International Business Across Border

This report examines the international business landscape of China, focusing on its political, economic, socio-cultural, and technological influences. It analyzes the country's factor endowments that create competitive advantages, foreign currency and exchange influences, existing trade policies, systems, barriers, and incentives. The report also explores the levels of foreign direct investment in China and provides recommendations for future growth.

International Business Across
border

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of the country..............................................................................................................1
Political, Economic, Socio-cultural and Technological influences and advantages ..................1
National resource and factor endowments that create competitive advantage............................2
Explaining the foreign currency and exchange influences of China...........................................3
China existing trade policies, systems, barriers and incentives ................................................3
Existing Levels of foreign direct investment..............................................................................4
RECOMMENDATION...................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
International business means trading of good and services between two or more nations.
This can be said that exchange is made between different multiple nations leads to international
business. In this present report China nation has been chosen for assessment. This report will
concentrate on factor endowments that create competitive advantage. In addition to this, brief
description regarding the nation and foreign currency and exchange influences of the country
will be detailed. Other than this, Existing Levels of foreign direct investment will also be
discussed In brief. Furthermore, Political, Economic, Socio-cultural and Technological
advantages will also be described in depth.
Overview of the country
China is an East Asian nation which has the highest population in the entire world. It has
population of around 1.411 billion. Along with this, it is also the largest country as per its land
area. Capital of the nation is Beijing and Mandarin Chinese is the official language that flows in
the nation (Andriof and et.al.,2017). Currency of China is Yuan which also floats in the
exchange rate system of the country. In today's time it is the fastest growing economy of the
world with an annual growth rate of 10% in last 25 years. In addition to this, China is that nation
which has exported maximum to the other nations. China also owns the tag of second largest
importer of goods. Majorly the country has higher investment in infrastructure and also the
economy is growing majorly through expansion in light industry.
Political, Economic, Socio-cultural and Technological influences and advantages
Political factor: China is a nation which has a strong political system which helps in running the
nation effectively. The nation has always come up with different rules and regulations so that
maximum benefits to the economy can be achieved by the same (Chai, 2016). It can be said that
China is a nation where government rules and has the sole power of managing and controlling all
the activities of the people. Along with this, the nation has made such rules and regulations for
the citizens where they got the freedom to trade and setup their own new businesses.
Economic factor: It is the second factor which determines that China is a economy which has
world's largest purchasing power. The nation has made great economic growth by way of
increasing GDP and per capita income of the nation. This helps in adding higher values to the
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society and overall growth of the nation. Other than this, the country has very low labour cost
which is the reason behind setting up of different multinational companies. This also has helped
the nation in giving employment to various people due to low cost of hiring them (Chimucheka
and Mandipaka, 2015). On the other hand, major worrying aspect for China are its inflation rate
and high property prices. This both factors leads tough for people to make investments and have
good personal growth.
Socio-cultural factor: China has the highest population which plays the most important role on
the social and cultural factors of the nation. As even the nation has high amount of people
residing in the country it has great literacy rate. 90% of the Chinese Population is literate and
playing major role in the development of the nation (Hallowell and Yugar-Arias, 2016). Also,
the country has different social trends which are followed by the people.
Technological factors: There are various factors which are being concentrated by the nation for
new development. China has the highest population which is connected with the online
technology and uses the same for various benefits. Along with this, the nation is low at online
payment methods. Even in this higher technology people do not use credit card system much
which leads to less development of the country in terms of payment system.
National resource and factor endowments that create competitive advantage
There are certain factors which influence the system in some or the other way on the
competitive advantages of the country. The decline in the opportunity cost of the country gives
the maximum benefits to the country. These different factors are defined below:
Labour: These factors which has low costing in the china, these makes easy for any business
man to operate the business at low cost and can earn the higher advantages by the same. This low
labour cost will lead to low opportunity cost and earn maximum benefits by the same.
Capital: It is that factor without which the business cannot be run. This helps in running and
taking the venture to a different level as the business can not be operated without capital. Due to
the highest purchasing power of the people of China it can be said that capital invested by the
nation is high. Hence, this leads to create a great competitive advantage among the different
establishment. China is that nation which has exported maximum to the other nations. China also
owns the tag of second largest importer of goods.
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Explaining the foreign currency and exchange influences of China.
The root of the conflict for the United States and other countries, is complaints that china
keep the value of the RMB artificially low, boosting its exports and trade surplus at the expense
of trading partners.
Foreign exchange is the method of changing currency for another or the conversion of
one currency for another or the conversion of one currency into another. Foreign exchange is the
another term which has been used for the virtual trading around the clock. It depends upon the
country that how much they charged to exchange the money (Huq, Chowdhury and Klassen,
2016). Overall, the impact of foreign exchange on the China market is that. China has been
consistently intervention their exchange rate below the level of the market. So that, market
prevented from international market functioning. This process of price damaging has directly
impact on the economy of China. In order to discouraging investment in the local market or
exploring the large scale investment in export manufacturing will help China to grow the
economic conditions. Another scenario, that China also affect the US dollar by loosely pegging
the value of its currency. Many of the support for China affect to America. Some raw materials,
