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Foundations of International Business in Asia-Pacific, World trade and…
Foundations of International Business in Asia-Pacific
Asia and the Pacific: trade position today
Regional challenges and changes
Population and Urbanization
The Asia–Pacific region is home to over 4.48 billion people, representing 59.9% of the world's population, with nearly half living in urban areas.
Diversity and Economic Classification
Economies with varying levels of development:
High-income developed economies.
Rapidly growing economies.
Those with slower or more modest growth aspirations.
China's Economic Transformation
A manufacturing labor pool => a target market with an affluent emerging middle class.
Chinese companies are also significant FDI investors in developed countries.
Trade Agreements
Australia's trade deals with China, Japan, and South Korea.
Cultural Considerations
Crucial for international business success.
Affect communication, etiquette, and organizational hierarchy.
Credit and Financial Conditions
Rising credit-to-GDP ratios across the region have been mitigated by sustained income growth and supportive financial conditions
Socio-Demographic Developments
Rapidly aging.
Investing in workforce skills and considering immigration to address labor shortages
Emerging Middle Class
Expect to reach over 3 billion by 2030.
Generating demand and creating employment opportunities.
Opportunities and Challenges
Opportunities: unprecedented opportunities for international business.
Challenges: addressing aging populations, poverty,....
Trade position today
Intra-Regional Trade
Over half of Asia's total exports are sold within the region.
Leading in Global Exports
In 2015, China becomes the world's leading exporter.
Shift in Global Economic Power
The center of global economic power has shifted from the US and the EU to Asia.
Economic Powerhouses
China, Japan, and India are driving regional growth.
India is emerging as the fastest-growing major economy, driven by its industrial sector and government initiatives like Make India.
Global risks and international business
Cascading Risks
Climate change
,
the global refugee crisis
, and
the Fourth Industrial Revolution
can exacerbate other risks, such as conflicts, migration, and economic instability.
Economic Risks
Unemployment, energy price shocks, fiscal crises, asset bubbles, and cyber-attacks.
Different regions
prioritize
different risks
based on their specific challenges.
Resilience and Stability
Plan to manage immediate risks and create long-term stability.
Dynamic Environments and Risk
International businesses operate in dynamic environments with various opportunities and challenges, making risk identification and management crucial.
Global Risks Perception Survey
The World Economic Forum's annual survey identifies global risks and trends, highlighting their potential impact over the next 10 years.
Climate change, weapons of mass destruction, water crises, involuntary migration, and energy price shocks.
International business today
Composition of trade and trade flows
Transformation of International Trade
Evolved from primary industries -> manufactured goods and services.
Impact of Crises on Trade
The 2008 global financial crisis.
The 2015 Chinese stock market crash.
Rising Importance of Services
Consulting, software, insurance, and education.
More resilient to global disruptions compared to merchandise trade.
Developing Economies' Participation
Asia: have increased their share in global trade, both in merchandise and commercial services.
Regional Shifts in Trade
China has become the leading exporter globally, surpassing the US and Germany.
Imports by China and India have surged, while developed economies' import levels have stagnated.
Interdependence Among Nations
Trade flows, FDI, portfolio investment, and currency movements
Critical Success Factors for Firms
Innovation, creativity, flexibility, and speed to succeed.
Participation in international markets -> avoid losses.
Globalisation and the international business imperative
Investment and International Trade
Investment
focuses on the movement of assets (money, property, businesses) between countries.
International trade
focuses on the exchange of goods and services across borders.
Foreign Direct Investment (FDI) and Portfolio investment.
World Trade and Investment Statistics
Growth in Global Trade & Investment.
Shifting Landscape.
Multinational Enterprises (MNEs)
MNEs play a crucial role in driving international market growth.
Vodafone, Nestlé, Diageo, British American Tobacco, and Volvo.
Macro- and Micro-Environmental Factors
Macro-environmental factors (political-legal, economic, sociocultural, technological).
