The use of Internet Yellow Pages reduces the use of printed yellow pages. In fact, with proper employee training, the business owners are assured of approximately 300% ROI for $12,000 modest investment (Amanda 2008). Switching to online Yellow Pages is a move that promotes a paperless society that is environmentally friendly.
After all, since the year 2007, print usage of the Yellow Pages stagnated at 13.4 billion according to Punjabi M. K. et al. (2008). This corresponds to a declining 87 per cent of people in the United States using the Print Yellow Pages since 2007.
Thus, the use of online Yellow Pages proves that they are cheap, convenient and environmentally friendly. In fact, not only this fact result in a paperless society because it also encourages green computing where paper and energy are conserved.
Use of opt-in and opt-out strategy advances to reduce or ban print Yellow Pages delivery. For example, in San Francisco, one is required to opt-in in order to receive the print Yellow Pages; otherwise, such deliveries are banned since passage of the ordinance. The development of an online advertising campaign to search for engines as well as the Internet Yellow Pages is significant in this endeavor.
According to the report filed in the year 2000, the use of online search engines resulted in 67 per cent including online yellow pages. On the other hand, the printed yellow pages had a response of 55 per cent as compared against the cost, convenience and user friendliness (Chiras 2009).
Turn-Page 2011, Turn-Page Increases ad revenue.
Ultimately, as it is suggested by Boutin (2011), 80 per cent of the directory costs are saved if yellow pages are recycled. The waste reduction initiative will cuts down on paper and yellow pages consumption by 25% compared to other newspapers covering 70 per cent.
How We Can Expand Online Books Rather Than Bookstores
The online books are more accessible and interactive than the books in printed form at the bookstores. According to English.news.cn (Guanqun 2011), about 98 per cent of internet browsers experience stress-free access to any online books. The need to increase online books is essential in correspondence to the high level of interaction as the books range from audiobooks, practice books, videos and word definitions.
One can expand the online books over bookstores through indexing services. Immense steps have been undertaken by Eat Your Books to upload over 88,000 books coupled with 2000 indexed volumes.
Online surfers just indicate in the site that books are theirs, thus, enabling them to have an access to a great variety of books. This builds a virtual bookshelf as an account for every user just like having a personal library or renting books from a bookstore.
Online books enable readers to explore through millions of copyrighted books, browse passageways and buy copies. This was confirmed when Google paid $126 million (8.5 million pounds) to build a Book Rights Registry. The Book Rights Registry enables authors and publishers to register books and get reimbursement from the sale of books.
Again, one can set up the user account to receive email access on new online books opposed to getting to the bookstore. The discounts offered in online books (30 or 40% off) make them cheaper than in any bookstore, which offers lower discounts at 20 % off (Guanqun 2011).
References
Amanda, B., 2008. How to reduce your carbon footprint. New York: Crabtree Publishing Company.
Boutin J. P., 2011. Yellow Pages Going Green. Life in Yellow A blog by Yellow Pages Group, [blog] September 1. Web.
Chiras, D. D., 2009. Environmental Science. Burlington: Jones & Bartlett Learning.
Guanqun W., 2011. Traditional bookstores fight for survival as online book sales boom. English.news.cn, Web.
Punjabi, M. K., Anderson T., Katz M., McMillan L, & Petri G., 2008. New Research Shows Overall Yellow Pages Usage Growing 17.2 Billion Searches in 2007 Yellow Pages. Web.
Financial planning and control is a significant process in business, whose main aim is to offer focused guidance on organisational performance and management. We need to define these terms separately, for perfect understanding of the concept. Financial planning refers to the projection of assets, income, and sales through an approach which has been based on alternative marketing and production strategies, and the determination of the various resources that would be required to reach those business projections. On the other hand, financial control is the phase upon which the overall implementation of financial plans takes place. Financial planning and control offers internal as well as external guidance to the overall planning and steering of corporations. More importantly, the concept also plays a significant role in providing key corporate information to stakeholders and other participants in a business.
The concept of financial planning and control is associated with various corporate functions. For instance, it offers guidance in planning, administering and observation of value development in corporations through important financial aspects which include; cash flows, income statements and balance sheets. The other function of financial planning and control is to offer external guidance on corporate affairs to stakeholders, in order to enable them to have full access of appropriate economic and financial performance of a corporation (Jones 1986). This way, the stakeholders are able to assess and rate the creditworthiness of the organisation in a perfect way, thus facilitating control capabilities and statutory compliance. This report examines the concept of financial planning and control as it is used by GCC organisations.
In order to bring out a strong argument about the use of financial planning and control in GCC organisations, we first of all need to understand what GCC organisations are. GCCs are some type of organisations whose activities are team oriented. This form of structure plays a key role in ensuring there is flexibility in allocation of responsibilities and tasks, as well as efficient decision making in all areas of business concern. Basically, GCCs dont serve as single contact points for communication between key players in the network, but also as a significant interface towards suppliers and external customers (Rudberg and West 2008). Through this perception, it would be obvious that GCC organisations should try to provide quality services all units of the network. In that regard, it would be important for any GCC organisation to adopt the idea of financial planning and control in its business plans, among other important approaches.
As it would be observed, GCC organisations are associated with many benefits that have been realised through constant application of the process of financial planning and control. These benefits are divided into three main categories which include; supply chain measure, reduced costs and increased efficiency, and improved service and quality. Under the supply chain measure, there is the benefit of effective coordination of supply chain and integration between key sites in business. Through this effective process, GCC organisations have been able to focus on their market goals through integration of functions. More importantly, the organisations have been able to realize a common platform for support of decisions.
Other benefits which could be found observed under reduced costs and increased efficiency would include things such as improved efficiency in transportation and inventories, increased efficiency in product and service delivery, high utilization planning resources and production, emphasised support of logistics to internal sites, and increased efficiency in matters involving decision making. Regarding improved service and quality, GCC organisations have been able to benefit a lot from this process in a number of ways. For instance, the approach has contributed to great market competence to many organisations. This competence combination would add great value to business by helping to facilitate better and more informed business decisions (Stock and Lambert 2001). This has also contributed to increased opportunities that would also add value to business, such as tracking of transportation, among other things.
The way GCC organisations conduct their financial planning and control is not so different from the approach applied by other corporations. However, the main concept of GCC organisations is that they aim at establishing integrated, as well as coordinated operations control in networks of supply, thus enabling effective management of capacities and flow of materials in networks. GCC organisations basically serve as communication and information nodes that would enable integrated activity operations as well as remote control within the supply network, across different organisational levels and geographical locations. The only difference between the concept of financial planning and control in GCC organisations and other corporations is that, unlike the latter, GCCs apply an integrated approach to carry out the process. GCC organisations use financial planning as a central factor behind the financial forecasting of their business goals, and would therefore view the concept as one of the most important drivers of business success in the modern competitive world. As it would be observed, growth cannot be viewed as the underlying goal of any business organisation, but the most appropriate goal here is for corporations to be able to establish stronger shareholder values. Just like other businesses, GCC organisations employ financial planning to conduct important businesses undertakings that can be used to predict the shape of a firm.
GCC organisations apply the process of financial planning and control to estimate the value of capital to sustain corporate goals and objectives, and also in determining their competition in the market. These organisations apply the concept to frame their financial policies in relation to investment, procurement, and the administration of funds. Other significant objectives of financial planning and control, as it would be applied by GCCs, would include determination of capital structure, determination of capital requirements, and framing of financial policies with significant connection to lending, cash control and borrowing, among other money dealings. Determination of capital structure refers to the composition of the structure of capital whereby short and long-term decisions of debt-equity ratio are included (Dreyer et al. 2009).
Determination of capital requirements would depend on factors such as cost of fixed and current assets, long-range planning and promotional expenses. Another important objective that explains why GCC organisations would apply the process of financial planning and control is that, a finance manager is able to make sure that scarce or rare financial resources are fully maximised, while costs are controlled, to ensure maximum return of gains on investment. The main focus of any successful corporation is to be able to generate enough flow of cash that would enable them cover costs and be able to make profits. By maintaining proper financial planning and controls, most GCC organisations have managed to monitor their financial positions, thus finding it easy to maintain a tight control of all costs incurred.
The idea of financial planning and control comes with great importance to modern business organisations (Olhager and Wikner 2000). Generally, this is a process which entails framing policies, programmes, procedures, as well as budgets and costs concerning important financial activities. Through all these, effective and adequate investment policies are fully ensured. These benefits can be observed through a number of approaches as expressed in the following few sentences. Through the process of financial planning and control, GCC organisations have been able to realise many outstanding benefits. For example, the process has helped them to minimise the number of uncertainties that would be observed in ever-changing market trends.
The process is also useful in that; it helps organisations to observe a perfect balance between inflow and outflow of funds, thus maintaining stability in business. Another key importance of the process is that it plays a major role in ensuring that fund suppliers would found it easy to invest in only those corporations that practice financial planning and control. The process helps in facilitating expansion opportunities and programmes, thus playing a key role in the long-terms survival and prosperity of firms. Lastly, financial planning and control also plays a significant part in getting rid of all uncertainties which are likely to hinder the advancement of firms. As it can be observed from the above observations, the process of financial planning and control has succeeded in helping many GCC organisations realise their goals and objectives in business. In that case, modern corporations should see them as important guidelines which could be used to improve businesses.
Reference List
Dreyer, H, Alfnes, E, Strandhagen, J, & Thomassen, M 2009, Global supply chain control systems: a conceptual framework for the global control centre, Production Planning and Control, vol. 20 no. 2, pp. 147-157.
Jones, C 1986, Financial planning and control practices in UK companies: a longitudinal study, Journal of Business Finance & Accounting, vol. 13 no. 2, pp. 161-185.
Olhager, J & Wikner, J 2000, Production planning and control tools, Production Planning & Control, vol. 11 no. 3, pp. 210222.
Rudberg, M & West, M 2008, Global operations strategy: coordinating manufacturing networks, Omega, vol. 36 no. 7, pp. 91106.
Many customer relations experts acknowledge that the satisfaction of customers expectations is crucial to the success of businesses (Angelova & Zekiri, 2011). This implies that the profitability of a business venture greatly depends on how the business handles the needs of customers who seek to purchase goods and services.
