Logistics and distribution, Laws & Regulations: MJM plc (known as MJM) is a large surface transportation company in China. MJM needs to reduces CO2 emissions int he short and long term. What...

Logistics and distribution, Laws & Regulations:

MJM plc (known as MJM) is a large surface transportation company in China. MJM needs to reduces CO2 emissions int he short and long term. What are the challenges in developing and securing adherence to a common set of regulatory standards?

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kipling2448 | (Level 3) Educator Emeritus

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A corporation as large as MJM employs a sizable team of attorneys and analysts whose responsibilities include tracking legislative proposals and working with central, regional and local governments to standardize regulatory structures as much as possible. In China, one of the major challenges is the entrenched corruption among many local officials that makes even harder the task of operating across myriad administrative boundaries. China is, of course, a huge country with a tremendous population of around 1.3 billion people. It is organized around provinces, prefects, counties, towns, and villages, with each maintaining its own government. To operate across all of these administrative borders requires knowledge of numerous laws and regulations, although a company as large and important as MJM would be able to appeal to the central government in Beijing any time it believes it necessary. Ultimately, it is that central government, run by the elite of the Chinese Communist Party, that sets the tone for all that follows. That said, as numerous cases of political and economic corruption exposed across China over the past 20 years illustrates, the challenge of navigating the governing structures across the expanse of China remains formidable. Ruthlessly-executed anti-corruption campaigns by the central government, especially the current such campaign being waged by Chinese President Xi Xinping, have targeted major political figures, like Bo Xilai, former party boss of the massive Chongqing province, but local and regional officials continue to make life difficult for business.

In addition to the problem of corruption, China's struggle with the difficult task of reconciling economic growth on the scale needed to support its astronomically-large employment base with environmental considerations is perhaps its largest challenge. China's economy must grow at unrealistically-high levels every year in order to ensure that jobs are created for its enormous population. Chinese leaders are perpetually nervous about this challenge, as high unemployment would lead to political and social instability in a country where such a development would be deeply anathema to its self-image, to the communist party's ability to retain its hold on power, and to the fundamental need for people to eat. Economic growth in China means environmental degradation, although it has grown more serious about reversing course on the earlier plan for construction of more coal-powered electrical plants.

China's expanse and population impose a burden on companies like MJM with respect to the problem of reconciling economic growth and environmental protection. The leaders and populations of far-flung provinces, towns, and villages demand the right to develop their economies as they see fit, but the central government recognizes the need to impose regulatory provisions that can run counter to those local agendas. Less-developed regions want to develop economically, but the industrial base needed to make that happen translates into more pollution. Laxer regulatory structures at the prefect level, for instance, run up against the power and agenda of the central government, which recognizes the damage to China's image of notoriously high levels of smog sitting atop major cities. Imposing and enforcing a common set of regulatory standards, then, is easier said than done, even with a central government more than willing to resolve political disputes by executing those who disagree.

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