Difference Between American Corporation And Chinese Corporation

Difference between American and Chinese Corporations
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Difference between American and Chinese Corporations
Introduction
Globalization has been one of the most critical trends in the contemporary marketplace. This aspect has not only ensured that organizations conduct business with their domestic counterparts, but also created a platform of developing close relationships with foreign companies. This development has strengthened ties between two global economic powerhouses; the Peoples’ Republic of China (PRC) and the United States. The latter is regarded as the most developed country while the former approaching this level fast. The economic and trade relations between these two countries backtracked to the 18th Century when the Chinese traded their Chinese tea, porcelain, and silk for ginseng, leather, and cotton (Liao, 2017). The dynamics of the trade are changing with the Chinese products creating a stalwart presence in the American market and vice-versa. The bilateral trade between the two countries has risen from $2.5 billion in 1979 to $519.6 billion in 2017 (Liao, 2017). Still, businesses in these two countries reveal similarities and differences in the running of their operations. The subsequent discussion offers more insight into the limited liability and corporate governance aspects of organizations in these two countries.
The Limited Liability Company (LLC)
The formation of an LLC in both PRC and USA is quite different considering the various regulations that entrepreneurs have to abide. Under the Chinese authorities, an LLC is allowed to have a minimum membership of one and a maximum of 50. An LLC with one member is required to pay capital of RMB 100000 at its incorporation while those with more than one member are expected to pay RMB 30,000 (Young & Lau, 2014). Still, companies are expected to conduct the type of businesses they have registered at the State Administration of Industry and Commerce (SAIC). The object clauses of a company are subject to change, and the enterprise has to re-register these changes at the SAIC. This sentiment implies that the concept of ultra vires still applies. The company laws from the authorities provide the respective duties of the supervisors, managers, directors, and shareholders. It is important to note that initially, the majority of the Chinese companies were state-owned and therefore, the PRC government had to mediate changes with the aim being to attract much-needed foreign capital. Moreover, before the money amendments of 2006, the legislature thereof for the LLC was the same for the public and listed companies (Young & Lau, 2014). Among the most important of the legislation initiated was the minority shareholders request to intervene when they deemed decisions from majority shareholders and the board contravened the articles of incorporation or the law.
The Chinese perception of LLC shares some similarities with the corporate law guiding the same business entities in the US. The most basic of them all is that the law alleviates the burden of debt on the shareholders if the company is declared bankrupt (Meiners Ringleb, & Edwards, 2014). Shareholders can never lose more than the relative equivalent...