Therefore, customer service recovery is a theory that proposes that a customer who experiences bad services from a business entity and obtains a quick response to his or her issues is likely to be more loyal than the one who does not experience bad services. It is argued that the rationale behind this is that a bad experience for a customer offers a business entity a chance to demonstrate how much it values its customers (Angelova & Zekiri, 2011).
Customer Service Recovery
In all the searches, the major message regarding service recovery is that the main objective of service recovery is to accurately identify customers who experience issues of dissatisfaction and then promptly address those issues to retain the customers loyalty (Fogli, 2007).
The searches also reveal that service recovery is a gradual business process that needs to be designed in a systematic manner and strictly implemented within a business organization (Gibson, 2011). In addition, the searches also acknowledge that a corporate organization must have a culture that supports the idea that customers are always very important to a business and that the voices and concerns of customers must be given top priorities (Withey, 2012).
There are many reasons customers may decide to defect to other goods and service providers. One of the reasons is the quality of services they get from service providers (Hollmann, 2008). In this case, it is important to note that customers are highly likely to defect when they have varied options to select from (Hollmann, 2008). This implies that any slightest dint in the standard of services provided may probably result in customer defection to other service providers (Hollmann, 2008).
The quality and standard of services provided to customers play a significant role in the relationship between business organizations and customers (Hollmann, 2008). Besides, it is evident that customers seem to be very fastidious as regards the way their service expectations are handled. Therefore, based on this fact, customers are most likely to defect should they perceive that their service expectations are not likely to be met (Hollmann, 2008).
The other reason for customer defection is how their service providers respond to their complaints. In cases where customers make complaints and do not get any confirmation that their concerns are either being dealt with or have been noted, they are likely to turn to competitors. Based on this, business organizations that ignore or provide slow responses to complaints by customers provide negative signals that drive away customers (Ryals, 2009).
The other reason that may give rise to customer defection relates to customer complaints. Customers who are not able to find the right persons or department within an organization to which they can give their complaints are likely to defect to other service providers with efficient systems that handle customer complaints (Ryals, 2009).
However, despite all the reasons for customer defection, it is important to note that there are many ways through which the defection can be thwarted. One of these is that service providers may ensure their services are of standards that satisfy the expectations of customers.
Besides, it is important that business organizations respond to customers complaints however minor they may be. Equally important is the fact that business organizations should have specific departments or personnel to whom customers can easily direct their complaints (Hutt & Speh, 2012).
Service breakdown occurs when a service provider makes mistakes during the service delivery process thereby not meeting the exact expectations of customers; this results in customer dissatisfaction (Mok, Sparks, & Kadampully, 2013). Many customers may not be concerned about how mistakes happen but how organizations respond to and resolve those mistakes (Mok, Sparks, & Kadampully, 2013).
In this case, a customer supervisor can minimize the events of service breakdown by establishing strict service protocols and policies to ensure that customers are provided with high quality services and standard responses to their complaints. In addition, it is important that a customer supervisor should learn how service breakdown events occur by establishing the contributory factors. After this, proper mechanisms should be put in place to avoid repeats of service breakdown in the future (Mok, Sparks, & Kadampully, 2013).
One of the strategies that can be used to prevent customer dissatisfaction is listening to feedbacks from customers. Business organizations need to be aware of the the importance of messages they receive from customers in relation to their services. The messages can be utilized as a means of determining customer satisfaction (Mok, Sparks, & Kadampully, 2013).
In relation to this, a customer supervisor may also utilize customer surveys in order to determine the experience of customers with respect to services provided by his or her organization. The surveys help organizations to realize inefficiencies and defects in their service delivery process and hence make improvements. The other strategy is dealing with individual customer problems (Mok, Sparks, & Kadampully, 2013).
A customer supervisor should provide immediate solution to a customers problems or promptly explain the reasons the problems may not be solved. In this case, a proper alternative advice should be provided to the customer. It is important for a customer supervisor to understand the various needs of different customers. This implies that the supervisor should be conversant with the unique needs of every customer who seeks services from his or her organization (Mok, Sparks, & Kadampully, 2013).
In order to enhance service delivery to customers, especially within the hospitality industry, service providers should emphasize on engaging their clients through the social media. Many customers discuss business organizations through the social media.
Therefore, the social media provides an opportunity for organizations to learn from their clients for the sake of enhancing service delivery (Odden, 2012). This is where Toyota, as a car manufacturing company, failed while trying to manage the crisis in which it recalled thousands of vehicles from the market. The use of the social media could have enabled it to easily connect with its clients across the world.
Conclusion
It is important to note that even though many business organizations have tried to enhance their service delivery to their customers, many of them still have cases where customers get dissatisfied with service delivery processes (Odden, 2012). This is the basis of having a strong and efficient customer service recovery system.
The reasons for customer defection include poor services, delayed handling of customers complaints and customers inability to access the right departments and personnel to deal with their complaints. Therefore, customer dissatisfaction can be ensured though listening to customers, paying attention to feedback and utilizing customer surveys to determine the level of satisfaction among customers (Mok, Sparks, & Kadampully, 2013).
References
Angelova, B., & Zekiri, J. (2011). Measuring Customer Satisfaction with Service Quality Using American Customer Satisfaction Model. International Journal of Academic Research in Business & Social Sciences, 1(3), 249-257.
Fogli, L. (2007). Customer Service Delivery: Research and Best Practices. Winchester, Hampshire: John Wiley & Sons.
Gibson, P. (2011). The World of Customer Service. London, UK: Cengage Learning.
Hollmann, T. (2008). A Process Theory of Customer Defection in Business-to-business Relationships. Ann Arbor, Michigan: ProQuest.
Hutt, M., & Speh, T. (2012). Business Marketing Management: B2b. London, UK: Cengage Learning.
Odden, L. (2012). Optimize: How to Attract and Engage More Customers by Integrating SEO, Social Media, and Content Marketing. Winchester, Hampshire: John Wiley & Sons.
Ryal, L. (2009). Managing Customers Profitably. Winchester, Hampshire: John Wiley & Sons.
Withey, F. (2012). CIM Course book 03/04 Marketing Fundamentals. New York, US: Routledge.
Unemployment is one of the main problems facing many economies in many parts of the world. Unemployment has affected many countries in the Middle East region. Saudi Arabia is one of the places where the level of unemployment has reached devastating levels.
This is as a result of over reliance on oil as the main activity in the economy. However, this problem can be solved by increasing the number of SMEs in the region in order to create employment opportunities for Saudis.
The main objective of this study is to examine the role of SMEs in creating job opportunities at Saudi Arabia economy. The findings of this study will be of great importance in making appropriate policies to suppress unemployment in the country. This study will therefore be necessary in promoting the efforts to bring about economic stability.
Background of the Study
Over the recent past, the economy of Saudi Arabia has been going through a difficult time. As already noted, one of the main problems in the economy is unemployment. The number of unemployed individuals has been increasing with time. The problem is even made worse by the relation that exists between employment and inflation. The two problems are usually difficult to manage since correcting one leads to worsening of the other.
In order to overcome the problem of unemployment, it will therefore be necessary to come up with the appropriate measures to generate job opportunities.
One of the main ways through which this can be done is through SMEs. In Saudi Arabia, SMEs plays a major role in creating job opportunities in the country. Most of the SMEs do not require very large amounts of starting capital. As a result, they have helped in suppressing the problem in the economy.
This study seeks to investigate the role of SMEs in creating jobs in Saudi Arabia. This study will help in understanding how the problem of unemployment can be solved through the SMEs. Therefore, this study will be useful in guiding various policies concerning the economy.
According to Nicola (2009), SMEs are becoming increasingly important to the Middle East economies. For instance, they are playing a pivotal role in promoting diversification of economies while creating job opportunities at the same time. SMEs are important in promoting stability in an economy.
The SMEs has also become an important part of the private sector development in the emerging markets in Middle East and the major components of most economies in the region. For instance, they have been contributing up to between 45 and 67 per cent of the GDP (Ramady 2010). This implies that SMEs are important in determining the stability of any economy.
Over the past years, Saudi Arabia has been relying on Hydrocarbon sector as the main economic activity. The economy relied heavily on oil where it contributed to over 80 per cent of the government revenue (Nicola 2009). This has posed a major risk in the country especially due to the fluctuating oil prices.
As a result, the government has recognized the need for diversification in order to suppress these risks. One of the ways through which this has been achieved is by boosting and developing SMEs in order to achieve a diversified economy.
Objectives
The main objective of this study is to understand the major roles of the SMEs in generating employment in Saudi Arabia. This understanding will be of great importance in revealing the best ways through which the level of unemployment can be lowered in the country.
Another objective of this study is to give policy recommendations. This will be based on the findings of the study. These recommendations will be of great significance to the policy makers in making appropriate decisions in the effort to solve the issue of unemployment in the country.
It will require a critical understanding of the problem at hand in order to understand the issue of unemployment. The recommendations proposed will be of great significance in solving the problem of unemployment in the country.
Literature Review
The issue of unemployment has been discussed by several people over the past. Many people have conducted research in an attempt to solve the problem in the economy. There has been intensive research that has been conducted in an effort to solve the problem in the economy.
SMEs play a significant role in lowering the level of unemployment in every economy. SMEs accounts between 60 to 70 per cent of the majority of OECD countries (Nicola 2009).
Most of the countries which have recorded good performance in their employment rates have been using SMEs to generate employment. For instance, SMEs accounts for a disproportionately large share of new jobs in the United States and Netherlands.
As small firm mature with time, the need for human resource and innovation increases significantly (Radwan & Speechley 2011). For instance, since small business usually expands fast, they will be required to employ more people in order to accommodate its increasing capacity.
This contributes in generating employment. Similarly, the need for an organization to innovate increases, an organization will need to attract unique skills from the work force. As a result, it will need to absorb more employees in order to meet their goals. As a result, the company will generate employment.
According to Ba-isa (2011), the growth of SMEs has significantly contributed in creating more jobs especially the youths in Saudi Arabia. Most of the business in the kingdom is composed of SMEs. For instance, it is noted that SMEs contributed between 80 and 90 per cent of the employment opportunities for the Saudis (Ba-isa 2011).
