...Introduction Emerging markets by definition are developing economies that exhibit sustained economic reform and growth, no doubt China has experienced both. In fact China, with more than 1.3 billion people, is the world’s most populous country and has a rapidly growing economy (Doh & Luthans, 2012). One would think that their dual status as it pertains to both communism and capitalism would be a deterrent to doing business in the People’s Republic of China, and in many cases cease long term global integration into China’s market, this has not occurred and probably won’t because the results of expanding in the Chinese market out weighs the challenges that are met. Continued forecast and optimistic projections still make doing business in China favorable and the most viable option to remain competitive in today’s global economy. The key to success or failure when entering a foreign market consist of careful examination, and identification of all potential problems regarding an organization’s culture, economic environment, political risks and social climate. Additionally, a comprehensive strategy has to be in place to overcome objections and make adjustments. Understanding the differences from a political, economical, social and cultural aspect as well as the ability to respond to different national standards and regulations are key factors. The Chinese Culture Culture is defined as the sum total of beliefs, rules, techniques, institutions, and artifices that characterize...
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...summary of the “Make or Break for China” by Fareed Zakaria in the Time Magazine January,2014. In the article the Fareed begins by addressing 2014 is the year of the horse in China and list down the country’ problem before it becomes the world’s largest economy . A big part of Fareed’s focus in this article is about China’s challenges likes debt, pollution and corruption. In this article showed how China’s financial crisis and the global economy slowdown based on it’s economic imbalances . The basic economy’s problem is that for almost a decade, China's economic growth has been fueled by cheap credit and government spending--a classic developing-nation problem .The country’s total debt level was estimated at 215% of GDP in 2013.Besides financial problem, China also have serious challenges in environment. Air and water pollution has become a major public health issue in the country.The last challenges in 2014 is the corruption’s problem ,it seriously increasing among the Communist Party. According to this article, China’s president has launched an anticorruption campaign for this unethical problem . In closing, Fareed Zakaria says that ,he not ready to bet against China if China’s leader did not manage this transition well.If China’s leaders manage this transition well.the country will emerge stronger and more stable and become the largest economy in the world. INTRODUCTION International business is much more complicated than domestic business because countries differ in many...
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...Country Risk & Strategic Planning Analysis Jameelah Baldwin, Shawandra McClendon, Dung Lee, Christopher Martinez MGT/448 January 12, 2015 Dr. Worden Country Risk & Strategic Planning Analysis Direct export admission to China has to be challenging due to the density and deliberateness of China’s rules and regulations. With the reduction in governing boundaries and the introductory of its markets to foreign investors, China may perhaps become the next popular market for the organic company Whole Food’s. According to She (2014), “The Chinese consumer market for imported organic food products is growing exponentially. Market research reveals that the Chinese organic food market is now 12 times the size it was six years ago. According to statistics, Chinese consumers in 2012 spent $13.8 billion on organic food.” Political Risk The opportunities to doing business in China are great; however they come with an even greater risk. The political risks involve the inconsistency between the government and their observation to applicable laws. Examples of political risk are * Price Controls * Labor Policy * Expropriation (takeover/unwilling sale with full or partial payment) * Domestication (local ownership, management, material inputs) * Nationalization (government ownership of industry) Legal Risk Legal risks are a major concern because China does not have many judges that are familiar with the laws and regulation of global trade. The Legal systems...
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...outsourcing information technology to China. It will take a look at the benefits, challenges and risks faced when a company makes the decision to outsource their information technology functions to China. As globalization accelerates and competition intensifies, outsourcing has become a strategic solution for many corporations and governments around the world. More companies are outsourcing their goods and services to other countries. It has become a way for many companies to gain cost savings, increase productivity by outsourcing their information technology goods and services. Outsourcing of information technology services is one area that companies are taking more and more advantage of. Companies that outsource see increase productivity and quality improvement in their information technology services. China is starting to make advancements in their information technology outsourcing services, in the goal of one day being the number leader in this outsourcing area. Outsourcing Information Technology to China The world of outsourcing continues to grow with different goods and services being sent to other countries. Outsourcing of goods and services has been around for some time now. According to Patterson, Gott & King (2011), “IT and BPO offshoring are early manifestations of a larger trend that, in the long run, means that more functions can and will be located outside the countries where end-customers reside” (p. 5). “China has long been the world’s factory for...
