Global Journal of Management and Business Research, A: Administration and Management, Volume 22 Issue 9

expatriate business owners yet it is still one of the most highly sought-after markets. Urbano, Audretsch, Aparicio, and Noguera (2019) explain how existing regulative statutes and cultural norms of China affect foreigners doing business there. Embedded within this institutional framework is Opportunity Recognition Theory. All other factors considered, foreign entrepreneurs must be able to recognize the opportunities that exist for them in line with provisions made by the institutions. Institutions will present the environment that foreigners must encounter. Formal institutions regulated by the State determine the prevailing state of entrepreneurship (North, 1991) in China. They determine the foreign entrepreneur’s ability to operate, to obtain legal residence status and visas as well as which industries to enter. This therefore means the formal institutions in China enable as well as constrain entrepreneurs. Social interactions and observation of culture and language are so important and are a determinant of the success or failure of a business in terms of productivity and formality (Lee, 2003). Firms that try to imitate their indigenous styles of management find it problematic to succeed in China. Opportunities that exist for foreign entrepreneurs are largely efforts by the government to create a fertile environment that is conducive to entrepreneurial activity. These currently range from opportunities in 1st and 2nd tier cities where there is access to talent, clusters, good infrastructure and preferential tax incentives (Xiao & North, 2017), allocation of space and money for Special Economic Zones SEZs and High-Technology Zones HTZs to incentivized foreign trade with minimal government interference as well as Free-Trade-Zones FTZs that through the BRI intend to modernize China’s business landscape and stimulate domestic and foreign trade (Wu & Burge, 2018). III. C onceptual D evelopment a) Item generation An initial review of studies on the market entry barriers (MEBs) of entrepreneurs in China was done to compile the prominent factors affect the business environment for foreign entrepreneurs (Jayaraman, 2010; Niu, Dong, & Chen, 2012; W. Zhang & Zhai, 2016). This study gathered findings from the literature survey on MEB’s explained in literature regarding the Chinese market, dating back from 1989-2020(Fang, Tung, Berg, & Nematshahi, 2017; Niu et al., 2012; Steinz, Van Rijnsoever, & Nauta, 2016). The paper by Dickson, Yao, and Hill (2020)was used as a basis on the groupings of the items. A preliminary list of 30 items divided into 6 general categories (5 items for each). b) Expert Review Four experts who are senior academics in Entrepreneurship, Business Administration and Management studies and have experience working with foreign entrepreneurs at Chinese Universities provided is with suggestions and feedback on the face validity of the 30 items. They were emailed the list of items along with the title of the manuscript and objectives of the study. Accounting for their feedback, we reworded some of the items, combined those that were ultimately the same and deleted 4 items. This resulted in a set of 20 items divided into 5 categories namely Chinese Government Policy (GP), national Demographics (DG), Domestic Market Competition (MC), Local Business Relations (BR) and access to Funding (Fu). c) Nomological Validity i. Government Policy (GP) Arguably, government policy is the most powerful shaping force of the business environment in China (Woetzel et al., 2014). Firstly, the Open-Door Policy (GP1) from 1979 saw China open up its borders to investment from other countries. This has since led to the State decentralizing decision-making regarding trade, opening of special economic zones in strategic locations to facilitate it, loosened control on foreign exchange and replacement of administrative restrictions with tariffs and quotas (Park & Ungson, 2016; Park, Ungson, & Zhou, 2013). This has significantly transformed the nation to a market economy. Secondly, China is forex-controlled country (Deloitte, 2017) meaning companies must apply for foreign exchange certificate and review annually by supplying documents for all money coming in and out of China through business transactions (GP2). Although the circulation of foreign currency is prohibited, The Shanghai Pilot FTZ currently allows full convertibility of RMB, the beginning of the relaxation of this policy. Thirdly in many 1st and 2nd tier cities, the State Tax Admiration has introduced some attractive incentives for foreign entrepreneurs and startups (Hsu, Lee, Leon-Gonzalez 2018) that give preferential tax treatment and substantial tax holidays (GP3). In certain industries, such as high-new-tech- enterprises (HNTEs) and cities in Guangdong and west China, they are offering a 2-year tax holiday followed by 3 years of 12.5% income tax versus the documented 25%. Therefore, entrepreneurs can easily bear the tax load after 5 years giving them enough time to get their businesses up and running (Deloitte, 2017).Finally, the last aspect of this is the regulatory transparency of policies regarding investment (GP4). (Jayaraman, 2010) describes the legal system as “loosely defined” allowing for many loopholes alongside red tape and many misinformation’s. Entrepreneurs with a good network of Chinese colleagues will have less difficulty navigating simple tasks such as permits and approvals, however without these connections one will face grave difficulties navigating the red tape and run-around as well as may have no protection against theft of expertise and intellectual property (IP). 11 Global Journal of Management and Business Research Volume XXII Issue IX Version I Year 2022 ( ) A © 2022 Global Journals A Study on the Complex Dynamic Factors Influencing Foreign Entrepreneurs in China: A GTMA Perspective