This presents a relatively higher fraction compared with the United States where SMEs contributes to about 65 per cent of the total employment in the country. This reveals the importance of SMEs in solving the problem of unemployment in Saudi Arabia.
In the Middle East, most SMEs are mostly in the services sector (Harvie and Lee 2002). Most of the job opportunities are from the trading and services sectors because they are usually labor intensive. They therefore generate more job opportunities especially for the youth. This has helped in reducing the rates of unemployment in the society.
By recognizing the importance of SMEs in generating employment in the country, the government has put up strategies to promote growth of this sector in order to provide employment opportunities for the youth. In connection to this, the government have guaranteed up to 80 percent of the loans provided by the local banks (Ba-isa 2011).
All these efforts are directed towards boosting the SMEs in the country in order to solve the problem of unemployment in the country. The Saudi Arabia government have also emphasized on clear identification of those SMEs that will generate employment so as to avoid misuse of the funds purposely aimed at generating employment.
Research Methodology and Research Methods
In this study, the data collected will be both qualitative. The data will be collected using structured questionnaires. These will be sent to the respondents who will be required to fill the questionnaires and then send them back. The subjects of the study will come from various SMEs from the country and various government leaders involved in policy making.
The people will be helpful in provision of the necessary information which will help in understanding whether and how SMEs has contributed in creating employment. The government officials will also be significant in providing the necessary information in this study. This group will be important in provision of the necessary information in understanding the issue at hand.
In this study, both primary as well as the secondary sources will be collected. This will include visiting the SMEs and interrogating the leaders and collecting useful statistics on employment. The information given by the respondents will then be recoded. This process will be very important as it gives an opportunity to get first hand information. It will also be important in enhancing the reliability of the data collected first hand.
Important information will also be retrieved from the official documents containing various economic statistics including employment. This data will be of great significant in understanding the issue at hand. As already noted, structured questionnaires will be useful in collection of the necessary data.
This method of data collection will be very helpful especially in collecting qualitative data from the selected sample from the population. However, this will be done with a lot care to avoid any negative feedback.
Since the respondents will be required to fill the questionnaires without interviews, the questions will be structured clearly in such a way that the respondents does not get hard time in filling the questionnaires.
There are several methods which will be applied in data analysis. This analysis will include a precise documentation of the field data. In this case, the researcher will collect data from various sources. Then this data will be compiled and then compared. It is therefore advisable to ensure that the data collected is precise.
The data collected from interviews and various government publications will also be examined at this stage. In this process, certain patterns will be identified as well as connections and similarities. This analysis will also identify any deviation from what is expected. In this case, the interviewer will be in a position to understand the contribution of the SMEs in creating employment in Saudi Arabia.
Problems or Opportunities
This study is very important in clomping up with appropriate policy recommendations in the economy. For instance, it will lead to a better understanding of the issue of unemployment and how this can be solved through SMEs.
Therefore, there is a great opportunity for the policy makers as the opportunity provides them with adequate information that will assist them in coming up with best policies in eliminating unemployment in an economy.
In conducting this study, there are several problems that the researcher is likely to0 face. For instance, the secondary data which plays a significant role in this study may not be found in the correct form. This is because it was not collected for the purpose of the issue at hand. Therefore, kit will require a critical analysis and comparison in order to collect useful information in this case.
As already noted, the questionnaire will be sent to the respondents who are expected to fill and then send the questionnaires back. The respondents may give false information. For instance, leaders in a certain SMEs may be tempted to give false information on employment statistics. In such a case, there are high risks of coming up with wrong conclusions. In other words, the study will be biased.
Despite of these problems associated with this study, there are several opportunities. For instance, the secondary data on employment is readily available in government publications. It is easy to find the data for different past years. This data will be useful in analyzing the trend over the time.
Limitations in the Work
Although this study provides vital information in solving the issue of unemployment in Saudi Arabia, the study has not investigated the reasons for poor performance of SMEs in Saudi Arabia.
There is therefore a need to have further study on this area in order to come up with the recommendations through which the performance of SMEs can be improved in Saudi Arabia. This will also provide important information on how to develop more SMEs in order to generate more and more jobs in the region.
A timescale / Gantt chart
This study will take about nine weeks. The main activities will be distributed as shown below.
ACTIVITY
WEEKS
1
2
3
4
5
6
7
8
9
Preparation of Survey Questions
XXX
Identifying Respondents
XXX
Data collection
XXX
XXX
XXX
Compiling the data
XXX
XXX
Data Analysis
XXX
XXX
Reference List
Ba-isa, M. 2011. Growth of SMEs is Essential to Create More Job Opportunities for Saudi Youth Web.
Harvie, C. and Lee, B. 2002. The role of SMEs in National Economies in East Asia. UK: Edward Elgar Publishing.
Nicola, M. 2009. Middle East The Rising Importance of SMEs. Special Report (Standard Chartered Bank, Dubai), Mary Nicola, +971 4508 3627
Radwan, H. and Speechley, T. 2011. SME Sector: Vital Source of Economic Stability Web.
Ramady, M. 2010. The Saudi Arabian Economy: Policies, Achievements, and Challenges. London, Springer.
This paper entails an analysis of two Tiger Economies; China and India. A brief explanation of why the two economies are regarded as Tiger Economies in addition to their history is given in the introduction. The researcher compares the two Asian economies by considering a number of elements. Firstly, an analysis of the two economies on the basis of their economic growth and the model adopted is outlined.
In this part, the researcher shows why the rate of economic growth for the two countries differs. The difference in their economic growth is associated with the divergent economic model adopted. For example, China adopted a fast track growth model while India adopted a gradual growth model.
In the second part, the author compares the two economies on the basis of their foreign trade balances which the author shows that they differ. The reason for the difference in their trade balance is associated with the economic sector that each country emphasizes on in its global trade. For example, China emphasizes on the manufacturing sector while India concentrated on the agricultural and services sectors.
The resultant effect is that the two countries competitive in the global market differ. The difference of the two economies with regard to their exchange rate regime is evaluated in part three.
In part four, the author evaluates the two countries investment efficiency whereby China emerges to be the most efficient with regard to investment compared to India. Their respective per capita consumption is illustrated in part five. An analysis of the two countries economic prospects and challenges is evaluated in part six. In the last part, a conclusion of the entire paper is outlined.
Introduction
Over the past two decades, the world economy has undergone significant transformation arising from high rates of economic growth. One of the factors that have stimulated the growth relates to globalization, which has led to increased industrialization in various economies. One of the regions experiencing this growth is Asia. For a long period, China and India had insulated themselves from the global economy (Srinivansan, n.d, p.3).
In an effort to stimulate economic growth, both China and India undertook a number of reforms in their governance. For example, China reformed its closed market economy system in 1978 (Bell, Khor & Kochhar, 1993, p.2). On the other hand, India abolished its stringent market regulations (Mattoo & Stern, 2003, p.23).
During this period, India had a relatively large private sector; however, the market was inefficient due to the stringent government control. This limited the countrys growth. Additionally, both India and China were regarded as impoverished economies until 1980(Das, 2005, p.94).The economic policies which they adopted led to a great transformation.
The two countries economic growth as emerging economies in Asia was also motivated by different factors. Some of these factors relate to political, social and cultural elements. Currently, China and Indias economic growth has made them to be regarded as the new tigers of Asia (Ahya & Xie, 2004, p.2).
The topic, The Tiger Economies; China and India therefore falls under the generally accepted body of knowledge that deals with basic facts and fundamental principles. This paper compares China and India as emerging economies.
According to Marshall Cavendish Corporation (2005, p.4), the phrase tiger economy is used to refer to a countrys economy on the basis of its strength and vigor.
Chinas economic growth can be compared to that experienced by the United States during the 20th century and Germany in the 19th century (Gopalan, 2001, p.5). Despite attaining independence in 1947, Indias economic growth during the post-independence period was relative low.
One of the reasons that explain the slow economic growth rate of the two countries during the 1950s is their over-dependence on agriculture. The resultant effect is that their competitiveness in the global market was limited (Madhukar & Nagarjuna, 2011, p.3).
However, this trend in their economic growth was reversed during the 1990s due to increased globalization and trade liberalization. For example, the Chinese national enterprises were given more autonomy in their operation. In addition, the government also abolished collectivized agriculture (Fan & Xiaobo, 2002).
In terms of population size, China and India are the most populous countries in the world. In 2008, Chinas population was 1.3 billion while that of India was 1.14 billion (Indiaonlinepages.com, n.d, para. 1-3). Their combined economy account for 18 per cent of the total global economy measured in terms of the Purchasing Power Parity (PPP) (Ahya & Xie, 2004, p.2).
Economic Growth and Growth Model Adopted
According to Tucker (2011, p.4), there are different indicators that can be used to determine a countrys rate of economic growth. Some of these include per capita GDP (Gross Domestic Product) and debt reduction. Per capita GDP is an index that is used to measure a countrys standards of living (Tucker, 2011, p.6).
Tucker (2011) further asserts that countries that have a slow growth in their GDP per capita experience a challenge in providing their citizens with basic needs such as health facilities, shelter, education, food, and clothing.
Over the past decade, India and China have undergone a significant GDP growth (Cox & Alm, 2008, p.6). However, Chinas GDP growth is relatively high compared to that of India. Ahya and Xie (2004, p.4) have the opinion that India will take more than a decade to reach Chinas per capita GDP.
They predict this period to be 10 years if India is to increase its growth in real GDP to 8%; however, if the rate of growth is maintained at its current rate of 6%, then it will take India 10 years (Ahya & Xie, 2004, p.5). It is also estimated that India and China will increase their nominal GDP to $ 1.3 trillion and $3.9 trillion by 2015 if their standard growth rate for the past decade is maintained (Ahya & Xie, 2004, p.6).
China has mainly focused on the manufacturing sector, as the core economic sector will contribute towards the attainment of its desired GDP growth (Chow, 1993). This has led to a significant growth in the countrys manufacturing sector. From 1980, Chinas manufacturing sector has experienced an increment of 11.5% annually (Chow, 2002).
On the other hand, the service sector is the core economic driver for Indias economic growth. In 2004, Indias service sector had grown with a margin of 7. 6% annually for the past 13 years compared to its manufacturing sector that grew with a margin of 5.7% (Ahya & Xie, 2004, p.5). On the other hand, Chinas manufacturing sector grew with a margin of 12.8% compared to a growth of 8.8% in its services sector (Ahya & Xie, 2004, p.5).