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...2: 4 Question No. 3: 5 Question No. 4: 5 VI. Leanings 5 I. Case Background The Walt Disney Company is the world’s largest amusement park operator. It was founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, Taking on its current name Disney in 1986. And Disney has 5 theme parks outside the USA; there are Tokyo Disneyland (1983), Tokyo DisneySea (2001), Disneyland Paris (1992), Hong Kong Disneyland (2005) and Walt Disney Studios (2002). Disney is motivated to set up parks throughout the world to expand its sales of merchandise goods as well as attendance to their theme parks. After lunched Hong Kong Disneyland in 2005, Disney has signed a letter of intent to build another park in Shanghai China in 2008; The Park will attract different potential visitors in Shanghai. Overview Disney Theme Park - Points of Interest (Michael Sandberg's Data Visualization Blog) Getting people excited about their data one visual at a time * Walt Disney had infinite confidence in his new park and unapologetically included future attractions and “lands” as if they were just around the corner. Examples of attractions that made it are: the Submarine Voyage, New Orleans Square, and the Haunted Mansion. Note that on this map New Orleans Square was in fact a square instead of the eventual streets and alleys, and that the Haunted Mansion is located across from where it would eventually appear....
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...minimum rate of return an investor should accept, given all options available within the capital structure of the firm. For this hypothetical situation it can be defined as the minimum acceptable return on our 800 million proposed deal in China. The Cost of equity is defined as (Dividends per share “for next year”/ current market value of the stock) plus growth rate of dividends. That translates to the compensation the market demands in exchange for owning the asset and taking on the risk associated with owning the asset. Cost of debt is effective rate that a company pays on its current debt. In our hypothetical China deal our equity investors must see a positive return on the China venture both now and at a multiple in the future for their cost of equity to be worth it. Out cost of debt in relationship to this deal is more or less the cost of doing business in China. Stated plainly it means the infrastructure costs, plus the costs of dealing with all the local agencies in order to get the plant built. 2. Discuss each of the main risk factors that should be allowed for in addition to WACC in order to determine the appropriate return on capital on the capital investment opportunity. The number one risk is currency risk. The Chinese government has manipulated its currency, the Yuan, lower since its inception; they were able to accomplish this by no longer pegging against the US dollar in 2005. Recently they have raised the Yuan in an effort to stave off...
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...investment projects Acme is considering doing in China. Acme is a US firm that plans to focus on investing in and penetrating markets in China. It will discuss the potential profits as well as the policies that are currently in effect in China. It will give the information on the factors that would be used to consider doing business in China such as import/export restrictions, labor relations, supplier financing, tax rules, etc. Global Financial Management Introduction A long-term investment, which includes stocks, bonds, real estate, and cash, is an account on a company’s asset side of the balance sheet that represents an investment the company intends to hold on to for more than a year (Definition, 2013). The US firm, Acme, wants to focus on investing in markets in China. There are many factors to consider when doing business in any foreign country, China is no different. The first bit of information to look at is the back ground of China. China, whose capital and focal point is Beijing, with over 4,000 years of verifiable history, is believed to have the oldest continuous civilization. The official language of China, which is derived from a Mandarin dialect, is Chinese. China is a Communist country that promotes atheism and a constitution that guarantees freedom of religion (China Introduction, 2013). Culture The second bit of information to look at is the appearance, behaviors, manners, and communications that China businessmen expect to see. The appearance...
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...In advising ABC Motor Company on the subject of opening manufacturing facilities in Asia, Karim Global Consulting Firm would like to present the risk factors of two companies in the automotive industry which already operate in two different Asian countries. In order to present two very different regions for consideration, we have selected to review General Motors operations in China and Ford operations in India. We will examine risk factors that should be taken into consideration before entering the global market, such as political and economic risks. There is considerable concern regarding the economic stability in India, as the country’s stock market, the Sensex, fell by twenty-five percent last year, which put the country in last place among all major world economies. Additionally, the country’s currency, the rupee, fell sixteen percent, which was the worst in all of Asia. These decreases are in large part due to worries regarding the country’s current account deficit as oil imports trump the country’s level of exports. With the rupee falling, inflation has been high in India. However, inflation in food prices fell drastically in December, raising hopes that general inflation rates will follow in the long run (Daniel, 2012). Although India is the third largest economy in Asia, growth has fallen to its lowest rate in two years, 6.9 percent, by the middle of last year. (Daniel, 2012). However, though this information looks grim, India is not in any immediate danger...
