International Business: Cultural Impact, Trade, and Foreign Investment

This essay delves into the complexities of international business, examining the contrasting cultural values of collectivism and individualism, particularly in the context of China and New Zealand. It explores how these cultural differences influence business practices and management strategies, highlighting the importance of understanding and adapting to diverse cultural norms. The essay further analyzes the impact of free trade agreements, specifically between New Zealand and Asian countries, discussing their benefits and drawbacks, including the implications for tax revenue, intellectual property, and job markets. Additionally, the essay investigates Foreign Direct Investment (FDI) policies, focusing on New Zealand's approach to attracting and managing foreign investment, and recommends strategies to facilitate capital inflows into value-adding industries, emphasizing the nature and operation of global money and capital markets. Overall, the essay provides a comprehensive overview of key issues in international business.

Running Head: International Business 1
INTERNATIONAL BUSINESS
Name
Institution

International business 2
ESSAY 1
Introduction
Collectivism can be described as a cultural value that is characterized by cohesiveness of
citizens and also prioritization of the team rather than the individualism spirit, (Collectivism,
2018). Countries that tend to be collectivist society tend to find common interests & goals and
also tend to demonstrate more orientation to groups and less towards individuals. This is the type
of culture embraced in China.
Individualism is a philosophy or a culture that stresses the need of the individual citizen
and rather the needs of the vast majority or a group. In this culture, the citizens are portrayed as
independent and autonomous.This is the type of culture embraced in New Zealand.
How business culture differs
New Zealand businesses, the employees tend to be more creative since they do not get
afraid when voicing and exhibiting their ideas. Contrary on the same, Chinese employees are
hesitant to air their out of norm ideas because they tend to be worried that they will be judged.
Individualism business culture like the onein New Zealand, benefits the companies and
the country which that has embraced it. Furthermore, it also benefits the citizens and the
employees since the citizens have an individualistic perspective which motivates them to be
competitive and need to attain their professional goal (Cultural Differences, 2011).
Individualisticpeople are independent and driven and they do not necessary rely on the
government or others to succeed. In china where collectivism is embraced, the goals and
objectives of the society are more ranked than those of individuals also the loyalty of the people
is promoted towards the work group the individual belongs to.
Collectivists volunteer themselves for the welfare of others and people value group
harmony and interdependence a lot. In this, by chance a dispute occurs, a third party is the one
who comes to resolve the conflict and provide the disputant without directly confronting the two.
In an Individualists culture, the involved volunteer to gain self-fulfillment, (Cherry 2013).
Lessons learnt by managers.

International business 3
Business managers in both china and New Zealand need to know on how to capitalize on
the positive goals and objectives which are posed by both collectivism and individualism
business cultures. These know-how can determine both failure and success of a business or a
company.
As managers or an owner of a business company based on any culture, it's crucial and
vital to identify thecharacteristics that employees have and portray in the workplaceand then be
able to strike a balance between them where by chance they meet in order to create an efficient
and a harmonious workspace (Collectivism vs. Individualism in the Workplace, 2011).
New Zealand managers need to learn from the Chinese managers in embracing not only
their collectivism culture but also know how to mix the two different culture in their workplace
so that individualism defects reduce, like of that when an employee refuses to work or is resistant
to work with other team members due to selfish behaviors exhibited by them, (Chelsi Reina
2014).
Conclusion
Many of the Asian cultures like in China tend to be collectivist, while Anglo cultures like
that in New Zealand tend to be individualist. This differences often have an impact on business
like for example, a research that was done to survey tourist agencies around the two different
cultures exhibited that collectivist agencies took longer than individualistic agencies. This gives
an insight that individualistic culture tend to be more productive.

International business 4
ESSAY 2
Introduction
Currently, we are in the era where countries are seeking ways on how to enhance and
improve their international trade through economic integrations. Economic integration refers to
the making and signing of deals and agreements between different regions or countries on the
concerns of trade (Staff, 2018). Regional economic integration can be described as the efforts to
stimulate free and a fair trade on a local and regional grounds. Global economic integration on
the other side is the process by which a country or a company integrates with other countries
internationally and also integrates different processes around the globe with an aim of operating
at the same method (Cambridge, n.d.). The New Zealand government has signed a free trade
agreement treaty with the Asian countries in order to promote economic integration.
A free trade agreement is an international signed treaty among two or more countries to
facilitate and promote good business environments and to remove any barriers that may hinder
trade.
Benefits of the free trade agreements
One of the key benefits that have resulted as a reason for the free trade agreement is that New
Zealanders will benefit in trade where they will be saving the exporters an annual tariff of $115.5
million basing on the current trade (N.Z Parliament 2009).A good example is that New Zealand
dairy exports are $363 million which constituents 18% of total exports to China, will no longer
be charged tariffs for a period of like 5 to 12 years.
In trade services areas, the new Zealanders who provide services will have a legal
permission of operating in the Chinese land and as well as the domestic suppliers.
Another benefit is that there will be smooth technology transfer among the two countries.
The local companies from say New Zealand, will get to access the latest and sophisticated
technologies from its partner China. As this local companies grow, more companies offer job
training and more employment opportunities (Amadeo 2011).
The trade agreement will also improve the investment area where investments in one
country will get the same priorities and protection that the other one gets. Like for example the

