Entry Mode Strategy For The Global Expansion Of Emerging Markets, And Its Attractiveness For Foreign Firms

It is this that has sparked China’s vulnerability to external shocks. In 2011, China’s exports amassed almost $2 trillion, however in Feb 2012, China recorded a $31.5 billion trade deficit as a result of the European sovereign debt crisis in which China’s main trading partners plunged into recession. China’s severe BOGS decrease is an attempt to control growth and a sustained level of 7.5%. Investment policies are also critical for China to achieve economic growth and development. Foreign Direct Investment (FDI) in China is being sought primarily in the redesign of State Owned Enterprises (SOE’s) and in the development of interior provinces. Between 75-80% of World Bank loans to China in 2008 were directed to the central and western regions, the most economically disadvantaged. This promotes increased wealth within China, leading to higher levels of development due to a more positive Human Development Index (HDI), which currently sits at 0.687, up from 0.677 in 2010. Thus, trade and investment are critical factors in ensuring that China’s growth remains sustained at 7.5% whilst still encouraging increases in development.

In 2008, the Global Financial Crisis broke out; both the American economy and the economy in the West suffered a hard blow. However, a big economy system in the East emerged unexpectedly. China is now able to challenge the America’s decades-long dominant position in economic area. Started during the middle of 1990s, China’s manufacturing industry developed rapidly that billions of exports were floating out, and China was given the title of “the world’s factory”(BBC). By the end of 2010, China with a GDP of $5.8 trillion, surpassed Japan’s GDP of $5.48 trillion, became the world’s second largest economy system (BBC). China also exceeded Japan became America’s largest foreign securities holder. Since then, China has been seen as the US’s

4. K.C. Fung, Hitomi Iizaka, Sarah Tong. 2002. ‘Foreign Direct Investment in China: Policy, Trend and Impact’, paper prepared for an international conference on “China’s Economy

China is one of the fastest emerging markets in the world and is also home to the highest cultural population, roughly 1.1 billion in 1992 and 3 ½ times that of the U.S. These statistics appear to make China a very

I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.

There are always business risk when it comes to expanding a company, especially from an international standpoint. There are many strategic risk that needs to be evaluated in order to expand the company successfully. Examining the possible risk of foreign currency exposure, basic functions of international banking/financial market, support of long term financing of operations, and assessment of opportunities that can be implemented within the company. There are risk on three dimensions of international finance, economic trends of the country, impact of globalization and monetary system. All of these situations will be discussed in this paper.

There are many factors involved when a company makes a strategic choice to enter into a new market. These factors include strategic market position, resource availability, human capital, as well as financial gains and efficiencies. For General Electric Healthcare (GEH), the strategy was clear: “...to revolutionize the world’s health by improving the quality, access and affordability of care.“ (GE Healthcare, n.d.) For GEH, the position that they needed was clear, to find a cost effective way to meet their goal. And their choice was to expand their operations into India and China. Specifically, according to Kumar (2012), India is on the brink of an innovation boom where many companies like GEH are establishing operations due to the influx of talented human capital.

However, despite the investment enthusiasm surrounding exponential growth rates, there are still huge challenges in doing business in China: Overregulation, fragmentation, a weak transport network, and congestion are holding back the industry. There are many risks for western companies attempting to

For businesses, emerging market has developed into a very well chosen destination for a firm operating well in their own country which is looking for expansion. Developed markets usually hint at the considerations to per capita income. Limited growth opportunity and emerging market economies usually expect an availability of a larger amount of growth opportunity. In saying that, to maximize shareholders return and business enjoy showing their strength in their own country, companies showing interest in saturated markets may consider the need to take part in the emerging market to benefit largely. However, emerging markets is based around the transition to a more market-oriented economic system. But yes, it does come at the expense of risks to hurdle over for the already successful business, particularly from a cultural and economic point of view. If the risk is not responded to well, internationalizing into emerging markets may lead to heavy financial woes. This paper will analyse two recent business cases namely economist.com Japanese Electronics Firms: Eclipsed by Apple (2014) and Michael Chen’s Alcatel economictimes.com (ET Bureau 2014), which is working on moving into an emerging/developing market and analyse their barriers from those 2 factors.

China is the most populous country in this world with more than 1.35 billion residents. People’s Republic of China is established in 1949 and its economy started to develop from 1978 onwards. Mr.Deng XiaoPing was the president at that time. He and China government implemented the ‘Reform and Opening-up’ or ‘Chinese Economic Reform’ policy to make the trade freedom with foreign countries. This policy ensures the opening of the country to foreign investments and allows entrepreneurs to start their own businesses. The successful of the policy resulted in the immense changes in China’s society and economy. This ensured the reduction of poverty and balance the income among residents. Nowadays, China is a powerful and the fastest developing country in this competitive world. There are large amount of well-build industries and factories. The low price of the workforces and trade freedom also attract many foreign investors. China is an ideal country to develop a business and there are more opportunities for entrepreneurs. The largest population also prove that there are many customers. In addition, their high affordability and purchasing power give more foreign investors confidents to operate businesses in

There are a number of different foreign market entry strategies, including exporting, outsourcing, licensing and direct investment. This paper will discuss the advantages and disadvantages of each.

Well known companies like Nike, Microsoft, Sony, Shell Group are just some of the big companies that went global and expanded their trading around the world, they are large businesses that operate internationally in many countries. Development of worldwide integration urges companies to reach out international markets and interact with foreign customers. Businesses focus on fulfilling the demand of the market by its products or services, besides their target is increasing profit, in order achieve these goals they favor to expand their work in a foreign market. Other reasons to internationalize their business may be to become

For businesses, emerging market has developed into a very well chosen destination for a firm operating well in their operating country which is looking for expansion. Developed markets usually hint at the considerations to per capita income. Limited growth opportunity and emerging market economies usually expect an availability of a larger amount of growth opportunity. In saying that, to maximize shareholders return and business enjoy showing their strength in their own country, companies showing interest in saturated markets may consider the need to take part in the emerging market to benefit largely. However, emerging markets is based around the transition to a more market-oriented economic system. But yes, it does come at the expense of risks to hurdle over for the already successful business, particularly from a cultural and economic point of view. If the risk is not responded to well, internationalizing into emerging markets may lead to heavy financial woes. This paper will analyse two recent business cases namely economist.com Japanese Electronics Firms: Eclipsed by Apple (2014) and Michael Chen’s Alcatel economictimes.com (ET Bureau 2014), which is working on moving into an emerging/developing market and analyse their barriers from those 2 factors.

With a population of 1.357 billion (2013)3, China is the most populated country in the world. Along with the huge population comes a market that is unmatched by any other country of the world. Both domestic companies and foreign companies want to tap into this large market that just recently embraced capitalism and entered into the World Trade Organization.

Foreign companies before to enter in new market, managers needs a macro- environment understanding such a political, economic, social and technological analysis to make necessary decision regarding to the business.