Introduction
Walmart Inc. is an American retail company that runs a chain of superstores. Currently, the company successfully operates over ten thousand stores in 24 countries (Walmart, 2022). As these countries’ political and legal environments vary substantially, it is crucial to consider how the company is impacted and whether it is supported or restricted in different countries. This paper will discuss the political and legal circumstances in the United States of America, the home country of Walmart, and the People’s Republic of China, one of the countries in which Walmart operates.
The Legal and Political Environment in the United States
The legal and political structures of the United States profoundly impact domestic businesses. The country’s political system is a representative democracy, with it being widely supported not only by the government but by the citizens as well (Graham & Svolik, 2020). As a form of government, democracy values individual freedom and grants people the authority to participate in the development of laws that govern them. These principles are reflected in the economy of the country and form the political environment for domestic American business. Democracy is associated with a capitalist market economy, which is regulated by supply and demand rather than the government. The country’s economy is regulated by various legal codes, including company, labor, investment, tax, and customs laws (“United States: Legal environment,” 2022). It should be noted that because the United States is a constitutional federal republic, each state has its own unique legal system. Nevertheless, Constitution remains the primary source of law in the country.
The Legal and Political Environment in China
The People’s Republic of China has a distinctive political and legal environment. In contrast to the United States, China is a unitary, socialist country led by the Chinese Communist Party (DiTomaso & Bian, 2018). The government in China exerts substantial control over the economy. According to McGregor (2019), a significant portion of China’s industrial sector is owned and directly controlled by the government. In addition, the private sector has experienced involvement from the government in the form of legal regulations and requirements. The hybrid market economy of the country is regulated by company, commercial, labor, and civil laws, as well as regulations on taxation, customs, the quality of goods, and opposition to administrative decisions (“China: Legal environment,” 2022). Although the current Chinese market is a mix of state and non-state sectors, the country’s government substantially impacts the economy and the operations of the business field.
Integration of Legal and Political Environments and Impact on Walmart
The political and legal environments of the United States and China differ substantially but do share certain similarities. As a democracy and a unitary state, the countries under consideration exert different levels of control over the economy and the business. Nevertheless, this control is exercised through various legal codes in both countries. As a domestic company, Walmart is well-regulated in the United States. Primarily, it is impacted by the country’s taxation, copyright, and corporate laws. The legal environment in China is far more different than in the United States. Therefore, the opportunities in the domestic market may not present themselves in the global one. Notably, this concerns the acquisition of other businesses in China, mergers, and the copyright of products. For example, the country’s Ministry of Commerce restricted Walmart’s acquisition of a local e-commerce company to prevent distortion of the Chinese market (Chen, 2021). Overall, the legal and political environments of the United States and China differently impact companies operating in the markets.
Conclusion
In summary, different countries have distinctly unique political and legal environments. These environments substantially impact the business field, with unique impacts on domestic and foreign companies. Walmart is a multinational corporation based in the United States and operates numerous stores in China. As a democracy and a unitary state, the U.S. and China have different regulatory codes impacting domestic and international businesses. Thus, Walmart is subject to a variety of laws and regulations in both China and the United States.
References
Chen, F. (2021). Variable interest entity structures in China: Are legal uncertainties and risks to foreign investors part of China’s regulatory policy? Asia Pacific Law Review, 29(1), 1–24.
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DiTomaso, N., & Bian, Y. (2018). The structure of labor markets in the US and China: Social capital and Guanxi. Management and Organization Review, 14(1), 5–36.
Graham, M., & Svolik, M. (2020). Democracy in America? Partisanship, polarization, and the robustness of support for democracy in the United States. American Political Science Review, 114(2), 392−409.
McGregor, R. (2019). How the state runs business in China. The Guardian. Web.
United States: Legal environment. (2022). Business Wales. Web.
Walmart. (2022). About. Web.