China adopted a fast-track growth model while India adopted unique gradualism model. Within a period of 25 years after implementation of the reforms, Chinas economy has experienced an average growth rate of 9.4% annually compared to the 5.2% prior to the reforms (International Monetary Fund, 2006, p.3).
China has also implemented major structural reforms aimed at improving its labor market. For example, the government has adopted aggressive labor reforms. Additionally, China made it compulsory for all youths to attend school for a period of nine years (Ahya & Xie, 2004, p.6).
The country has also been successful in increasing its capital accumulation by eliminating entry barriers (International Monetary Fund, 2011, p.15). The government used the accumulated capital to improve the countrys infrastructure network.
This has played a critical role promoting Foreign Direct Investment. In 2002, China earned $52.7 billion from FDI while India earned $ 2.3 billion (Gopalan, 2001). One of the factors that enhanced FDI within in China relates to availability of human capital and a sizeable ready market.
In an effort to enhance its economic growth through implementation of different reforms, India decided to adopt a consensual approach. The approach entailed integration of different institutional frameworks such as adoption of a democratic political system and the rule of law. Over the past two decades, India has continuously implemented internal and external reforms.
Some of these reforms involve reduction of restrictions with regard to foreign capital investments and reduction of tax rates. Despite its effort, Indias average GDP growth has been relatively constant at 5.8% from 1992 to 2003 (Ahya & Xie, 2004, p.6). The economic reforms implemented by India have not been successful in accelerating GDP growth compared to those of China (Kwan, 2006).
Comparison of China and India with Regards to Global Exports
Over the past two decades, China and India have experienced an increment in the volume of their exports; however, Chinas exports are relatively higher compared to those of India. One of the reasons that explain this differential arises from the fact that China has increasingly adopted the concept of economic integration.
This has improved its ranking in the global economy at a faster pace compared to India. In the global market, China accounts for 5.2% of the total global exports while India accounts for only 0.9 % (Ahya & Xie, 2004, p.5). In addition to economic integration, the increase in its global exports also arises from adoption of open market economy and implementation of structural reforms.
During the first twelve years (1991-2004) after implementation of the economic reforms, Chinas exports expanded with a CAGR of 16.3% (Ahya & Xie, 2004, p.6). On the other hand, Indias exports increased with a CAGR of 9.9%. The difference in the volume of export between the two countries arose from the rate at which reforms were implemented and the divergent growth models adopted (Ahya & Xie, 2004, p.5).
Despite their overall involvement in global trade, China and Indias exports differ with economic sectors. Most of Indias exports are those that originate from low capital intensive and high labor intensive economic sectors. Indias exports mainly include agricultural products, engineering products and commercial services. On the other hand, Chinas exports are mainly capital and labor intensive.
The countries core exports include machinery and equipments, garments, services, electronics, telecommunication equipments and computers (Ahya & Xie, 2004, p.7), According to Ahya and Xie (2004, p.7), China is more competitive in the global market compared to India; India only leads in exportation of software and steel.
The two countries have established trade with each other; however, Indias main trade partners include the United States, the United Kingdom, Belgium, Japan, Saudi Arabia and Germany (Unidas, 2006, p.84).
Foreign Trade Balance
The two countries also differ with regards to their foreign trade balances. India has a negative foreign trade balance while that of China is positive (Kowalski, 2008, p. 6).
In August 2011, Chinas foreign trade balance was approximately $ 17.75 billion as illustrated in chart 1(Trading Economics, 2011, para. 1). On the other hand, Indias foreign trade balance during the same period was $ -14,041 million as illustrated by chart 2(Trading Economics, 2011, para. 1).
Chart 1:
Chart 2:
Its trade with the European Union, Japan and the United States has made China to have a positive trade balance. Additionally, another factor that has led to emergence of this difference relates to the divergent demographical and historical developments between the two countries. For example, India has a high population growth compared to China.
Additionally, the two countries exports differ with regard to value addition. Chinas exports have a relatively higher value added compared to Indias exports which makes them to be competitive in the global export market (Srneck, Svobodova & Divisova, 2008, p. 36).
Exchange Rate Regimes
The difference in the two countries economic growth has also been stimulated by the exchange rate regimes that they have adopted. During the 1990s, China had adopted a fixed exchange rate regime whereby one US dollar was being exchanged for 8.28 Chinese Yuan (Srneck, Svobodova & Divisova, 2008, p. 36).
However; the dynamic nature of the global market during the 21st century has forced China to relax its exchange rate regime. In 2007, there was a slight improvement in the countrys exchange rate whereby 7.49 Chinese Yuan were being exchanged for 1 US dollar (Srneck, Svobodova & Divisova, 2008, p. 36).
Over the past few years, Chinas currency has strengthened relative to the dollar. During 2011, 1 Chinese Yuan is being exchanged for approximately USD 6.52 (Srneck, Svobodova & Divisova, 2008, p. 36).One of the factors that have led to Chinas competitiveness with regards to exchange rate is its control of the financial market.
For example, China has continuously maintained its interest rates very low. On the other hand, India has adopted a flexible exchange rate regime. The resultant effect is that the Indian currency is highly exposed to liquidity risks.
Investment Efficiency
India and China have effectively utilized their GDP in stimulating economic growth. One of the economic sectors that the two countries have emphasized investing in relates to fixed investment. For example, during the period ranging between 2003 and 2008, China and India invested approximately 3.7% of their GDP in fixed investments (Ross, 2010, para. 3).
The objective of the investment was to stimulate their economy to a growth with a margin of 1% (Ross, 2010, para. 3). According to Dekle and Guillaume (2006, p.6), China and India have not experienced severe macro-economic discrepancies over the past five years. Therefore, one can conclude that the 3.7% of GDP allocated to fixed investment is similar to maintaining a sustainable macro-economic stability (Kuijs & Tao, 2005, p.12).
Considering the size of the two economies, Chinas investment in fixed assets is relatively high compared to that of India. According to Gopalan (2001), Chinas investment in fixed assets is more than that of India with a margin of 15%. This explains why the two countries differ with regards to their aggregate performance.
Since the implementation of the economic reforms, India and China have significantly reduced the proportion of GDP required to be invested in fixed assets. By the end of the 1970s, the United States, India and China were required to invest 6% of their Gross Domestic Product in order to stimulate a 1% growth in their GDP; however, over the past three decades, India and China have improved their investment efficiency (Ross, 2010, para. 5).
This is well illustrated in the chart below, which shows that the GDP allocated to fixed investment has reduced from 6% to 3.7% in 2005(Ross, 2010, para. 6).
Per Capita Consumption
Chinas per capita consumption is higher compared to that of India. It is estimated that Chinas private consumption has increased with a margin of 7.4% since 1990(Ahya & Xie, 2004, p.15). On the other hand, Indias private consumption has only increased with a margin of 3.4% (Ahya & Xie, 2004, p.15). One of the factors that have stimulated this increment is the high rate at which products penetrate the Chinese market.
It is estimated that market penetration of different products and services in the Chinese market is more than 2 times their penetration in the Indian market (Ahya & Xie, 2004, p.15). The reason why India is experiencing a low private consumption is that Indians are biased with regards to consumption of certain products such as tobacco, beverages and other food products.
Chinese consume 62% of their disposable income on food, tobacco and beverage compared to 48% by Indians (Ahya & Xie, 2004, p.15). The high rate of private consumption in China has enhanced the countrys growth in GDP. This arises from the fact that personal consumption is a core component in a countrys GDP.
Economic Prospects and Challenges
There is a high probability of China continuing with its growth trend in the future. This arises from the fact that currently, there is no other country that can challenge China in its manufacturing prowess. Similarly, Indias economic future is also very bright. This is due to the fact that the country has managed to attain a substantial market position with regards to outsourcing of services in different economic sectors.
However, in order to enhance their economic growth, it is critical for both countries to enhance their competitiveness in sectors that they have not emphasized. For example, India should consider improving the strength of its manufacturing sector.
Similarly, China should shift its focus to the services sector. Considering the two countrys population growth and their effort towards improving their education sector, there is a high probability that the two countries will have a strong human capital (Knight & Li, 1996, p.5).
China faces a challenge in its effort to improve its economic growth through implementation of critical reforms such as those aimed at changing institutional frameworks; for example, the financial sector. One of the factors that may lead to this is that Chinas political stability is relatively low compared to other developed economies.
Despite its economic growth over the past two decades, the poverty level in India is relatively high. This has led to the country experiencing numerous civil unrests. The resultant effect is that the countrys industrial and services sectors are negatively affected thus slowing down the countrys economic growth.
Conclusion
The paper has illustrated the similarities and differences between India and China. This has been achieved by considering the various demographic and economic characteristics. Over the past two decades, China and India have undergone significant transformation. For example, the two countries have experienced a significant increment in their population size in addition to a rampant economic growth.
The two countries economic growth has made them to be regarded as Tiger Economies. The two countries growth has resulted from the effectiveness with which they have implemented economic and structural reforms. Some of these reforms relate to opening up their economies and relaxing their market control.
However, Chinas economic growth outpaces that of India in different aspects. For example, the core economic sectors that contribute to the two countrys global exports differ. In addition, the size of Chinas global exports is relatively high compared to that of India. The two countries have also adopted different exchange rate regimes.
China has adopted a fixed exchange rate regime while India has incorporated a flexible exchange rate regime. This has greatly affected the stability of their currency. Their investment effectiveness also differs. The analysis of the two countries has shown that China is more effective in its investment with regard to infrastructure compared to India.
Their private consumption also differs. Despite this, the two countries experience challenges such as political instability in China and high poverty level in India. However, despite this, their future economic prospect is very bright.
References
Ahya, C. & Xie, A. (2004). India and China; a special economic analysis. New tigers of Asia. New York: Morgan Stanley.
Bell, M., Khor, H., & Kochhar, K. (1993). China at the threshold of a market economy. Washington: International Monetary Fund.
Chow, C. (1993). Capital formation and economic growth in China. Quarterly Journal of Economics, 108(2), 809-842.