Micro-environmental factors (competitors, distribution channels).
Trading Relationships and National Engagement
Imports can enhance local economies.
Export growth is vital for economic viability.
Global Value Chains (GVCs)
Multinational Enterprises (MNEs) are crucial for global innovation and play a vital role in enhancing the competitiveness of local companies.
MNEs drive global innovation.
Benefits for local companies.
Collaboration is key.
Criticism of Globalization
Evaluating MNEs in international trade requires understanding both the benefits and criticisms of globalization.
Globalization
Interconnectedness.
Multi-sector Impact.
Multi-faceted Nature.
Focus on Global Trade.
International business development: growth drivers
Post-Crisis Growth
Developing Asia has rebounded strongly from global financial crises but faces the challenge of maintaining growth in the medium and long term.
Shift in Economic Model
The traditional "made in Asia, consumed in the West" model is evolving towards more inclusive and sustainable economic growth in the Asia–Pacific region.
Key Growth Drivers
Human capital
Aging Population
opportunities to increase workforce participation for those over 60 years.
International Migration
Provide
skills, labor, and services
in host countries and
financial remittances, skills, and knowledge
to their countries of origin.
Brings diverse
talents
, and
cultural understanding
to workplaces, influencing global market production.
It also addresses demographic changes, such as aging populations, by attracting migrant workers.
Company Culture and Core Values
Competition for Talent
Competition for talent and leadership is intensifying.
Making talent retention a key challenge for businesses.
Innovation and technology
Promotion of Innovation
Technological Progress in Transportation
Reduce perceived distances
Increase safety and reliability
Facilitate global trade and distribution.
Enhancing Productivity
Infrastructure Development
The $7 trillion upgrades planned for South-East Asia.
China's "One Belt, One Road" initiative.
Ecommerce Growth
Ecommerce, e-banking, mobile technologies, and software tools.
Reduce trade costs
Creat new opportunities for entrepreneurs.
Communications Technology
Regulation
Regulatory Frameworks
Synchronizing their regulatory efforts across borders.
Introducing new risk-based frameworks.
Convergence of Regulations
Benefiting consumers with innovative ideas and solutions.
Creating a healthier competitive marketplace.
Concentrated Wealth and Financial Regulation
Accelerates domestic business and the economy.
Presents corruption risks and legal compliance issues for foreign companies.
Diverse Regulatory Environments
MNEs face challenges in China and India due to varying economic zone regulations and potential bribery risks.
Protectionism and Domestic Growth
drives domestic economic growth
Pressures MNEs to form local partnerships, sometimes at the cost of management control.
Global Regulatory Impact
Regulations in key regions like the US and the EU have a global impact, with regulatory oversight developing towards global standards.
Transformation to Middle-Income Region
Asia's success has transformed it from a low-income, capital-deficient region to a middle-income, capital-abundant region, changing the factors driving economic success.
World trade and investment today
Volume of Trade
Global trade now exceeds 20th-century levels.
Daily trade exceeds $5.1 trillion.
Annual exports exceed $16 trillion.
Economic Indicators
Knowing a country's economy is key to international business.
Reveal a country's capacity to produce goods and services.
Economic Groupings
G20, APEC, RCEP, and BRICS -> more influential.
Fostering investment-friendly environments and facilitating FDI flows.
Breaking Down Barriers
Diminishing
Liberalization, promotion, and facilitation of international investment.
Globalization
Economic Integration.
Reduced Barriers.
Shrinking Distance.
Cultural Homogenization.
Importance of Trade
Trade is a crucial engine for economic and social growth, linking markets internationally.
Challenges and opportunities of international trade
Factors Driving Growth in International Trade
Future Growth Predictions
Global economic growth and international trade are projected to continue expanding, especially in emerging economies, despite recent economic setbacks.
Benefits of International Trade
International trade delivers services, goods, and capital among countries with minimal interference, significantly contributing to a country's GDP and revenue.