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...DigitalCommons@EMU Senior Honors Theses Honors College 2009 U.S. Business and Global Barriers to Entry Caitlin Long Follow this and additional works at: http://commons.emich.edu/honors Recommended Citation Long, Caitlin, "U.S. Business and Global Barriers to Entry" (2009). Senior Honors Theses. Paper 167. This Open Access Senior Honors Thesis is brought to you for free and open access by the Honors College at DigitalCommons@EMU. It has been accepted for inclusion in Senior Honors Theses by an authorized administrator of DigitalCommons@EMU. For more information, please contact libir@emich.edu. U.S. Business and Global Barriers to Entry Abstract An exploratory view of barriers to entry in countries of significance to U.S. companies, this thesis provides a comprehensive overview of prevalent business strategies of U.S. trading partners as well as a forecast of their international business policies. Diverse macro-environmental variables, such as economy, culture, and regulations result in varying barriers to entry for U.S. based firms to conduct business in U.S trading partners’ countries. This thesis will determine how these macro-environmental factors foster or stunt growth and strategies governments employ to attract businesses. Degree Type Open Access Senior Honors Thesis Department Marketing First Advisor Harash Sachdev Keywords International trade, Foreign trade regulation, Investments, Foreign China, Investments, Foreign India, Investments, Foreign Hungary...
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...Case Study: China Myths, China Facts Julliana Schlemper Embry-Riddle Aeronautic University Organizational Behavior & Change MGMT520 Fernando Muniz April 27, 2016 Case Study: China Myths, China Facts Introduction Considered the second-largest economy in the world, that should surpass the US in the next decade, China has a very unique culture. When I think about China, in a business way, I think about very serious people that know what they want and go get it. Chinese people like to know you more than what other people from other nationalities would. This way, Chinese can learn more about the person and know if they can trust you or not. Most of what Chinese do in business has to do with trust and how it’s built. The biggest difference between the West people and the Chinese people is we work on building a trust relationship (Harvard Business Review, 2015). In this case study, I will comment about three myths that surround China’s culture, work ethic and management techniques. The three myths are collectivism, long-term deliberations and risk aversion. Discussion Questions 1. Has this presentation challenged any assumptions you had about China and the Chinese people? Yes. Movies, News, the media in general, have pictured China as a culture that is more inclined to the individualism more than collectivism. It was new to me to know that workers in China are more inclined to self-interest than their communities and the companies they work for. 2. Using your...
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...Shui’s business at moderate level as Chinese government is encouraging foreign investment however not prefer foreign ownership. This means US based company could not further expand and affect deeply its joint-venture in US. However, 50-50 joint- venture with Chinese offer relatively advantages since government would support this business model. Moreover, the Chinese government controls completely the business in their country, so that it is too tough to make a relative with Eastern companies. * Economic: economy development in US and China are developing in the same direction, however, US economy mainly depend on the service sector while China is favor for developing heavy industry sector. This might present the different in US and Chinese manager perspective since service sector normally fast growing while industry sector require long-term development. This might explain the problem that US based manager believe on the fast growth of business (20%) while Chinese manager believe that 5% growth is considered as successful. * Cultural: This may consider as a significant problem that US is a Western country and China is an Eastern country. The Eastern is normally “uncertainty avoidance” and “future oriented” while Western managers are relatively referring “Performance Orientation” taking risk in their business. In other words, Chinese manager (Chiu Wai) would believe that a 5% growth is a strong, reliable and healthy growth for a business that ensuring low level of risk while...