Chow, G., & Li, K. (2002). Chinas economic growth. Economic Development and Cultural Change, 51(1), 247-256.
Cox, A., & Alm, R. (2008). Economic letters. Insights from the Federal Reserve Bank of Dallas. New York: Federal Reserve Bank of Dallas.
Das, D. (2005). China and India: A tale of two economies. China and World Economy, 13(4), 83-97.
Dekle, R., & Guillaume, V. (2006). A Quantitative analysis of Chinas structural transformation. Mimeo: University of Southern California.
Fan, S., & Xiaobo, Z. (2002). Production and productivity growth in Chinese agriculture: New national and regional measures. Economic Development and Cultural Change, 50, 819- 838.
Gopalan, R. (2001). China competitiveness. New Delhi: Department of Commerce.
International Monetary Fund. (2011). Chinas economic outlook. Web.
International Monetary Fund. (2006). World economic outlook: financial systems and economic cycles. Washington, D.C: International Monetary Fund.
Knight, J., & Li, S. (1996). Educational attainment and the rural-urban divide in China. Oxford Bulletin of Economics and Statistics, 58(1), 83-117.
Kowalski, P. (2008). China and India: A comparison of two trade integration approaches. Web.
Kuijs, L., & Tao, W. (2005). Chinas pattern of growth: Moving to sustainability and reducing Inequality. China and the World Economy, 14(1).
Kwan, C.H. (2006). Improving investment efficiency in China through privatization and financial reform. Nomura Capital Market Review, 9(2), 33-43.
Madhukar, S., & Nagarjuna, B. (2011). Inflation and growth rates in India and China: A perspective of transition economies. International Conference on Economics and Finance Research. Singapore: IACSIT Press.
Marshall Cavendish Corporation. (2005). People of Eastern Asia. New York: Marshall Cavendish Corporation.
Mattoo, A. &. Stern, M. (2003). India and the WTO. Washington, D.C: World Bank.
Srneck, K., Svobodova, E., & Divisova, M. (2008). China versus India: Current tendency of their economic development. Suchdol: Czech University of Life Sciences.
Srinivasan, T. China and India: Economic performance, competition and cooperation. New Haven, Connecticut: Yale University.
Trading Economics. (2011). India trade balance at $-14, 041 million. Web.
Trading Economics. (2011). Chinas balance of trade at $17.75 billion. Web.
Tucker, I. (2011). Economics for today. Mason, OH: Cengage.
Unidas, N. (2006). Trade and development report: Global partnership and national Policies for development. New York: United Nations Conference on Trade and Development.
The poor performance at the Internal Revenue Service (IRS) raised concerns among various stakeholders. There was need for the organization to change its manner of operations to achieve effective service delivery. The stakeholders in IRS transformation included the government, outside institutions, IRS employees and the public. The public, government and IRS employees were the most important stakeholders in this case. The main function of IRS is to collect money from various taxpayer segments. These include individuals, self-employed persons, small businesses, large businesses and partnerships (Amy & Frances, 2002). These segments comprise of members of the public. In this regard, the public forms a core component of IRS operations, as it is the greatest source of revenue.
IRS plans its revenue collection operations based on various categories of taxpayers. It considers the revenue obtainable for each customer segment and devises means to ensure appropriate levels of contribution by these segments. The other important stakeholder in the IRS transformation is the organizations employees. The implementation of various task force recommendations will largely be an undertaking of the employees. Employees play a significant role in determining the outcome of any organizations change process. Without their involvement, it is considerably difficult for an organization to realize meaningful changes (Whitsett & Burling, 1996). Furthermore, employees have the greatest influence on customers. The employee-customer relationship determines an organizations progress in various aspects.
A healthy employee-customer relationship enhances customer loyalty and confidence with respect to a particular organization. Another important stakeholder in the IRS transformation is the government. IRS serves as a vital of the government concerning revenue collection. The government uses the money obtained through this organ to fund various projects that directly influence the countrys growth. Therefore, when such an organization suffers poor performance, it affects a wide range of national undertakings. The proper functioning of such a crucial organ is a key consideration for the government.
IRS transformation became necessary due to complain from various stakeholders regarding poor performance. It had become considerably difficult to file tax returns and sort out various issues affecting taxpayers. Outdated systems and poor service delivery had resulted in increasing cases of lateness in filing returns and non-compliance (Amy & Frances, 2002). There were increasing concerns that the organizations ineffectiveness in executing various duties translated into revenue losses. Taxpayers complained that IRS took long to respond to their enquiries. Thus, although they intended to file tax returns early, the manner of operation in the organization made the process considerably difficult. In addition, even when taxpayers got responses, complex accounting and law concepts made the interpretation of various reports challenging.
The organization lacked mechanisms that could allow the presentation of taxpayers records in a simple and clear manner understandable to everyone. Numerous cases of errors in tax returns created a negative perception about IRS among taxpayers. Taxpayers became discouraged to pay taxes considering numerous processes involved in the whole exercise. The limited number of outlets from which taxpayers could file their returns further worsened the problem. Furthermore, some of the measures imposed to enforce revenue collection subjected taxpayers to unfair treatment.
Therefore, it was necessary to adopt various approaches that created a customer-friendly environment and enabled taxpayers to sort out various issue with minimal challenges. IRS intended to change its employees work practices, redefine management roles, and introduce new systems to enhance service delivery and eliminate various factors that had led to its unsatisfactory state. Organizational change relating to the human resource focused on creating a customer-focused approach of operation. This would ensure that employees regarded customers highly and responded to their queries on time. This would boost the taxpayers confidence in IRS and improve customer loyalty (Rusaw, 1998). There was the need to increase the number of office hours to enable more taxpayers to access various IRS services and minimize issue of late tax filing that occurred due to the inability to access services on time.
Ineffective and outdated systems such as the telephone service that made it considerably difficult for taxpayers to conduct enquiries, required replacement. IRS needed systems that could handle large numbers of customers and minimize call traffic (Amy & Frances, 2002). In addition, the organization required systems that facilitated increased customer service hours. Thus, it was crucial to expand service delivery by employing effective technologies such as call-routing technologies. Adopting appropriate and varied means of filling returns was necessary to ease the congestion associated with tax payment. It would also eliminate unnecessary filing procedures and thus save taxpayers time. Taxpayers required a variety of filing systems relating to payment of returns and future follow-up incase of disputes regarding compliance. In addition, there was the need to increase the outlets at which taxpayers could access IRS services. Through creating channels that enabled taxpayers to learn more regarding tax payment, IRS would tackle issues of non-compliance and promote timely filing of returns. By expanding the scope of interaction between IRS employees and taxpayers, the organization would tackle various problems that largely occurred due to the inability by taxpayers to obtain clarification regarding the filing of returns.
References
Amy, C. E., & Frances, X. F. (2002). Transformation at the IRS, Harvard Business School, Web.
Rusaw, A. C. (1998). Transforming the character of public organizations techniques for change agents. Westport, Conn.: Quorum Books.
Whitsett, D. A., & Burling, I. R. (1996). Achieving successful organizational transformation. Westport, Conn.: Quorum.
Sequestration is a procedure for limiting the federal governments spending in the United States (Benson par.1). This procedure is entrenched in the United States constitution. Government spending in several of its departments are limited to a certain figure that is calculated based on the set principles.
If the Congress passes an annual budget that is higher than the set value, automatic regulations are instigated in all the necessary departments to ensure that the limit is not exceeded (Benson par. 3). The effects of these cuts affect all government departments with equal magnitude.
This process was reviewed and adopted through enactment of the budget control act of 2011. This was done iwithj the aim of averting the debt crisis that was looming in the United States. Although these measures have the capability of controlling the rate of growth of the debt, the harmful effects that accompany the regulations are lethal to the survival of the United States, its citizens, and the world economy at large.
To begin with, cuts in government spending on defense have a capability of destroying the United States economic stability across the world. The department of defense is a vital driver of the American economy (U.S. Department of Defense par. 3). Apart from providing the necessary secure environment for economic development, it is a major employer in America. It is estimated that over 1.5 million Americans will be rendered jobless if the automatic cuts are initiated in this department (Brown par. 2).
The American economy has just started recovering after a major global financial crisis in which America was worst hit with the highest levels of unemployment. During the time of recovery, it is estimated that over 4 million jobs have been created thereby lowering the unemployment rate in the United States (Brown par. 4). Budget cuts in the department of defense will result into massive layoff of workers. This will automatically increase the unemployment rate to alarming percentages.
The amount of money that will be withdrawn from the economy because of automatic cuts in spending by the department of defense is well above $85 billion (Brown par. 6). This is a very large amount of money to be withdrawn from the economy. Consequently, the economic development will be slowed down by about 25%. This has a capability of pushing the American economy into another depression (Eaglen par. 12).
Several manufacturing industries that are directly linked to the department of defense will be greatly affected. Apart from the destruction of millions of jobs, the revenues collected from the sell on the international market of these products will be greatly reduced (Eaglen par. 6). For instance, the American aerospace industry is the leading exporter in the world with up to $40 billion dollar profits annually (Eaglen par. 13).
The majority of these industries, whether local or international, are fully or partly owned by the government. Limiting expenditure will result into the closure of several of such industries thereby destroying the American economy (Eaglen par. 8). Based on the estimates of the number of American that directly and indirectly depend on this department, 4 million Americans will be exposed to economic hurdles if spending by this department is restricted to a certain figure (Eaglen par. 15).
The department of transport is yet another American icon that can be greatly affected by sequestration. This is one of the best transport systems in the world. It links most departments and hence propels a lot of economic processes (Eaglen par. 18).
The number of Americans who will lose jobs because of restricted spending by this department is very high. Most air transport systems will be shut down. This will seriously affect businesses. Moreover, a sector such as that of tourism is a major revenue source in America. It will be affected by initiating sequestration.
The department of education is another sector that will be significantly affected by sequestration. The government will be forced to seriously cut down on federal spending in the sector of education (Cross par. 1). Several education projects will stall due to lack of funds. In addition, several students who come from poor backgrounds will not afford education. This will seriously affect the educational standards in the United States.
Moreover, the number of Americans who work in this department in terms of teachers and aides are enormous. Reducing the numbers will result to an economic crisis on a large American population. This has the potential of affecting the quality of education in the country. Furthermore, people with disabilities will be greatly affected. Sequestration will limit the funds available for necessitating these services.
