Saturday, January 5, 2008

Ease of Doing Business

I stumbled across this website from The World Bank Group that ranks 178 countries on how easy it is to do business there. Not surprisingly, the United States is ranked near the top at #3 and Canada is ranked #7. Out of Chinese-majority countries, Singapore is ranked #1, Hong Kong is #4, Taiwan is #50, and China is #83. To calculate the rankings, they factor in 10 subcategories... pretty interesting stuff.

Since I've been traveling to China and helping out with PMI, I was interested China's ranking. The worst areas were:

• Starting a Business: #135 (US = #4)
• Dealing with Licenses: #175 (US = #24)
• Paying Taxes: #168 (US = #76)

For Dealing with Licenses, the study compared building a warehouse in New York City vs. in Shanghai. In the US, there are 19 procedures which take 40 days to complete. In China, there are 37 procedures and it takes almost an entire year. For taxes, I think the entire country has to file monthly taxes on the 10th or the 11th. PMI's bookkeeper tells me that she has to work like crazy during the 1st week of each month just to get everything done.

I think the only thing in China's favor is the 1.3 billion people that need work, though I hear that Vietnam, Cambodia, and even India has cheaper labor. China's government needs to address all these impediments to doing business before they lose their competitive advantage from lower labor costs.

1 comment:

Anonymous said...

Saudi Arabia, Israel, and Pakistan came before China on the overall rankings. i guess there is no section on getting blown up by a suicide bomber.

i think to make the rankings more meaningful, they need to add overall security of the country and available labor pool, relative wages, and quality of workers(education).