Shui Fabrics Question 1 Ans

1557 Words Feb 3rd, 2012 7 Pages
Economic factors include economic growth, interest rates, exchange rates and theinflation rate. These factors have major impacts on how businesses operate and makedecisions. For example, interest rates affect a firm’s cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and supply and price of imported goods in an economy. There are economic differences that influence the relationship between the partners at Shui Fabrics. Chiu Wai, operated Shanghai Fabrics LTC located in China, before it became a joint venture with Rocky River Industries in the United States. When the companies became a venture, Chiu Wai became the Deputy General Manager for Shui Fabrics in China and …show more content…
It seems there was once a clear strategy that has been forgotten over the course of ten years. Another social factor that is different between the partners would be that a profit over 20% return on investment may be perceived as Western exploitation. When it comes to doing business in China, respect for people’s feelings is paramount - this sensitivity that needs to be taken in respect to people’s ‘face’. Face - a cliché, is the currency of advancement. It’s like a social bank account. You spend it and you save it and you invest. And when you take away somebody’s face you take way someone’s fundamental sense of security. Because of China’s history of exploitation by foreign countries who colonized China or raided China for business purposes, particularly in the business sphere, Chinese do not want to be seen culturally as having been ‘had’ by Western businesspeople.(http://www.nytimes.com/2010/12/14/business/global/14iht-busnav14.html)Chiu Wai is pleased with the way the company is operating and feels that Shui is generating just the right level of profit especially because many U.S.-Chinese joint ventures are still operating in red tape. He sees no reason why Ray’s American bosses shouldn’t be more than satisfied with their 5% annual return on investment. This tells me that Chiu is unclear of his company’s strategic goals. Without a clear strategy it is

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