The number of teachers to help such students will be minimal as well as lack of enough funding to support such students. Affecting the education department processed has a danger of resulting to unfit professionals for the future American economy (Eaglen par. 7). in additon, the gap between the rich and the poor in America will continue to be broad since education is the only tool that helps in empowering the poor in the society.
The public health department depends on government funding. Since sequestration affects all government departments equally, the health department is at a greater risk. This is because it is concerned with the physical well being of Americans. To highlight some cases, the public health threat response department ensures that life is saved during critical emergencies.
Cutting down on spending will incapacitate this unit as most workers will be laid off and the equipment purchases will be minimized (Eaglen par, 14). In addition, the number of deaths resulting from drug use and abuse will increase immensely as the funds needed for running these processes will be lessened. Furthermore, HIV epidemic might reemerge, as the monitoring unit will not have enough funds to ensure correct data on the status of the syndrome is available (Eaglen par, 14).
Moreover, childcare and support will also be deeply debilitated. This is because of insufficient funds to ensure immunization processes are done. Poor developmental health will result to the government spending more in treating diseases that could be prevented by immunization (Eaglen par, 14). These will result to more losses, as managing health problems are more expensive than actual preventive measures.
The government has programmers that ensure most Americans are healthy. A program such as seniors nutritional program ensures healthier lifestyles thus longer life spans for Americans. Cutting down on expenditure on such an important initiative will mean reducing the life expectancy of most Americans (Eaglen par, 14).
Additionally, the current push for global environmental rehabilitation for sustainability of humanity will be harmed by the cuts in budgetary spending. Poor environmental conditions will result to degraded life standards and health of Americans. The government will incur more costs in an effort of dealing with health consequences resulting from degraded environmental conditions such as unclean air and water. Stalling government initiatives for a clean environment has ripple economic effects.
America has one of the best socioeconomic policies in the world. This policy target employed students and job seekers. Cutting down on government expenditures will directly affect millions of Americans who directly depend on government assistance in stabilizing themselves. The government subsidizes the living costs of many job seekers. This service will be ineffective if sequestration is implemented.
At the international level, America is an economic powerhouse that is depended on by almost two thirds of the word. Economic instability in America will result into an international economic crisis (Eaglen par. 15). Most countries directly or indirectly trade with America. Its neighbors such as Canada and Brazil greatly depend on Americas economic stability for their survival. Any economic glitches in America will have ripple effects on the worlds economic stability.
Sequestration, a technique that limits the amount of money in the American economy, will hamper several international economic processes. As much as it is seen as a way of reducing the debt burden on the government, it has a possibility of melting down the worlds economic prosperity, bearing in mind that America has international subsidiaries in most countries in the world (Eaglen par. 15).
In conclusion, sequestration is a lethal tool to the American economy. It affects all government processes negatively. These effects directly impact the American citizens in various ways. Some of these ways include unemployment, poor working conditions, insecurity, and poor social services by the government as well as food security. These effects have the potential of destroying the American economy (Eaglen par. 16).
On the other hand, debt reduction is the only major positive effect that accompanies sequestration. The effect of debt reduction can be short lived because a crisis might force the federal government to increase international and domestic borrowing (Eaglen par. 18). Since the effects of sequestration extend beyond America as a country, it should therefore be avoided at all costs as an economic step.
GCC is an acronym for the Gulf Cooperation Council for the Arab (Gulf Cooperation Council, 2012). The cooperation is a framework that unites the Gulf regional states of Saudi Arabia, Kuwait, Bahrain, United Arab Emirates, Qatar and Oman. The GCC basic objective is to promotion, coordination, integration and interconnection among the member states in terms of economy, finance, trade, customs, tourism, agriculture, science and technology, mining and legislation. This aims at strengthening ties and cooperation in private and public sectors of the member states (Gulf Cooperation Council, 2012).
GCC common market
The GCC common market is an economic integration that seeks to promote economic linkages among the member states. The agreement gives the citizens from the member states equal rights to employment, healthcare, education and participation in stock markets trading, establishing companies and trade of properties (Oxford Business Group, 2008). The common market facilitates free movement of labour and capital among the six member states. The member states also agreed on removal of trade barriers to facilitate the free movement of goods and services between member states with an aim of encouraging interstate commerce (Oxford Business Group, 2008).
The GCC common market has a positive effect on trade in the region. The framework has the potential to expand trade up to three to four times above the levels that existed before the common market was established. At the same time, the common market is expected to boost international trade. The removal of interstate trade barriers by the common market opens the entire block to international trade because there is only one entry point for trading (Oxford Business Group, 2008). This is likely to increase direct foreign investment in the region. The common market is also expected to encourage member states to diversify greatly to benefit from the block trading boom.
Additionally, the companies take the advantage of the free market to merge and amalgamate. The acquisitions and mergers are crucial in eliminating transaction costs, which reduce the cost of commodities. This works at the advantage to importers who source the goods at affordable prices (Oxford Business Group, 2008).
GCC customs union
The GCC member states have unified customs regulations and procedures that contribute to enhancement of cooperation among member sates (Low & Salazar, 2011). The regulations establish common external custom tariff and custom regulations. The agreement also eliminates all tariffs and nontariff barriers and gives consideration to agriculture and veterinarian quarantine. Furthermore, the customs regulations have rules that address prohibited and restricted goods in the economic block. The regulations require the treatment of any member states goods as national goods by another member state (Low & Salazar, 2011). The regulations have also considerably reduced the flow of counterfeit and prohibited commodities between member states. This is extremely beneficial for businesses because the products usually affect business to greater extents.
The custom regulations are of significant importance because goods move freely across the member states without being subjected to extra duties. Majority of the industries in member states benefit from these regulations because they can freely source for labour and vital raw materials without paying the cross-border taxes and levies. The free flow of manufactured products among the member states catalyses business growth in the region (Low & Salazar, 2011).
Conclusion
The GCC has successfully contributed to robust business growth in member states. The elimination of trade barriers and tariffs has a positive impact on business growth. Full implementation of the GCC regulations is necessary to maintain the positive step in trade of the region. The regulations and rules should be strengthened to improve trade and economic integration in the region.
Reference List
Gulf Cooperation Council 2012, Gulf Cooperation Council. Web.
Oxford Business Group 2008, The report, Oxford Business Group: Oxford.
Low, L & Salazar, L C 2011, The Gulf Cooperation Council: A rising power and lessons for ASEAN, Institute of Southeast Asian Studies: Singapore.
The Misery Index and the US share of the global GDP from 1960 to 2007 is as shown below (figure 1). The GDP share declined steeply in the 1970s when oil producing countries increased share portion. This trend levelled-off in the 1980s. Even with the strong emergence of the information-technology in the 1990s; the US share has been on the downward trend and lately, steeply.
To respond to the short supply of the petroleum commodity in the 1970s; the US used expansionary policies intended to influence monetary and fiscal schemes. The expansionary intentions exceeded productivity resulting in higher inflation. This scenario popularly known as stagflation has recurred again in the recent recession.
Recent US governing regimes have adopted a protectionist approach due to increase in job losses. There has been a rising trend of back-office outsourcing propelled by the globalisation of the economy. Protectionist tendencies incldes the near sanction action reported by Rowley, against the China currency in 2011.
Figure 1: % of Global GDP and Misery Index, United States, 19602008.Figure 2: Expansionary monetary policy.Figure 3: Contractionary monetary policy.
Globalisation of the economy results in inflation depending on the prices of inbound goods (imports) because of competition between imports and exports. This influences the pricing power of suppliers and productivity growth. With a globalised market, those supplying the US with commodities and labour face-off competition-wise because prices and wages are determined within the local and international markets.
Thats why more products found in the US markets (like textile) are from Asian countries because of lower manufacturing and labour costs. Trade competitively lowers prices; but, not inflation. In the past, US tax laws have made it cheaper to produce abroad resulting in a trade deficit.
Thats why China and India have emerged as stronger economic powers driven by trade booms. To address this, the US introduced counter measures like tax laws and declining exchange-rate. The intended effect is to transfer spending power to the rest of the world as redress for trade imbalances. Thus, there is a relative decline compared to the income in the rest of the world. This explains the US trade deficit experiences.
When the US spends highly, the demand curve shift outwards to RDW1; resulting in a higher value (PU/EPT) as the new equilibrium. Thus, the terms-of-trade in the US improve with a rise in exchange to (PU/EPT)1. The higher the transfer (of trade) from the global economy, the greater the increase in the US terms-of-trade.
Other factors like foreign tastes and technology have an effect on terms-of-trade. Preferences for US goods result in right shift in the RDT and smaller upward change in the RDU line. When there is a negative slope, the US stronger terms-of-trade are associated with a broader US trade deficit (TT). This moves US-economy from A to B and the trade deficit from C to D.
Figure 4: Terms-of-Trade.Figure 5: Other Factors Acting on Economic Relations.
China is located in East Asia and it has the largest population in the world. It is one of the largest countries in the world. The population of China is estimated to be 1.3 billion people. The Communist Party of China (CPC) is the sole party that governs China. China is therefore a single-party state. CPC exercises jurisdiction in 22 provinces across China. It is also responsible for monitoring the operations that take place in the five autonomous provinces and the four main metropolitans in China.
China has a vast and diverse landscape. It is characterized by forest steppes and deserts which are found in the northern and central Asia. China also has subtropical forests which are found in the wet regions of Southeast Asia. The terrain of Western China is rugged and raised. China is separated from Central and Southeast Asia by the Himalaya, Pamir, Tian Shan ranges. The Yellow and Yangtze rivers are some of the largest rivers in the world.
They originate from the Tibetan Plateau. These rivers flow from Tibetan Plateau up to the densely populated seaboard in Eastern China. Chinas coastline along the Pacific Ocean is one of the most elongated coastlines in the world. It is estimated to be 14,500 kilometers (Guthrie, 2012).
China has experienced a series of historical manifestations. The Chinese civilization is one of the earliest form of civilization that has ever been encountered in the world. The first civilization in China occurred around the Yellow. The political system of China is also based on monarchies. The early Chinese used to refer to monarchies as dynasties. Dynasties in China came to an end when the Qing dynasty fell in 1922.
