Global Business Management - 825 Words

Global Business Management (Term Paper Sample) Content: Global Business Management Student's name Professor's name Institution Date Global Business Management Impact of China's economy on the world trading system Trade policies in the world trading system have changed significantly as a result of the ever-growing economy of China. From the late 1990s, China has made significant steps when it comes to the reduction of tariffs, abolishment of trade distortions that resulted from the exchange rate regime and reduction in nontariff barriers coverage. There has been a significant drop in the number of tariff lines that are subjected to quotas and licenses. Since the late 1990s, China has embarked on significant tariff reforms that has seen the drop of average tariffs by almost 20 percent. Due to China's economy, the policies of China's partners in the world trading system have had to change. China has an interest in textile and clothing. The economy of China has made it possible for the textile and clothing to be integrated into GATT. This has led to the abolition of quotas and as a result the quota growth rate has increased. The initial plan was to wipe out all existing quotas by the year 2005. The elimination of quota has greatly enhanced trade in the world trading system especially with the countries doing export business with China. Impact of China's economy on the world monetary system China's economy has had a huge impact on the dollar. Although the economic power has been declining, the US still has biggest economy in the world. In the recent past, China and Brazil have paid each other with their own currencies and not in dollars like it is in common practice. This highlights the pressure that China is putting on America regarding the value of the dollar. However, China still has huge debts to settle. It recently reported 9.6 per cent of GDP. The yuan has been kept stable versus the dollar though this has led to appreciation on trade weighted basis. As the economy of China continues to grow, there is increase in the number of trade settlements that are done in Chinese yuan. The challenge that is being experienced by the authorities is that the yuan is not fully convertible. This has made it unable to challenge the dollar. It will take time for the yuan to be fully convertible and until then the dollar will still continue to reign. Impact of China's economy on western-based corporations The US has been in the forefront of technology advancements for a number of years. However, in the recent past Chinese companies have been giving the western-based corporations a run for their own money. The Chinese products are cheaper than those produced in the West. Most of the time, the Chinese products are better and of superior quality. The Chinese companies have proved to be innovative and very nimble when it comes to competition in the global free market economy. Huawei is an example of a company that has thrived due to the Chinese economy. The company started just by importing telephone equipment to rural villages and thrived under the economy to eventually develop its own technology.ÂÂ  The company has spread its market base to cover some countries in the West such as Germany. It sell smartphones at prices which Western corporations find hard to match. China's economy therefore offers stiff competition to the western-based corporations. Concepts of guanxi and guanxiwang Guanxi refers to a special relationship between top people where there is more of long-term mutual benefits as compared to short-term personal gains. On the other hand, guanxiwang is a network of transactions involving two or more people. The principles of guanxi and guanxiwang have proved crucial for the growth of the Chinese economy. The concepts have enhanced trade between parties that has helped improve the economy. There must be ethical considerations for a western business when it comes to guanxi and guanxiwang. This is because there are instances where guanxiwang is considered unhealthy social tendency and a form of corruption. It becomes corrupt when activities like bribery are involved. There is a high chance of corrupt dealings taking place in guanxiwang due to the strong bond and trust that is present. Cultural tips for US businesspeople doing business in China For US businesspeople going for business in China, they must be aware of the ...