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...Cross Cultural Implications for doing Business in Emerging Markets International business is the act of investment and trade activities by firms across national borders. Small, Medium, and Multinational companies who have the resources tend to be attracted at doing business abroad. There are nine reasons why firms choose to internationalize which are (1) to gain market share, (2) earn higher profits and margins, (3) acquire new ideas about products, service, and business method, (4) to follow and better serve key customers that have relocated abroad, (5) to be closer to their supply chain, (6) have access to lower-cost or better value factors of production, (7) to develop economies of scale in production, sourcing, research and development, and marketing, (8) to challenge international competitors more effectively, (9) invest in a potentially rewarding relationship with a foreign partner. There are different ways companies can engage in international business. Companies can be involved in international trade, exporting, importing, international investment, international portfolio investment, and foreign direct investment. Depending on the type of risk the company decides to take, for example if the company wants the lowest risk possible for doing business abroad then exporting would be one of the safest ways to get their products or service abroad. Foreign Direct Investment is considered high risk due to the structure of each country’s culture, government, laws, rules...
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...Case Study Why the telecoms industry is doing business in RMB Telecoms equipment and handset manufacturers like Telco – the representative but fictional example in this case study – recognise that they can only stand out in a tough sector by competing on an international scale. This increasingly means doing business in high-growth emerging markets like China and leveraging RMB to gain that vital competitive advantage. Background Telco, with its Head office based in London, began life as a manufacturer of wire-line equipment for the Western European aerospace sector. Following the privatisation of national telecoms operators from the late 1980s, it refocused its business to supply carriers in Europe and the US. Telco has been an HSBC client for more than ten years, after finding that domestic banks could not match its international expansion strategy. HSBC’s global network supported its exports growth across new markets by supporting all Telco’s export invoices. Rolling waves of telecoms deregulation saw Telco and other suppliers enter the mobile handset market in the 1990s, attracted by the significant growth opportunities. The intense competition and tightening margins in equipment supply – not least the demand from emerging markets – saw Telco make its first trip to China on a sourcing mission for basic components. Building a business In China At the company’s request, HSBC relationship managers helped guide Telco’s entry into China by working with professional advisors in...
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...States and Canada. ("Buffalo Wild Wings, Inc. History", 2004). Canada is currently the only country other than the United States that Buffalo Wild Wings Operates in. Buffalo Wild Wings is looking for a new venue. Buffalo Wild Wings is looking for a new country to market and present their product. China is seemingly a great choice as other United States based companies are finding great success in their restaurants. Companies such as Kentucky Fried Chicken and McDonalds have seen profitable results from their restaurants in the People’s Republic of China. Buffalo Wild Wings wishes to capitalize on this market and expand the Buffalo Wild Wings brand to the next level. * American fast food chains show surprising success operating in China. Several fast food chains have been very successful in China. Yum! Brands is an American restaurant giant that owns Pizza Hut, Taco Bell, and Kentucky Fried Chicken. This company has had the most success of any multinational restaurant group in the challenging Chinese market ("Localization Key To Yum! Brands' Success In China", 2012). Kentucky Fried Chicken has 140 restaurants in the People's Republic of China. Other companies are following suit in China. Companies such as McDonald's are Kentucky Fried Chicken's primary competitor, even though many Chinese...
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...countries (Iron Pump, Company). Iron Pump’s core competence is its main focus on production and R&D in the value creation activities (Hill, 2012, p. 425). This knowledge of applications has founded the corner stone of the company. Iron Pump is situated in Herlev, near Copenhagen and has around 100 employees. Iron Pump has an annual revenue exceeding EUR 18 million (Iron Pump, Company). With an ambitious growth strategy and full capability of competing globally, Iron Pump seeks continuous global growth in the future (Iron Pump, Company). In 2003 Iron Pump entered the Chinese market by establishing a representative office in Shanghai (Interview, Iron Pump). This report will focus on expansion of Iron Pump into the Chinese market, but why China? Firstly, with an expected GDP growth exceeding 7,5 percent in 2013, the Chinese economy is steadying, showing new signs of stabilization after a 2 year period of cooling due to the global financial crisis, hindering further globalization of new markets (Reuters, 2013). Secondly, from a more market-oriented point of view for Iron Pump, it is critical that the great majority of the Chinese pump market is driven by centrifugal pumps. In 2011 it accounted for 50.56 percent of the total market revenue reaching USD7.28 billion. Additionally, this trend is expected to increase and reach USD10.20 billion by 2015, a 10,67 percent...
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