International Business Case Study: China and Caterpillar

Abstract China is one of the oldest civilizations dating back over 10,000 years. The history of China is exciting and as diverse as the topography of this region. From the peaks of the Himalayas to the scenic beaches of Yalong Bay. China has scenic and agricultural areas. China has the highest population and the fourth largest land area in the world. Caterpillar is a multi-national company engaging in foreign business within China and has been successful in China for decades. China is the world’s largest dirt-moving manufacturer. Caterpillar and China are partners in progress.

A Brief Overview of China The People’s Republic of China is located in eastern Asia. It is bordered by fourteen countries and covers an area of more than 3. 6 million square miles. This is slightly smaller than the U. S. and China ranks fourth in the world for land area after the USA, Canada and Russia ( CIA,Unknown). China also has the Himalayas in the North and tropical regions in the south. Culture Chinese culture is rich in arts, beliefs, customs, and dates back many centuries. China is the most populous country on the globe with an estimated 1,331,460,000 people.

The PRC officially identifies 55 ethnic minority groups in China in addition to the Han majority. The Han Chinese majority with 91. 5%, Zhuang, Manchu, Hui, Miao, Uighur, Tujia, Yi, Mongol, Tibetan, Buyi, Dong, Yao, Korean, and other nationalities 8. 5% (CIA, 2012) Since 2005 the combined population of officially recognized minority groups is around 123. 33 million, about 9. 44% of China’s total population (Unknown, China Today, 2010). Social Structure The social structure in China is ruled by the Chinese Communist Party (CCP) which came to power in 1949 and established the People’s Republic of China (Unknown, China, Government).

The CCP controls the content of the internet and media and only shows the citizens what is approved by the CCP. One reason they might regulate American imports is to avoid too much of a cultural influence from the US. All broadcast media is owned by the CCP or a government agency, no privately owned television or radio stations. (Pearson Educaton Publishing as Fact Monster, 2000-2006). The family is also very important to the Chinese peoples. The family structure in China is comprised of four categories, nuclear, linear, joint and other.

Nuclear families consist of the couple and their child(ren) or simply the couple. Nuclear families have become more common because of modernization and other social factors. Couples in China are allowed to have one child unless the first born is a girl then they are allowed to try again for a male, due to the male child being favored. The reason they implemented the one child policy was to help control the growing population. The impact of the changes are that parents have more time to spend with children since they do not have to take care of elderley relatives.

Men and women are much more equal than the in the past, predominantly in the cities. Children like here in America are expected to be obedient and respectful of elders. The Chinese children of today enjoy more freedoms than their relativcs in the past. Parents expect children to excel in school but allow greater tolerance towards careers, leisure activities and romantic partners. (Tanner, 2012) Religion Zen Buddhism and Taoism are the two most practiced religions. The Chinese society closely adheres to the precepts of Taoism. Taoism is inclined to simplicity in all things.

Zen Buddhism has had an extensive following in Chinese history; its practice influenced the daily habits of a great number of people. Zen Buddhism may be the best way to illustrate the mysterious quality of oriental culture. (Unknown, Traditional Lifestyle, 2010) Christianity is not as widely practiced in China same with the Muslim religions. Daoist (Taoist), Buddhist, are the majority religions with nearly 93% of Chinese people practicing, while Christianity accounts for about 3%-4% of the population, and Muslim religions are practiced by about 1%-2% of the population (CIA, 2012).

Values, Customs and Beliefs China is a patrilineal society meaning they would pass the family name down through the males in the family, with the oldest son in charge of performing family rituals. The Chinese have a high respect for their ancestors and many have shrines in their homes. Burping in America is considered rude or gross, and when a person burps in public they usually excuse themselves. However, in China it is a sign of contentment, and it is not disrespectful to burp after you eat. Feng Shui means “wind water” and is an ancient part Chinese philosophy of nature.

Feng Shui is often identified as a form of geomancy or divination by geographic features, but is mainly focused with understanding the relationship between nature and ourselves so we might live in congruence with our environment. Feng Shui is related to a simple idea that living with nature rather than against nature is better for people and our environment. Masters of Feng Shui are people who understand the five elements and the two energies; chi and sha. Sha is the opposite of chi. Chi is positive energies and sha can best be described as bad vibes.

These masters are supposed to be able to detect metaphysical energies and give directions for their best flow. They decide which way doorways should face, pictures and mirrors are hung, they decide based on the feel of the room and they detect good and bad energies. If a person is struggling in the bedroom with their partner maybe a feng shui master is what is needed to restore that flame and get the correct energy to flow throughout the room (Unknown, Cultural China, 2010). Education The Chinese education system is broken into three divisions: basic education, higher education and adult education.

Basic education includes pre-school, primary and regular secondary education. Pre-school and kindergarten can last up to three years with children being as young as three until age six. When finished they usually enter elementary school, just like America’s schools the academic year is divided into two semesters. Secondary education is divided into academic secondary education and specialized/ vocational/ technical secondary education. Academic secondary education is delivered by academic lower and upper middle schools.

When they complete lower middle school they take a test to determine whether they will advance to upper middle school or a vocational school. Vocational schools offer two to four year programs and train medium-level skilled workers. Technical schools offer four year programs to train intermediate technical personnel. Higher education at the undergraduate level includes two and three year junior colleges that offer both academic and vocational subjects. Many colleges and universities offer graduate programs leading to a master’s or Ph. D. degree. The adult education category overlaps all three categories.