The Chinese Civil War took place between 1946 and 1949. During this time, the Chinese Communist Party fought with the Nationalist Kuomintang who had occupied mainland China in order to reclaim China. CCP defeated Nationalist Kuomintang in 1949. After CCP won the fight against Nationalist Kuomintang, it set in place the Peoples Republic of China (PRC).
The establishment of PRC was carried out in Beijing. The Kuomintang was therefore forced to move the Republic of China (ROC) administration to Taiwan. Today, the jurisdiction of ROC is limited to Taiwan only. However, since 1949, both the PRC and ROC have been in dispute regarding the political state of Taiwan. They compete over the ownership of Taiwan (Guthrie, 2012).
Many academicians, economists and analysts stipulate that China is advancing at a dramatic rate. The market-based reforms that were set in place in 1978 by worlds superpowers are the ones that have spurred the dramatic growth of the Chinese economy. By the end of 2011, China was regarded as the second largest economy in the world.
China is ranked number two in terms of import volume and it is the principal exporter goods in the world. It has the largest army in the world. As a result, it is ranked as the second country in the world which allocates the largest budget to its defense force. China is also a well-known for its ability to manufacture nuclear weapons. China has also been able to launch space mission without encountering any difficulties. Today, many economists, analysts and academicians stipulate that China is a potential world superpower (Xiaotian, 2012).
Land Area and location
China is the second largest state in the world. It is located on the east of Asia and borders the Pacific Ocean to the West. It covers an area of approximately 9.6 square kilometers. China has a boundary that is approximately 22,800 kilometers long. Korea borders China to the east while Mongolia borders it to the north. It is bordered by Russia to the Northeast while Tajikistan, Kazakhstan and Kyrgyzstan border it to the northwest.
To the west, China is bordered by India, Pakistan, Nepal, Afghanistan, and Bhutan. To the south, it is bordered by Vietnam, Laos and Myanmar. Chinas mainland shoreline is estimated to be 18,000 kilometers in length. Chinas shoreline is unique in that it has a flat terrain.
In addition, the shoreline has plenty of docks and harbors which do not get covered by ice during the winter season. Chinas mainland is bordered to the east by East China and Bohai. To the south China is bordered by Yellow and South China seas. These seas are estimated to have a maritime area of about 4.73 million square kilometers.
Natural resources
Natural resources are very important in terms of enabling countries to survive in this fast growing world economy. The main categories of natural resources found in China include water, minerals, and favorable climate. Chinas big size has played a very vital role in enabling it to be in possession of different types land resources. The farmland of China is about 122,400 square kilometers. This is approximately 10 percent of Chinas total land area.
The farmland in China is mostly scattered across the plains which are located in northeast China, north China and middle China. Agriculture plays a very important role in improving the standards of living of the people who are located in the plains. The main agricultural products that the people in the plain grow include wheat, corn and rice.
They also grow cash crops which they sell to industries to enable them improve their standards of living. Fresh water lakes occupy an area of approximately 67,500 square kilometers thereby facilitating the production of shrimps and fish products (Xiaotian, 2012).
The amount of rainfall that falls in China annually is estimated to be around 5.9 trillion cubic meters. Moreover, the overall water resources in China are estimated to be add up to 2.7 trillion cubic meters. This state of affairs has made China to be ranked the number six state in the world to be in possession of abundant water resources.
The rivers in China have the capacity to produce 676 million kilowatts of hydropower. China is so rich in minerals in that it has been found to have deposits of all kinds of minerals that are believed to exist in the world. The country has approximately 135 deposits. China has some of the biggest mineral deposits in the world. The biggest mineral deposits that are known to exist in China include the tungsten, antimony, vanadium, magnetite, pyrite, graphite, and barite deposits.
China also has vast land along the mainland coastline which is rich marine resources. The coastline also has pleasant beaches which attracts tourists from different parts of the world. Out of Chinas 280,000 square kilometers of off-coast sea areas, it is said that approximately 260,000 square kilometers is fit for carrying out agricultural practices.
China also has the largest salt pans in the world which have the ability to produce approximately 17 million tons of salt annually. The amount of salt that is produced in China is said to account for approximately one third of the salt that is produced all over the world. China is therefore the principal manufacturer of salt in the world. Since China has more than 2,600 marine varieties, the fishing industry is also very large (China Today, 2012).
Population
China is regarded as the worlds most populated state. By mid-2011, the population of China was estimated to be approximately 1.3 billion people. The population of the world is approximately 6.7 billion people. Therefore, it is true that the population of China accounts for one fifth of the total population in the world.
Therefore, this means that one out of every five children in the world lives in China. However, in 1979, the population of China was observed to decline slightly. This is because the government of China implemented the one Child policy which required people to have only one Child. The goal of implementing this policy was to ensure that the swelling population of China was drastically reduced. It is estimated that the population of China was approximately 563 million people in 1950 (Guthrie, 2012).
Experts stipulate that the fertility rate of China is 1.7. This means that every woman in China has the ability to give birth to at least one child during her lifetime. However, it is argued that the total fertility rate for any stable population is supposed to be 2.1. This is an indication that Chinas fertility rate is below the required minimum.
However, the fertility rate in China is expected to rise in the next decade since there is a high rate of immigration into China. In addition, the infant mortality rate has reduced significantly over the past few years.
Moreover, the death rate in the country has reduced owing to the improvement in national health services and the massive investment by the Chinese government to provide adequate health care institutions. In 2010, the population of China was approximately 1.4 billion people. Experts stipulate that the population of China will reach its peak in 2030. After reaching its peak, the population of China will start declining.
Age structure and life expectancy
China is regarded as one of the most populated countries in the world. Since 1950, the fertility rate of Chinas population has been on a constant decline. As a result, sizeable bulges in the Chinese age structure keep being established. This is because of the social and economic developments that have taken place in China since 1950.
For example, in 1970s, the Chinese government sponsored birth control programs which played a very critical role in bringing down the fertility rate of the Chinese people. Studies show that transition in the age structure of the Chinese people presented a window of opportunity in 2010 when the share of the working population reached 70.7 percent. This led to a drop in Chinas dependency ratio by 4.5 percent.
However, differences in dependency ratio existed between provinces, urban areas and rural areas. However, it is expected that the dependency ratio will start to pick up again in 2015 since the Chinese population will be aging by then. It is therefore important for China to take advantage of the working population in order to enable it to reach its 2020 target of quadrupling its per capita GDP (China Today, 2012).
Many analysts stipulate that the Chinese age and sex distribution is alarming. The efforts by the Chinese government to reduce birth rates in China have been observed to increase the number of males in the country while the number of females is declining slowly. The one child policy forced many parents to strive to have a male child as the only child. This is because many parents in China argue that a male child is more beneficial to the family than a girl Child.
The life expectancy in China has been observed to be on a constant rise since the Peoples Republic of China was founded in 1949. Studies reveal that the life expectancy of the Chinese people was 73 years in 2005.
This reflected a 1.6 percent increase from the previous year. In 2008, infant death rate reduced to 1.53 percent compared to the previous year. This is because in 2007, the Chinese government increased health organizations by 315,000 and spent more than US $144.27 billion to enable it provide adequate health care services to its population (Sinomania, 2010).
Ethnic groups
China is a large multi-national state. It has 56 ethnic groups. The Han is the largest ethnic group in China. These people account for approximately 91.59 percent of the entire Chinese population. The other 55 ethnic groups account for the remaining 8.41 percent. The different ethnic groups in China are widespread in the entire Chinese territory. They live in individual societies. Since the Han people are the majority, they are found to be present in any part of China.
The Han group is also famous for being the largest ethnic group in China and in the world. The other 55 ethnic groups in China are distributed evenly throughout China. The regions whereby the other 55 ethnic groups in China are normally concentrated include Northwest China and Northeast China.
In order to ensure that peace prevails among the different ethnic groups in China, the Chinese government introduced policies whose goal was to foster equality among all the ethnic groups living in China. These policies were meant to ensure that the different ethnic groups in China respected others peoples beliefs, culture and faith (China Today, 2012).
Religion
There are four major religions that are observed in China. They include Catholicism, Islam, Taoism and Buddhism. All the residents of China are free to choose any religion that they wish to follow. Studies reveal that there are more than 100 million people who follow these different religions that are found China.
There are more than 85,000 sites where the religious people conduct their religious activities. The total number of religious organizations in China is three 3,000. In addition, the number of clergymen is approximately 300,000. Moreover, it has been observed that the different religious organizations in China usually set up learning institutions such as colleges in order to assist the less privileged members of the Chinese society to acquire quality education. The total number of religious schools in China is 74.
Buddhism is said to have been introduced in China more than 2,000 years ago. The Buddhists have established more than 13,000 temples to enable them to carry out their religious activities more effectively. In addition, there are more than 200,000 monks who live in the temples.
On the other hand, Taoism is said to have been in existence for approximately 1,700 years. Taoism is the second largest religion in China and has more than 1,500 temples. In addition, there are more than 25,000 Taoist priests and nuns who reside in the temples. Islam and Catholicism were introduced in China in the 7th century. There are approximately 18 million people in China who believe in the Islam faith and there are more than 4 million Catholics (Guthrie, 2012).
Language
The formal language that is spoken in China is referred to as Putonghua. However, not all people in China are able to speak the language. Studies reveal that only 53 percent of the people who live in China speak Putonghua. It is said that there are more than 200 languages that are spoken in China. These different languages cause problems to the foreigners who visit China and other Chinese who live in different parts of the country.
The different languages in China are said to be written in a similar manner. However, the different languages spoken in China pronounce the different characters differently. As a result, many Chinese often communicate by passing notes to each other in order to ensure that they communicate effectively with their colleagues. People in China are therefore encouraged to learn Putonghua in order to make it easy for them to communicate effectively with each other (China Today, 2012).
Chinese society and culture
China is regarded as the worlds largest society. It is characterized by a set of values and institutions. The Chinese practice different languages and they relate differently to their environment. Their cultural practices are also different. For example, it is very difficult for people living in the south to understand a speech that is made by a person who comes from the north and vice versa. Research indicates that the Chinese society has experienced significant changes in the 20th century (Sinomania, 2010).
