The social values and history have shaped and formed the economical developments and the current environment of business in the People's Republic of China. They have determined the patterns for negotiation and the Chinese perceptions of business, and their feelings towards westerners. The implicit and explicit rules that the Chinese society has on the development of businesses, and the economy in general, are very important issues for any person going into China to understand and consider. In order to achieve a successful partnership between Chinese and Western cultures it is essential to have a basic understanding of history and cultural developments that have shaped the current environment of business. The three pillars of China are economy, culture, and society.

The Chinese economy has been formed as a result of centuries of history and development, which reflect the philosophy of China and its current economical position. China started as a mainly agricultural based society with the subsistence group; the family. For more than 2000 years the Chinese economy operated under a type of feudal system; land was concentrated in the hands of a relatively small group of

Negotiating in China can be very frustrating. Differences in decision making styles and negotiating tactics cause misunderstanding and tension. Chinese culture is based on the importance of rituals and ceremonies and so is Chinese business. Business meetings are as important as the dealings during receptions. To exemplify the process of dealing with China in order to develop a productive relationship we will use the case of Kentucky Fried Chicken in China. This case includes the different problems and strategies used in the negotiation and development of business in China, specifically in setting up a foreign joint venture. However, the problems that arise and the current working environment of the Chinese economy cannot be understood without first understanding the history and the cultural revolutions that have shaped it. This brief outline of the history of China leads insight into some of the problems and the resolutions that a manager for KFC experienced during his venture with the Chinese.

The new government initiated a land reform program that redistributed land to 300 million poor peasants into cooperative farms. In 1958 the rural people's communes were established, and these dominated agriculture in China until the early 1980s. The commune was based on the collective ownership of all land and major tools by its members, who produced mainly to meet state planning targets and who were rewarded according to the work they performed, although basic necessities were guaranteed to all members.

The conclusion of the Opium War of 1840 formally initiated a period of Western penetration of China from the coastal treaty ports. Railroads and highways were constructed, and some industrial development began. Such activity had little impact, however, on the overall Chinese economy. In effect, China was carved up into a number of competing colonial spheres of influence. Japan, which tried to attach China to its East Asia prosperity Sphere, was able to create only isolated nodes of a modern economy.

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Approximate Word count = 4792
Approximate Pages = 19 (250 words per page double spaced)