Adult primary education includes Worker’s Primary Schools, Peasants’ Primary Schools, and literacy classes. Most adult education classes offer two and three year short-cycle curricula. (CERNET, 2000) Legal and Political Systems The People’s Congress System is China’s fundamental political system, which consists of National People’s Congress and People’s Congresses at local levels. Like the U. S. Congress the NPC’s functions are legislating and amending laws, reviewing and approving the government budget and also electing and removing bureaucrats.

The NPC is the highest form state power and the deputies are far more than the U. S. congressmen. Being the highest power the NPC also has the right to elect and remove top officials of the Supreme People’s court and the Supreme People’s Procuratorate The term for a NPC member is five years and they hold a general convention once a year. (Shuzhen, 2010) Economy and Trade China’s gross domestic product was worth 7,298. 10 billion US dollars in 2011, according to the World Bank, who published the report. The GDP value of China is approximately equal to 11. 77 percent of the world economy.

China’s GDP from 1960 until 2011 averaged 963. 58 USD billion, reaching an all-time high of 7298. 10 USD Billion in December 2011. The GDP measures the national income and output for a given country’s economy. GDP is equivalent to the total expenditures for all final goods and services produced within a country in a specified period of time. (Unknown, China GDP, 2012) Caterpillar Caterpillar tractors got their name from the movement they made along the ground. They moved across farmland and construction sites on tracks, rather than the traditional two big wheels in the back tractor model.

This innovation allowed for the tractors to move across muddy or wet ground and distribute the weight more evenly across the tracks so they would not get stuck in the mud. Two men fought for the business in the track-type tractors. Best and Holt companies merged into tractor business as Caterpillar in 1925. Caterpillar’s dealerships developed a reputation for keeping machines running (Caterpillar, 2012) The Caterpillar name is synonymous with tough dependable machinery and progress around the globe. The only competition in sight is Komatsu of Japan and they do not have anywhere near the resources and capabilities of Caterpillar Inc.

Caterpillar is a multi-national company and wherever you see infrastructure development, you will see a Caterpillar machine hard at work. Caterpillar and China Caterpillar and China are partners in progress. Today Caterpillar is the world’s foremost designer and builder of innovative construction and mining equipment, diesel and natural gas engines, and electricity generators. They are global company entirely committed to sustainable progress in China and around the world. In every corner of the world wherever you see infrastructure development from roads, to bridges, to airports or railways; you see Caterpillar equipment hard at work.

Businesses like Caterpillar help make progress possible. “Caterpillar needs to be where the growth is, and in terms of size and opportunity there is no market more significant than China”, said Rich Lavin the Group President at Caterpillar Inc. (Unknown, Caterpillar in China, 2012). Caterpillar China Inc. was started in Beijing, China in 1996. To date, Caterpillar has invested in seventeen manufacturing facilities in China. They produce hydraulic excavators, compactors, diesel engines, and several other industrial or commercial equipment that require significant capital investment to purchase.

The opportunities are so significant in China that since 1996 they have expanded from a single sales office in Beijing to a cross-country footprint of today which includes; manufacturing facilities, R&D centers, marketing offices, logistics and parts centers. Knowing their customers and their unique needs is how Caterpillar separates themselves from the competition. With the facilities in China it enables CAT to bring the best of their business to the Chinese customers (Unknown, Caterpillar in China, 2012).

Responsibilities Caterpillar has been powering progress for nearly 100 years. The global network of dealers and manufacturers know that sustainable and responsible production plays a vital role in the development of any nations where Caterpillar’s machines are working. This is the code by which Caterpillar’s products are manufactured and the secret of Caterpillar’s success. Today’s work supports progress around the world. By Caterpillar creating products and solutions that help their customers operate more sustainably, they help their customers, but also the communities and our world.

Caterpillar’s facilities in China reach the highest global standards of efficient and sustainable operations (Unknown, Caterpillar in China, 2012). Conclusion Caterpillar’s long history of innovation has placed it on the cutting edge of advanced designs to produce the next generation of machines that will power progress around the world and in China. For Caterpillar tomorrow’s world is just as important as the work being done today. Caterpillar is proud to call China one of their homes and proud to manufacture world-class products in China. They look forward to growing in China and with China.

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The Introduction of China’s political system and structure. Retrieved November 28, 2012, from China Daily: http://www. chinadaily. com. cn/thinktank/2010-03/10/content_9566611. htm Tanner, L. (2012). Family Life in Modern China. Retrieved November 28, 2012, from EHow: http://www. ehow. com/facts_5465042_family-life-modern-china. html Unknown. (2010). China Today. Retrieved November 27, 2012, from Cultural China: http://www. cultural-china. com/chinaWH/features/chinaoverview/ChinaToday. html Unknown. (2010). Cultural China. Retrieved November 28, 2012, from Explore Feng Shui History, Meaning, and More-China culture: http://traditions.

cultural-china. com/en/14Traditions9184. html Unknown. (2010). Traditional Lifestyle. Retrieved November 27, 2012, from Cultural China: http://www. cultural-china. com/chinaWH/features/chinaoverview/TraditionalLifestyle. html Unknown. (2012). Caterpillar in China. Retrieved November 28, 2012, from Caterpillar: http://china. cat. com/en/caterpillar-in-china Unknown. (2012). China GDP. Retrieved November 28, 2012, from Trading Economics: http://www. tradingeconomics. com/china/gdp Unknown. (n. d. ). China, Government. Retrieved November 27, 2012, from Countries Quest: http://www. countriesquest. com/asia/china/government. htm