International business 5
businesses and companies in New Zealand from china will get the same avenues like that of New
Zealand gets.
Drawbacks of free trade agreement
The number one drawback of these free trade agreements is that it reduces the tax
revenue that an individual country gets from tariffs. China will struggle to replace the lost
revenue from imports fees and tariffs (Amadeo, 2011). A good example is that the import tariff
china was getting from New Zealand wines and dairy products will reduce due to the scratching
of the import fee.
Intellectual property is no longer in protection. Theft of inventions, ideas and new
processes are not protected anymore as the agreement gives way for the country to access it
freely.
There will be a lot of job outsourcing in both countries companies. Due to the reduced
tariffs on products and services, companies tend to outsource cheap workforce and also tend to
reduce their workforce in order to compete with their rivals in the same field from the other
country, (Amadeo, 2011).
Improvements made in March 2017 negotiations.
In March 2017, Premier Li Keqiang and New Zealand Prime Minister Bill English, held a
joint conference with an intention of free trade agreement upgrade negotiations("China and New
Zealand to upgrade free trade agreement," 2017). Some of the negotiations that were agreed on
to be improved included;
Promoting and facilitation of small and medium-sized enterprises participation in trade
by both China and New Zealand.
There was also an agreement on customs and trade facilitation on both sides. They agreed
that FTA was to provide a predictable and transparent base for trade and also include ways to
simplify and modernize rules and procedures for exports and imports, (New Zealand Ministry of
Foreign Affairs and Trade, 2017).
It was also agreed by both parties to improve and enhance and foresee sustainable
development.

International business 6
On the animal welfare issue, it was noted that there was to be an improvement where
both countries agreed to come together and cooperate to provide high standards of animal
welfare, (Gao, n.d.).
Promote market access for products and services and also public procurement.

International business 7
ESSAY 3
Introduction
F oreign Direct Investment (FDI) is an investment in a business by an investor in
form of a controlling ownership in another country for which the foreign citizen investor has
total or partial control over the business (Wikipedia, 2018). Usually the businesses and
companies that perform foreign direct investments are called multinational enterprises or
multinational corporations. By New Zealand exports to other countries being high, it means
that the investors from New Zealand who export the commodities make foreign direct
investment.
New Zealand government has a policy on Foreign Direct Investment and investments
which is are under New Zealand Trade & Enterprise government agency. This agency is the
one responsible for facilitating, promoting and attracting foreign direct investment which
may be in form of group ventures of like partnerships with new corporate relocation and
companies. The New Zealand government policy has imposed on tax incentive to place due
the reason promoting foreign direct investment. Also the 2015 law on foreign investments
granted foreign investors the accesses to the New Zealand domestic market (New Zealand
Ministry of Foreign Affairs and Trade, n.d.).Recently New Zealand's Overseas Investment
Office has announced some findings which are intended for those who intend to Foreign
Direct Invest (Study, 2016). This new operation will change the existing systems in some
ways; coverage, where the screening has been amended to increase the asset threshold and
also to incorporate special properties. Next is the criterion for screening, which now requires
all foreign investment to submit investment management plan, residency intentions, and
economic development benefits. Monitoring where investors will be mandated to confirm
their compliance of consent from time to time (Santandertrade,2018). And finally it will
have enforcement where New Zealand regulators have been granted power to impose
administrative penalties.
Changes recommended to facilitate more capital inflows into “value adding” industries
Surging capital inflows has been seen in recent years where countries have reaped
handsomely due it. A capital inflow has raised the levels of investments and have facilitated

