代写 Business and Government in the Global Context BUSM3886

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  • 代写 Business and Government in the Global Context BUSM3886

    Business and Government in the Global Context BUSM3886
    Business and government forms - an overview
    LECTURE 2 SEMESTER 1, 2016
     





    Part 1 Learning Outcomes
    This lecture and workshop aims to provide increased knowledge and understanding of business structures and how they are creatures of government.  By the end of this lecture you should understand:
    Business structures are a product of history and political ideology
    Governments regulate business structures and can facilitate or hinder business, including transnational business
    Political choices inform available forms and what those structures can or cannot do
    Tutorial Discussion Task: What factors underpin the western vs Chinese approach to State Owned Enterprises. What factors are driving change to the Chinese approach?
    Consider what you know about the political economy of Western countries and China.
    Background Readings – Available in the RMIT Library
    Hanrahan, P, Ramsay, I , Stapledon, G “Commercial Applications of Company Law 12th Ed.” 2011, CCH Australia: Sydney.  Ch 1 ‘About companies’ & Ch 3 ‘Companies and business planning’. 
     Chen, J “Chinese Law: Context and Transformation”.  Ch 13 ‘Law on Business Entities.” 2008, Martinus Nijhoff: Leiden. 
    Articles on Reforms to State Owned Enterprises in China
    Zhang, D & Freestone, O (2013) “China’s Unfinished State Owned Enterprise Reforms” Economic Roundup, Issue 2, 2013.  See:http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/Economic-Roundup-Issue-2/Economic-Roundup/Chinas-unfinished-SOE-reforms
    “China Issues guideline to deepen SOE reform.” Xinhua (13 September 2015) see:http://news.xinhuanet.com/english/2015-09/13/c_134620127.htm
    De Jonge, A (17 Sept 2015) “China’s grip still tight on state-owned enterprises” The Conversation. See:https://theconversation.com/chinas-grip-still-tight-on-state-owned-enterprises-47478
    “Overhaul of Chinese state-owned firms splits them into commercial and not-for-profit operations” South China Morning Post (7 September 2015).  See:http://www.scmp.com/news/china/policies-politics/article/1856060/overhaul-chinese-state-owned-firms-will-split-them
    Panda, A (14 September 2015) “Is China Serious About Its New State-Owned Enterprise Reforms?” The Diplomat See:http://thediplomat.com/2015/09/is-china-serious-about-its-new-state-owned-enterprise-reforms/
    Lau, J (1 December 2015) “Profits at China’s state-owned enterprises poised to plunge further”. South China Morning Post See: http://www.scmp.com/business/companies/article/1885477/profits-chinas-state-owned-enterprises-poised-plunge-further
    Wu, W & Zhou, L (3 January 2016) “Chinese state-owned finance firm goes global to raise funds amid national slowdown.” South China Morning Post See:http://www.scmp.com/news/china/article/1897720/chinese-state-owned-finance-firm-goes-global-raise-funds-amid-national
    Barton D and Ye, M (July 2013) “Developing China’s business leaders: A conversation with Yingyi Qian”. McKinsey Quarterly See http://www.mckinsey.com/global-themes/leadership/developing-chinas-business-leaders


    In the West - How did Companies Develop?
    1500s – England – emergence of the “corporations aggregate”
    Means by which a group of people could hold property to advance collective aims
    Municipal boroughs, trade guilds and colleges conferred identity that was independent of the fluctuating identity of members
    Creation required the consent of the Crown
    In the West  - How did companies develop?
    1600s – England – notion of joint stock developed.
    Mechanism developed whereby an investor could invest money in return for a share of the profits of the venture.
    Colonial expansion.  Mostly occurred in unincorporated ventures, although a few eg. British East India Company, Virginia Company were incorporated.  These were rare as required Royal Charter.

    In the West  - How did companies develop?
    Granted a charter by King James I in 1606, the Virginia Company was a joint stock company created to establish settlements in the New World.  This is the seal of the Virginia company which established the first English settlement in Virginia in 1607.
    In the West  - How did companies develop?
    In the early 1700s speculation in joint stock was rife.  The South Sea Company went in value from 100 pounds to 1000 pounds in days.
    Estimated the value of speculative investment was 500 million pounds, more than twice the value of all the land in England.
    Bubble collapsed in 1720 leading to large losses.  Parliament passed the Bubble Act of 1720 and banned joint stock without Royal Charter.
    How did companies develop?
    Factors driving the need to have multiple investors did not go away.
    Lawyers developed a “deed of settlement company” to get around the Bubble Act.
    Property in the venture was held by trust and investors received a share in trust property.  Complex to establish and administer and potential liability for investors.
    How did companies develop?
    1825 repeal of the Bubble Act
    1844 Act allowed businesses to become companies by a process of registration rather than Royal Charter
    Such companies had separate legal personality.  This means they could sue and be sued.
    1855 Limited Liability Act introduced limited liability.
    1862 Companies Act (UK) was adopted by the Australian colonies and is the basis of modern Australian company structures. 
    Characteristics of Modern Companies
    Separate Legal Personality: At law a company is a separate person from its members and those who manage its operations
    Limited Liability:  shareholders are not liable to contribute additional money to meet the company’s debts beyond the amount initially paid for the share.
    The legal rules that separate the company from its participants are referred to as “the corporate veil”


