles and Family Obligations The heads of Chinese family businesses usually are succeeded by family members who carry the business tradition to the next generation. Even if nobody in the family has the skill to run the business, family members are preferred over outside professional managers. Often, Chinese assets are divided among all of the sons, who may branch off into different industries. This has the effect of adding a higher degree of diversification to the business. • Family-Financed, Family-Accountable Corporation The formal accounting in a Chinese business family tends to be for tax purposes, with the real books kept in the heads of family members. People are evaluated informally and personal reputation is more important than achievements. Decisions are made quickly, often based on personal recommendations. The following table contrasts some of the key differences between traditional Chinese business practices and those of Western companies. Inside Chinese Business A Guide for Managers Worldwide Summary of Ming-Jer Chen's Book Note: The following text is a summary of part of Ming-Jer Chen's. We recommend that you purchase the book in order to benefit from the full depth of the author's own words. Introduction: Who (and Where) are the Chinese? Many non-Chinese find the behavior of Chinese business people to be difficult to understand. To understand it, one must understand Chinese culture. While China is a diverse country, it also has a large degree of unity. While there are 200 dialects, there is a common written language. 90% of the population belongs to a single ethnic group called the Han. Perhaps the most important source of unity is Confucianism, which has endured for more than 2500 years. Confucianism governs every relationship, including business ones. Even when the Chinese emigrate from China and become citizens of other countries, most still consider themselves to be Chinese, even after several generations. Many of those who left China before the 1949 revolution consider themselves more Chinese than those in China today because the emigrants did not experience the communist assaults on their traditional values. Chinese culture and institutions seem vastly different to Westerners, but Western culture seems vastly different to the Chinese. By understanding these differences, we better can develop a global perspective. Family Businesses, Business Families According to a famous saying, when a Chinese individual is honored, his whole family is honored. When he is condemned, his whole family is condemned. The family had a practical use in China's agrarian society, but Confucius added a moral dimension and broadened it to mutually dependent societal relationships. Every person has an important role as a link in the network of society. The family is the foundation of Chinese organizations, including business ones. In the West, one often refers to 'family businesses'. For the Chinese, the term 'business families' may be more appropriate since the family comes first and the business comes second. Rather than creating wealth, the Chinese tend to see their business duties more as responsibilities to the family. For Chinese living outside the PRC, the family-based business model is strong. In mainland China, the family-based model of business diminished as communist rulers attempted to replace family loyalty with loyalty to the party. More recently, the increase in the number of non-state businesses, many of which are family-run, has helped the family model of business to reappear. Four features of Chinese business families are that they are family-directed, there is a dominant family head, it has enduring roles and family obligations, and it is family-financed and family accountable. • Family-Directed Operation As a family directed operation, the typical Chinese business family is headed by a patriarchal or matriarchal figure, often who is the founder of the business. The other family members have key positions. The extended family may have its own companies that are linked together to form a complex network. Cross-holdings are common but are not always apparent since knowledge of such holdings often is kept private. Even when a Chinese business is a publicly held corporation, it often is family controlled. The family members generally take a hands-on approach in the affairs of the business. Decision-making is informal and often occur at events such as family dinners. The organizational chart does not necessarily provide information about who actually holds the power; often a person with an influential-sounding title may be only a figurehead. Business deals may be based on family reasons, which sometimes may cause a financially attractive deal to be rejected. • Dominant Family Head Chinese business families usually are controlled by a dominant family head who has the final word on important decisions. This person may have advisors who are family members or close friends. Such relationships are more important than what the organizational chart may imply. Often a lower level manager will go straight to the head without going up through the chain of command. Western companies dealing with the Chinese will benefit if they take the time to find out who really holds the positions of power and influence in the Chinese firm. • Enduring Roles and Family Obligations The heads of Chinese family businesses usually are succeeded by family members who carry the business tradition to the next generation. Even if nobody in the family has the skill to run the business, family members are preferred over outside professional managers. Often, Chinese assets are divided among all of the sons, who may branch off into different industries. This has the effect of adding a higher degree of diversification to the business. • Family-Financed, Family-Accountable Corporation The formal accounting in a Chinese business family tends to be for tax purposes, with the real books kept in the heads of family members. People are evaluated informally and personal reputation is more important than achievements. Decisions are made quickly, often based on personal recommendations. The following table contrasts some of the key differences between traditional Chinese business practices and those of Western companies.
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