Expansion of a company in a foreign country can be inhibited by government regulation and reforms. This is precisely what is occurring in China and Walmart is being affected. China is a communist government which means it has a communist economic system. This type of system means the government or state owns all resources both non-human and human. In this type of system the government plays a central role in the production and the consumption of all goods in order to ensure that planning offers socially desirable production and consumption. China is one of the few remaining examples of this type of economy. China has recently made changes based on its business cycles in order to counter some of the effects of the geopolitical world and it has inhibited Wamart’s ability to expand its operation overseas.
Business cycles are the recurring contractions and/or expansions of any national economy. (This is most often measured through the GDP). Cycles will vary in length and can last up to ten years or longer. There are always some distinctive phases that economists use to recognize where any particular economy is in the process or cycle. These phases include expansion, peak, contraction and trough.
It is not difficult to understand where any particular economy is in its individual cycle because there are some common occurrences frequently connected to the phases. For instance, inflation is a common event during an expansion, and unemployment tends to rise during any period of contraction. How is the business cycle actually measured? You apply the items you learned about in the previous section: the unemployment rate, the GDP, and the rate of inflation. For instance, the GDP that has increased since the previous year, along with the increasing rate of inflation is usually indicative of an expanding business cycle.
Overall there are many things that can change the development or expansion of a company in a foreign country. One of the most prominent things is government regulation and reform. Since China is a communist economy that means the government in involved in the planning of all production and consumption throughout the country. In order for a foreign company to produce and sell commerce it must go through approval from the government. That being said Walmart is currently battling expansion in China because of this. Walmart is being inhibited from growth of new production plants and expansion throughout China and only once reform is made yet again can this be changed.
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