International business: China, Brazil and the UAE
International or foreign investment is triggered by the need for growth and expansion to tap a larger market as well as yield more returns. Any company intending to invest in a foreign economy must conduct a market analysis to establish the viability of such a move. Factors to put into consideration include the country’s economy, demographics, geographical location, culture, technological and to some extent the religious background. These among other factors such as political leadership and judicial system affect the running of a business. Religion sometimes dictates consumption; for instance, engaging in the pork industries would not succeed in the Islam region. Notably, investors will shy away from countries that record high instances of political instability through demonstrations and riots, as the costs of operation would be increased through higher insurance premiums or investment on tight security systems. Riots are associated with loss in property destroyed, as well as reduced sales from business closure. A country’s culture and general way of doing things affect by a great magnitude success of international business. This paper will analyze the factors affecting international trade in China, Brazil and United Arab Emirates. Their differences in terms of culture and its effect on the business will be highlighted, and their economic factors will be discussed before determining which one of them is most viable for an interested foreign investor.
China is an Asian economy that has recorded a tremendous growth for the past three decades. This turn around can be blamed on the replacement of socialistic or communist approaches with capitalistic tendencies. China’s economy became the second largest economy in 2012 surpassing Japan. Foreign trade policies were made more flexible and investors would have operated wholly as opposed to the prior times when they had to use joint ventures (Ma, 2010). China became a member of the World Trade Organization in 2001, which is plus in as far as international trade is concerned. As China is the most populated country, foreign investors can enjoy the surplus labor supply. Privatization of the initially owned public utilities increases their effectiveness, competitiveness as well as their accountability. Although western tendencies have gradually embraced Chinese culture, their influence in as far as doing business in China, cannot be underestimated (Ma, 2010).
Many Chinese businessmen prefer to deal with people they have had personal relationships with, as opposed to the strangers interested in business. They also tend to prefer informal contract enforcement and property rights as opposed to the US based approach where contracts should be formal and legally binding. These tendencies increase the need for trustworthiness among the members interested in doing business in China. Concerns are, however, raised against the manner in protection of the intellectual property rights.
Brazil is a Latin American country that has had a consistent growth in terms of economic growth. It embraced entrepreneurship that saw the country’s GDP rise from $358 billion to $2.5 trillion in two decades. The role of women in entrepreneurship of the country is arguably higher than that of the global percentage rate. The change in the political leadership is to blame for transformation in Brazil (Silva et al., 2012). The Brazilian management embraces paternalism, although the role of women in business is gradually increasing. Despite success of the economic story in Brazil, income disparities between the rich and poor are still a source of concern on the wealth distribution (Glick et al., 2012).
Common feature between Brazil and China is their high population which acts as readily available labor supply to investors. The two countries have in the past shown consistent economic growth. Their resilience to the 2007-2009 economic crises which took a toll on the developed and developing countries alike is clear evidence of their thriving domestic markets. The two countries have also embraced technology and role of the Internet and social media which affect business in terms of products sold and purchased as well as an advertising tool. Loyalty is also a core aspect valued in both countries when conducting a business. Flexibility in the manner in which business is conducted where a middle path is sought to avoid bureaucratic procedures is also a common feature between the Chinese and Brazilian economies (Ardichvili et al, 2012).
United Arab Emirates is an Arab country which was ranked the 47th position in terms of economic freedom. It has a federal government led by Sheikh Khalifa bin Zayed (Datamonitor, 2011). The country has also had an immense transformation for the past three decades that have seen it rise from a poor desert state to a modern economy. The population is estimated to be 4.8 million comprising of Emirati, south Asians, other Arabs and Iranians. 96% of the population adheres to the Islamic faith. The official language is Arabic, and this may pose a communication barrier to investors. All in all other languages are slowly being embraced. The country’s economic growth largely relies on its oil reserves. Diversifying the economy will be vital for sustainability. Overreliance on oil can be blamed for negative effect of the 2008-2009 global economic crises on the country’s economy when the economy was at 1.6%. Democracy has not been successfully embraced in the UAE, although it has the most liberal trade regime in the region. The UAE is committed to diversifying the economy and investors targeting the non-oil based industries can thrive in the country. Unlike China and Brazil, where the existing population is adequate for the labor demand, the UAE depends on the expatriate labor. CIA estimates that a tune of 73.9% of the population aged 15-64 is comprised as non-nationals (Datamonitor, 2011). The UAE pegs its currency to the dollar denying it a chance to control its monetary policy. The country has also relied on the fiscal policy for development of the triggering its persistent deficits. The role of women in business in the UAE is slowly gaining popularity, although there are still instances of gender bias. The role of government in terms of resource ownership and control is higher in the UAE than in China and Brazil.
China, Brazil and the UAE have all ranked high in as far as economic growth is concerned. Investing in any of them would depend on the nature of business, as well as how easy one can adapt to the prevailing market trends. Understanding people’s culture, their language and other regulations are vital before investing in foreign markets. With all the factors in place, investing in Brazil will be a better move since one would not have to deal with the hindrances the UAE and China pose. The language barrier, inability to embrace democracy and overreliance on Islamic tendencies would pose a challenge to a non-Muslim investor there. Risk of breach in the patent or intellectual rights in China is also a serious threat to a foreign investor.
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