    Characteristics of Modern Companies
    Characteristics of Modern Companies
    Consequences
    A company’s obligations and liabilities are its own and not those of its participants
    A company can sue and be sued in its own name
    A company has perpetual succession
    A company’s property is not the property of its participants
    A company can contract with its controlling participants
    Other forms of organisation in Australia
    Unincorporated associations
    Incorporated associations
    Sole traders
    General partnership
    Limited liability partnership
    Joint ventures
    Trusts
    Managed investment schemes
    These forms can be used to facilitate multiple types of businesses
    Proprietary companies and publicly listed companies
    Franchises
    Not for profits
    Trans-national corporations
    Multi-national corporations
    State owned enterprises
    Public and private partnerships (PPPs)


    Chinese business structures
    Chinese business structures
    Chinese law has also evolved to create a domestic law of business structures
    Entities available for business in China reflect different philosophical tensions to those in the West.
    Tension between socialism and private economy
    Socialist ideology:  socialist public ownership and transforming or eliminating forms of private economy.
    Private law institutions: focus on economic freedom and equality of civil law parties in a market economy.

    Chinese business structures
    Pre 1988 – individual economy only allowed as a complement to the socialist public economy: Articles 6 and 11 (1982 Constitution)
    1988 Constitutional amendments – Article 11 – amended to “permit a private economy to exist and develop within the limits prescribed by law”.
    Legalised a largely unregulated sector that was already operating
    Business started blossoming

    Chinese business structures
    1999 Article 11 amended again - Individual economy longer a complement to socialist public economy but “an important component of the country’s socialist market economy.”
    Represented elevation of the role of the non-public economy in the state economic system.
    Article 11 again amended in 2004 to include “individual economy” as well as “other non-public economy” .  This was required because of flourishing of the private sector in different business forms.  

    Chinese business structures
    Laws and administrative regulations lay down provisions governing organisational structures
    Also confer beneficial or discriminatory treatments on various forms
    Argument this lays down an unequal and unfair environment for economic competition among different economic entities as business not “equal” to compete in the market.
    See: Chen, J “From Administrative Authorisation to Private Law: A Comparative Perspective of the Developing Civil Law in PRC” (Dordrecht: Boston, 1995). 
    Chinese business structures
    Three types
    Domestic investment enterprises
    Hong Kong, Macau, Taiwan investment enterprises
    Foreign investment enterprises

    See Provisions concerning Enterprise Registration Classification issued by State Statistics Bureau on 28 September 1998.
    Chinese business structures
    Domestic Investment enterprises
    State owned enterprises
    Collective enterprises
    Shareholding co-operatives
    Joint operations
    Limited liability companies
    Companies limited by shares
    Private enterprises
    Chinese business structures
    Hong Kong, Macau, Taiwan Investment Enterprises
    Equity JVs
    Contractual JVs
    Sole investment enterprises by HK, Macau or Taiwan investors
    Companies limited by shares with HK, Macau or Taiwan investors.
    Chinese business structures
    Foreign investment enterprises
    Sino-foreign equity JVs
    Sino-foreign contractual JVs
    Wholly foreign owned enterprises
    Companies limited by shares with foreign investment.
    Comparing approaches
    Availability of business structures reflects history and political ideology of prevailing governments
    Different legislative responses to different business forms
    “Who cares what colour the cat is, as long as it catches mice.”  - Attributed to Deng Xiaoping.

    Comparing approaches - The Public Sector
    In many countries government is comprised of central government, local government, and businesses that are owned by government
    In the last twenty years the number
    of government-owned firms (or state owned enterprises (SOEs) in many OECD countries has decreased considerably.
    In the US (Bank of America) , Australia (Australia Post), the UK (Royal Mail) few remain due to a liking for Friedman and Hayek’s economic theory.
    150,000 SOEs in China, less than 30 in the UK, approximately 10 in the USA. 
    Problems with China’s SOEs - 2014

