China economic model Assignment Example | Topics and Well Written Essays - 750 words

China economic model - Assignment Example The short supply of skilled laborers in China is part of the problem. The Chinese culture has never respected the value of intellectual properly probably because they are the merchants of pirated merchandise in the world. Due to this business culture the local inventors know that if they file for a patent, nobody will respect it and the product will get imitated. The government does not prosecute violators of intellectual property crimes even though there are some laws that are suppose to protect inventors and innovation in the business industry. China has forgotten than in the long term patents are what enable firms to gain incredible amounts of wealth. The American pharmaceutical industry in the great example of the value intellectual property can bring to firm. Raising money for smaller firms is difficult anywhere in the world. In China the task become much greater. The underlying behind this is the fact that the state is owner of the banks due to the communist Chinese regime. Since the state owns the banks the state tend to lend money only to state-owned companies that are large and can create a greater amount of jobs opportunities for the people. Small companies have to resort to the underground economy to receive financing. The three primary sources that lend money to these firms are: pawn shops, â€Å"credit guarantee firms†, and small industrial companies (Doungguan, 2009). These are informal creditors which operate under different type rules than the normal banking industry. They charge high interest and expect their money back in the short to medium term. The small business must produce fast, otherwise bankruptcy is inevitable because they face high short term liabilities. China has been hit harder than other civilized western countries by the global financial crisis. Some cities have lost between 33% to 50% of their overall employment because due to