clothing, electronics and machineries the China exports to America. Apart from that, America
also delivered some raw material to the China. Companies of China are getting dollar as
payments for their exports to the United States. China is very strict and disciplined about holding
foreign currency as well.
China existing trade policies, systems, barriers and incentives
Trade policies:
In the year 2001, China became the member of World trade organisation. This has
managed the barrier and leads to liberalise the trading system with foreign countries. Different
policies on export and imports has been implemented by the nation which leads to manage the
same in well manner (Lehner, 2015). China also started focusing on the Campaign of Paperless
Customs Clearance to make possible imports and exports via air, sea and land. In addition to this,
China has also lowered down incomes tax by 30% to 25% for enterprises of own nation and for
foreign companies as well. Import licensing and quota has been removed to a great extent by
government, only a few good comes under the category of import license control.
Trade barriers:
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There are certain barriers by the government like fully or partially blocking the social
sites such as Facebook, Twitter and google. China has analysed and adopted a number of
different regulations of Cybersecurity. Country has made higher trade barrier for United states in
various aspects like No us firm will be granted license for accessing international payments
network operators.
Trade Incentives: There are various incentives such as low labour cost and higher number of
buyers due to large population if the country. Along with this, a ease has been given to Chinese
laws on foreign investments (Lueg, Pedersen and Clemmensen, 2015). Different benefits by way
of Tax and foreign companies are permitted to form organisations which are established 100%
by foreign capital. Other than this, companies investing in production of integrated circuits will
get a benefit of "5+5" years tax holiday.
Existing Levels of foreign direct investment
Foreign of direct investment are the type of business that affect the better transform
results and make the best developing goals. Basically foreign direct investment is the best way to
skilled workforce, enhancing the standard of living and new development market that affects the
both countries (Busse and et.al., 2017). It also affects the overall, market opportunity to make the
bet growing and leading challenging task. There are some kinds of different foreign direct
investment which is briefly given below:
Horizontal FDI : Horizontal investment done by a company or organisation in which
company all practices or activities hold by the investing company. China has the highest
population which plays the most important role on the Horizontal investment. Overall, some
investors are belongs from the same industry which holds the operations in two different
countries.
Vertical FDI : The industry of the investor and the company. On the other hand, vertical
foreign investor are the multinational who acquire or build up the great operational activities
which is either full fills the functional activities or the role of distributors (Macias-
Konstantopoulos and et.al., 2015).
Conglomerate FDI: this is the another kind of foreign direct investment in which
company invest for the sack of gain control in unrelated business sector or in industry in a
foreign land.
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Greenfield Entry : it is the another kind of foreign direct investment level in which
companies taking some parts or machineries to make their own product or services.
Foreign Takeover : This kind of FDI where companies takeover the another foreign
company in the form of merger, acquisition or takeover.
RECOMMENDATION
It has been recommended that China should majorly concentrate on policies of different
foreign direct investments. An easy policy will help in more investments and higher economic
growth of the nation. In addition to this, China also should analysed and adopted a number of
different regulations of Cybersecurity more rapidly. Other than this, government should also
initiate the use of credit card system much which leads to more development of the country in
terms of payment system. It will be helpful and make easy for citizens to buy more at less
savings. Furthermore, all the sectors should be developed for future growth and entire national
development so that country can earn and compete more at worldwide level.
CONCLUSION
From the above report it has been summarised that Foreign exchange is the method of
changing currency for another or the conversion of one currency for another or the conversion of
one currency into another. Companies can made investment in different nation after considering
all the factors of trade incentives and policies. In addition to this, These factors which has low
costing in the china, these makes easy for any business man to operate the business at low cost
and can earn the higher advantages by the same. Furthermore, In china there is a large market for
different foreign companies due to its high population.
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REFERENCES
Books and Journals
Andriof, J. and et.al.,2017. Unfolding stakeholder thinking 2: Relationships, communication,
reporting and performance. Routledge.
Busse, C. and et.al., 2017. Extending the supply chain visibility boundary: utilizing stakeholders
for identifying supply chain sustainability risks. International Journal of Physical
Distribution & Logistics Management, 47(1), pp.18-40.
Chai, K., 2016. The challenges faced by homeowners and other stakeholders in retrofitting
double glazed windows in older homes in New Zealand (Master's thesis).
Chimucheka, T. and Mandipaka, F., 2015. Challenges faced by small, medium and micro
enterprises in the Nkonkobe Municipality. The International Business & Economics
Research Journal (Online), 14(2), p.309.
Dhaliwal, D., Li, O.Z., Tsang, A. and Yang, Y.G., 2014. Corporate social responsibility
disclosure and the cost of equity capital: The roles of stakeholder orientation and financial
transparency. Journal of Accounting and Public Policy, 33(4), pp.328-355.
Hallowell, M.R. and Yugar-Arias, I.F., 2016. Exploring fundamental causes of safety challenges
faced by Hispanic construction workers in the US using photovoice. Safety science, 82,
pp.199-211.
Huq, F.A., Chowdhury, I.N. and Klassen, R.D., 2016. Social management capabilities of
multinational buying firms and their emerging market suppliers: An exploratory study of
the clothing industry. Journal of Operations Management, 46, pp.19-37.
Kishita, Y., Hara, K., Uwasu, M. and Umeda, Y., 2016. Research needs and challenges faced in
supporting scenario design in sustainability science: a literature review. Sustainability
Science, 11(2), pp.331-347.
Lehner, M., 2015. Translating sustainability: the role of the retail store. International Journal of
Retail & Distribution Management, 43(4/5), pp.386-402.
Lueg, R., Pedersen, M.M. and Clemmensen, S.N., 2015. The role of corporate sustainability in a
low‐cost business model–A case study in the Scandinavian fashion industry. Business
Strategy and the Environment, 24(5), pp.344-359.
Macias-Konstantopoulos, W.L. And et.al., 2015. The commercial sexual exploitation and sex
trafficking of minors in the Boston metropolitan area: experiences and challenges faced by
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front-line providers and other stakeholders. Journal of Applied Research on Children:
Informing Policy for Children at Risk, 6(1), p.4.
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