    代写 Business and Government in the Global Context BUSM3886

    Failed to comply with the government’s order to focus on what are deemed to be “strategic sectors” such as aviation, power and telecommunications - industries that the Communist Party believes it must dominate in order to maintain control of an increasingly complex economy. (The Economist 2014)
    “Profitability of state companies has fallen, even as private firms have grown in strength. SOE returns are now about half those of their non-state peers.” (The Economist 2014)
    Some 80,000 are “in the economic lowlands” - they run hotels, build property developments, manage restaurants and operate shopping malls. “The temptations to branch out have been too great: relative to their private-sector peers, they have benefited from cheaper financing from state-owned banks, favouritism from local governments in land sales and a lighter touch from regulators” (The Economist 2014)
    http://www.economist.com/news/china/21614240-reform-state-companies-back-agenda-fixing-china-inc

    Problems with China’s SOEs - now
    Since then, things have gotten worse! Profits fell 9.8% in the first 10 months of 2015 (South China Morning Post 2015)
    Energy Sectors such as coal mining suffering due to China’s economic slowdown, excess supply, lack of demand and the shift away from traditional industries in the old economy towards the tertiary sector.  Manufacturing sector suffering from stockpiling (SCMP 2015)
    Crucial missing factor is demand.  Lower interest rates cannot compensate for this (SCMP 2015)
    Main purpose for SOEs is to absorb employment.  This makes them poor economic performers. (SCMP 2015)
    http://www.scmp.com/business/companies/article/1885477/profits-chinas-state-owned-enterprises-poised-plunge-further

    September 2015 China announces reforms to its SOEs
    Splits into commercial and not-for-profit corporations
    Reflects the need for public goods
    Role of government and business
    GOVERNMENT and POLITICS
    GOVERNMENT and BUSINESS
    Dr David Schmitt
    Part 2 Aims & Objectives
    qUnderstand the nature of the political relationship between government, civil society and business
    qUnderstand the what, how and why of government
    q Understand the nature and complexity of the relationship between politics and government
    q Understand why government exists and the structural and philosophical/ideological options
    q Understand the complex relationship between Business and Government – cooperative, competitive, symbiotic, other?
    q
    q
    WHAT IS POLITICS?
    Numerous definitions
    Governing mankind through deception ( Isaac D’Israeli)
    The art of the possible (Lord Butler)
    Control and reconciliation of diverse interests (Aristotle)
      Scruton Roger (1982)
    The exercise of power to gain advantage over others – access to scarce resources – satisfy self-interest (Rational Choice Theory)

    The natural state of human affairs? 

    WHY GOVERNMENT?
    To peacefully resolve political situations
    Political Situations:
    1. Conflict
    2. Exercise of power
    3. Uncertainty
    Elaborate governmental structures and political institutions required to ensure peaceful resolution of political situations.

    What Is Government?
    “The exercise of influence and control through law and coercion, over a particular group of people formed into a state.” (Scruton, 1982)
    The management of the state - government – management of/for citizens
    The body that manages the state – the government (executive – elected or appointed)
    “The state is the organisation which monopolises legitimate violence over a given territory.” (Weber in Scruton, 1982)
    Noun: the Government     Verb: government
    GOVERMENT versus GOVERNANCE
    Government usually understood as control over – top down – but responsible to the majority, monarch, clergy – rule via a legitimate mandate
    Governance – based on the recognition of stakeholders and involves a more inclusive form of management – responsive and responsible to all stakeholders, all citizens more fragile mandate and legitimacy. Consequence of increasing complexity
    Basic Types of Government
    Constitutional and Non-constitutional
    Absolute and Limited
    Political (institutional) and Non-political (despotic, primitive)
    Constitutional and Limited Forms: (Limit the power of government – people sovereign)
    Parliamentary (Constitutional Monarchy) and Presidential
    Absolute: (Unlimited government power – ruler or party sovereign)
    Monarchical and One Party States

    Structure of Governments: Formal
    FORMAL (Constitutional Recognition)
       Executive (Cabinet Ministers and their departments)
       Legislature/Parliament (House of Reps & Senate)
       Judiciary  (police/military)(Legal/Court system – various levels)
      Constitution provides a blueprint for above

    Separation of Powers (independent, defined functions): Checks and balances to prevent dictatorship of the one and the many (mob)
    Legislature: makes the laws
    Executive: implement the laws
    Judiciary : enforce the laws

    Theory and practice of above are quite often in conflict
    Federal systems are complicated by competing governments


    q

    q

    Structure of Governments: Informal
    INFORMAL Political Agents (Not Recognised in a Constitution)

      The Press/Media – in all its forms

      Pressure groups – insider (eg business) and outsider (eg Unions)

      Lobbyists – paid agents of special interests

      Political parties – major and minor
    q

    q

    Key Constraint on Government Power
    At the end of the day it does not matter what form of government it is it still needs to serve the interests of the citizens – maintain legitimacy (mandate of heaven) to forestall electoral defeat or revolution.
    The Nazi regime in Germany (1933-1945) put an enormous amount of effort into keeping the average German well off during the WWII.
    Nature of Business-Government Relationship: It is political!
    Questions?

    代写 Business and Government in the Global Context BUSM3886