International business 8
economic growth to soaring heights. But surging capital inflows are double edged sword
which has both positive impacts and negative impacts, (Jang-Yung Lee, 2016).
There are changes which can be put in place for countries to facilitate more capital
inflows. Countries should tighten the monetary and fiscal policies so that there will be no
capital inflows going aside.
There should capital controls put in place to control in inflows either indirectly or
directly through regulation. This is recommended as it will promote low capital inflows to
substandard level.
Countries should let foreign exchange reserves to accumulate since this will add
value to the already imposed industries. This should be either with or without sterilization of
resources (Rangarajan,2009).
Nature and operation of global money and capital markets
Capital market refers to activities and processes that gather assets from entities and make
them available. The main goal is to improve the efficiency of transactions, (Staff, 2018).
The nature of capital market can be well described through its salient features. A capital
market is a complex and unique establishment which comprise of issuers, regulators, facilitators,
and investors, (Prasanna, n.d.). It is a processes trough which long term resources for
government, firms or individuals are polled together and made available to different sectors of
the economy. There are some problems which hinder the promotion of capital markets. Capital
market scan be promoted through great emphasis on the activities that will boost the economy
and this will stimulate the economic growth and development.

International business 9
References
Amadeo, K. (2011, March 10). 7 Pros and 7 Cons of Trade Agreements. Retrieved from
https://www.thebalance.com/free-trade-agreement-pros-and-cons-3305845
Cambridge. (n.d.). global integration-Cambridge University Press. Retrieved from
https://dictionary.cambridge.org/us/dictionary/english/global-integration
Chelsi Reina. (2014, May 8). INDIVIDUALISTIC VS. COLLECTIVIST: BUSINESS
RELATIONSHIPS,. Retrieved from https://prezi.com/hotwfwywwdbz/individualistic-vs-
collectivistic-business-relationships/?webgl=0
Cherry, K. (2013, December 27). How Do Individualistic Cultures Influence Behavior?
Retrieved from https://www.verywellmind.com/what-are-individualistic-cultures-
2795273
China trade agreement. (2017, March 29).China and New Zealand to upgrade free trade
agreement. Retrieved from
http://english.gov.cn/premier/news/2017/03/29/content_281475610799757.htm
Collectivism vs. Individualism in the Workplace. (2011, April 9). Retrieved from
https://bizfluent.com/info-8192993-collectivism-vs-individualism-workplace.html
Collectivism. (2018, September 3). Retrieved from https://en.wikipedia.org/wiki/Collectivism
Cultural Differences. (2011, September 4). - Individualism versus Collectivism. Retrieved from
http://thearticulateceo.typepad.com/my-blog/2011/09/cultural-differences-individualism-
versus-collectivism.html
Gao, H. (n.d.). China–New Zealand Free Trade Agreement. Bilateral and Regional Trade
Agreements: Case Studies, 77-96. doi:10.1017/cbo9781107479937.004
Jang-Yung Lee. (2016). Economic Issues 7--Sterilizing Capital Inflows. Retrieved from
https://www.imf.org/external/pubs/ft/issues7/index.htm

International business 10
N.Z Parliament. (2009, August 8). Free-trade Agreement, New Zealand - China'Benefits - New
Zealand Parliament. Retrieved from
https://www.parliament.nz/en/document/48HansQ_20080408_00000506/
Prasanna. (n.d.). Nature of 'capital market? can be explained well with the help of its features.
Retrieved from http://ask.learncbse.in/t/nature-of-capital-market-can-be-explained-well-
with-the-help-of-its-features/9387
Rangarajan. (2009, February). Capital flows, exchange rate management and monetary policy.
Retrieved from https://www.tandfonline.com/doi/full/10.1080/17520840701859534?
scroll=top&needAccess=true
Santandertrade. (2018). Foreign investment in New Zealand - Santandertrade.com. Retrieved
from https://en.portal.santandertrade.com/establish-overseas/new-zealand/investing
Staff, I. (2018, March 5). Capital Markets. Retrieved from
https://www.investopedia.com/terms/c/capitalmarkets.asp
Staff, I. (2018, April 26). Economic Integration. Retrieved from
https://www.investopedia.com/terms/e/economic-integration.asp
Study. (2016). What Is Foreign Direct Investment? - Definition, Advantages & Disadvantages -
Video & Lesson Transcript | Study.com. Retrieved from
https://study.com/academy/lesson/what-is-foreign-direct-investment-definition-
advantages-disadvantages.html
Trade agreement. (n.d.).What is a free trade agreement? Retrieved from
https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/
glossary/pages/free-trade-agreement-fta.aspx

International business 11
Wikipedia. (2018, August 5). Foreign direct investment. Retrieved from
https://en.wikipedia.org/wiki/Foreign_direct_investment