Within the late 1970's, the People’s Republic of China started its policy which in turn would encourage foreign investment. Since 1979, China has turned its focus on acquiring an active role in the international business environment. From then on China has spent numerous years actively modernizing its legal structure, culminating in its effective entry to the Globe Trade Organization in 2001. The scale of foreign investment has elevated after year of 2001. The Chinese economy has developed fast considering the joint of Globe Trade Organization (WTO) in 2001 there has been additional expansion of the economy. It has resulted in relaxation of trade barriers and liberalization of the company laws. The Chinese economic climate has shifted from centrally controlled system of the government to a market oriented economic climate supporting foreign investments.

China has benefitted from the elevated access of the foreign goods by way of export into the foreign market. The export of China has enhanced to US $ 762.7 billion in 2005. It has turn out to be the second largest recipient of Foreign Direct Investment (FDI) following United State of America.

There has been a change in the Company Law from the People's Republic of China (PRC) of 1994. Previously the foreign investment in China took the three standard forms namely Chinese- Foreign Equity Joint Venture, Chinese- Foreign Contractual Venture and Wholly Owned Foreign Enterprises (WOFE). Among the initial major measures was the promulgation of the Law of the PRC on Chinese-Foreign Equity Joint Ventures (the "PRC Joint Venture Law") in 1979 which governed foreign investment. As a direct result of this, the first Sino-foreign joint venture was established in 1980.

The management of those three forms of Enterprises was plagued with inflexibility as these were governed by separate specialized legislations. The foreign investor can now open a Private Limited Liability Company and Public Companies issuing shares. This is an significant step to a friendly foreign investment.

As the second largest economy already, China continues to grow quickly establishing its position as a major economic player, putting its ambitions on becoming the world's largest economic climate in the following 15 years.

China is deemed a crucial nation and recognized as a nation of development and massive potential. With this development comes an increasingly high demand for those who can bridge the gap with firm information of Mandarin as well as an understanding of Chinese enterprise culture. Many business practices in China remain diverse from the rest around the world. Studying business and knowing the business culture of China puts you at a huge advantage.