Are Chinese collectivists or individualistic?
Chinese people are regarded as collectivists. This is because they mostly pay special attention to family and work group goals. They lay less emphasis on individual desires or needs. There are various traits that the Chinese portray which demonstrate that they are collectivists. Chinese encourage each other to be active players in their society and to put the needs of their nation ahead their personal desires.
The rules that are set up by the different societies in China are usually aimed at promoting obedience and order. People in China also believe in the spirit of cooperation and they give their colleagues support whenever they get stuck while undertaking any activity. In addition, the citizens of China usually identify themselves as a community.
Power distance
Power distance is a concept which illustrates the manner in which different kinds of inequalities in a society are handled. It targets intellectual, power and wealth inequalities. In China, inequality in wealth and power is very high. As a result, people in China play different roles depending on the positions that they occupy in the society (Mathilde, 2008).
Uncertainty avoidance
Uncertainty avoidance refers to a situation whereby different cultures devise certain rules that can enable them to handle certain ambiguous situations that challenge them. However, the Chinese are said to have a lower need for uncertainty avoidance. This is because they avoid many formalities and rules while conducting their daily activities.
Masculinity/ Femininity
The Chinese society is regarded as Chauvinist. The roles that men and women play in the society are very different. Men are the ones who take up most leadership positions. On the other hand, the roles that women play in the Chinese society are limited. In addition, studies reveal that the status of women is inferior in the rural areas (Mathilde, 2008).
Economic environment and government type
The Chinese economy is very big. It is also expanding at a high rate. Experts argue that the rate at which the Chinese economy has grown is miraculous. Chinas GDP has been growing at a steady 8 percent per annum in the past 30 years. Today, the Chinese economy is growing at a rate that is 10 times higher than it was growing in the 1970s.
Studies show that Chinas GDP averaged US $ 3.42 trillion in the last quarter of 2007. Analysts predict that China will be the largest economy by the end of the 21st century. However, though the Chinese economy is one of the best performing economies in the world, income inequalities still prevail among the Chinese people. The per capita income in China is approximately US $2,000 (The Economic Times, 2010).
The type of government in China is regarded as Communist. This is because it is the role of the government control and plan for the economy. The government strives to ensure that private ownership of property is eliminated and that people share all the resources in the economy equally. Moreover, China is also regarded as a single-party democracy. This is because there is only one political party that governs the country.
Macro and micro factor analysis
GDP
Gross Domestic Product (GDP) refers to the rate at which the value of goods and services produced in a country change within a given time period. 30 years ago, China was a centrally planned economy. However, China has gradually shifted from being a centrally planned economy into a market oriented economy.
This has made the private sector in China to experience significant growth. The growth of the export industry has played a critical role in enabling China to realize significant growth in the past 30 years. In the last quarter of 2011, the GDP of China was estimated to be 10,799.5 billion Yuan.
This value indicated an 8.1 percent increase from the first quarter of the year. Moreover, the value added by state owned enterprises increased by 7.2 percent. The enterprises that are funded by private investors from Hong Kong and Taiwan gained value by 6.4 percent compared to the previous year (Trading Economics, 2012).
Inflation rate
Inflation refers to the persistent rise in prices of goods and services thereby making the purchasing power of the residents of a nation to drop significantly. China is said to have recorded a 3 percent inflation rate in May 2012. However, the inflation rate of China was 5.5 percent in 2011.
Studies show that Chinas inflation rate has remained constant at 4.3 percent from 1994 to 2012. However, in October 1994, the inflation rate rose to 27 percent and in March 1999 it dropped to -2.2 percent.
The Consumer Price Index (CPI) is the widely used mechanism to measure inflation rate. Studies reveal that the Consumer Price Index in China went up by 3.0 percent in May 2012 compared to the previous year. This state of affairs made prices to rise by 3.0 percent in urban areas and 2.9 percent in the rural areas (Trading Economics, 2012).
Unemployment
Unemployment refers to the number of people who are able and willing to work at the prevailing wage rates but they are unable to secure jobs. It is said that in 2010, 25 percent of graduates were unable to secure jobs in China. Most organizations in China stipulate that one of the major challenges that they face is the ability to find and retain talent. The level of joblessness in China was estimated to be 6.1 percent in 2009.
The level of unemployment in 2009 was a drop from the 6.3 percent which was observed in 2008. In the beginning of 2012, China reported a 4.1 percent unemployment rate. However, studies reveal that the unemployment rate in China has been constant at 4.15 percent from 2002 to 2012 (Economy Watch, 2010).
Chinas Exports and Imports compared to other countries in the world
China is employing a lot of effort to enable it become competitive in the global market. After entering World Trade Organization in 2002, China has made a significant contribution to the world market. Studies show that Chinas exports in 2010 reflected an average of US $1.194 trillion. Chinas main products that China exports to the world market include electrical goods, machinery, apparel, iron, and steel. The major countries where China exports its products include United States, South Korea, Hong Kong, and Japan.
On the other hand, Chinas imports in 2010 were estimated to be $ 921.5 billion (Economy Watch, 2010). The main products that China imports include machinery, oil, mineral fuels, organic chemicals, and electrical components. The major countries where China imports its goods from include Japan, South Korea, and Germany.
What investors should know before opening up businesses in China?
Restrictions
There are certain restrictions that are imposed on companies that conduct their operations in China. For example, China imposes high tariffs on foreign organizations. This makes the foreign companies to perform poorly despite the high rate of growth that is being observed in China. China lowers quotas and tariffs for those companies that it has close business relationships with.
Moreover, China imposes restrictions which limit foreign organizations from interacting with certain crucial industries in China such as health care, energy, and financial organizations. In the case of those companies that are involved in mining, transportation and power generation services, the government of China selects the best performing local companies to perform the operations. This action by the Chinese government prevents the foreign companies from competing effectively with the local companies.
Legal framework
Studies reveal that China has implemented a complete legal framework in its main aspects of social, economic and political life. It is therefore important for investors in China to ensure that they abide to all the rules that are set in place in China. This would ensure that their business perform optimally without any interference from the state. All foreign organizations should also ensure that they abide with the rules and restrictions set forth in order to enable them to boost their competitiveness in the country.
The legal system in China is based on Civil law. However, the legal system is normally under heavy influence of the traditional Chinese law. It also incorporates certain aspects of the German and Japanese law. It is the responsibility of judges to interpret the law depending on cases that are presented before them. Courts are not allowed to make any decisions that conflict with the policies that are set in place by the Communist Party.
The process of publishing court cases in China is normally under heavy influence of politicians. However, some cases are published in order to provide foreign investors with sufficient information regarding the rule of law in China.
The published cases also help the government in setting up policies that regulate the activities of foreign investors in China. Foreign investors in China are therefore required to ensure that they understand the Chinese legal system fully in order to enable them to conduct their business activities smoothly.
Chinese Business etiquette and Protocol
Communication
It is said that Chinese do not like to carry out business activities with organizations that they do not have enough information about. Foreign organizations are therefore encouraged to talk an intermediary in order to facilitate their communication with companies in China.
Companies that desire to carry out business activities in China are required to submit material that is written in Chinese language. The written materials should describe the company, its history and the products that it offers. Chinese do not entertain gender bias while carrying out business activities. Moreover, investors are required to understand that Chinese prefer face-to-face communication as opposed to telephone or written communication (Williams, 2012).
Business negotiations
While conducting business operations in China, only the senior members who represent a foreign organization are allowed to speak. The business negotiations are carried out at a slow pace in order to ensure that all parties reach an agreement collectively. If the Chinese are not interested in transacting business activities with a certain organization, they usually say that they will think about the negotiations.
In addition, the Chinese usually take a long time to make decisions because they believe that all decisions must be carefully reviewed and considered before they can be implemented. A person is also required to remain calm while negotiating with the Chinese (Williams, 2012).
China relations with UAE
China and United Arab Emirates established diplomatic ties in 1984 in order to foster trade between them. Since then, trade between the two countries has been on a constant growth. For example, the trade between the two countries exceeded $ 19.4 billion in 2007. This reflected a 41 percent increase from the previous year.
It has also been noted that there are approximately 2,000 Chinese organizations that operate in the UAE. Moreover, it has been noted that there are many Chinese who work in the construction sector in UAE (The Economic Times, 2010).
Studies reveal that UAE ranks as the second largest country trades with China in the Gulf region. As a result, UAE is regarded as Chinas most valued trade partner in the Gulf region. UAE serves as an intermediary because it facilitates in the transfer of products from China to Africa and Middle East markets. The close relationship between China and UAE has therefore played a major role in enabling the two nations to become competitive in the global market.
The main products that China exports to the UAE include handicrafts, machinery equipment, clothes and apparels, textile products and products that are made from silver, gold, tin and copper (Guthrie, 2012). On the other hand, the main products that China imports from UAE include petroleum and natural gas. This is because China is the worlds largest consumer of energy. Therefore, since UAE is a major oil producing country, it is able to assist China meet its energy demands.
China is the principal exporter of goods and services to UAE. Chinas exports to UAE account for almost a quarter of UAEs total imports. For example, in 2009, Chinas exports to UAE were approximately Dh 47.8 billion. In 2011, it is estimated that the bilateral trade between China and UAE reached 32 billion dollars.
This was a 38.6 percent rise from the previous year. The exports to UAE were 24.3 percent in 2011. This was a 24 percent increase compared to the exports that were made in 2010. On the other hand, the imports from UAE to China stood at 7.6 billion dollars. The exports by UAE to China rose by 88.9 percent compared to 2010s exports.
It is said that there are approximately 200,000 Chinese citizens who live and work in the United Arab Emirates. The Chinese citizens residing in the UAE have made a significant contribution to the development of infrastructure, energy and trade in UAE. The free trade agreement between China and UAE is the one that contributed to the intense growth in the trade between the China and UAE (The Economic Times, 2010).
References
China Today. (2012). General Information of the Peoples Republic of China. Web.
Economy Watch. (2010). China Trade, Imports and Exports. Web.
Guthrie, D. (2012). China and Globalization: The Social, Economic and Political Transformation of Chinese Society. New York: Routledge.
Sinomania. (2010). How China Trade Affects You and Your Business. Web.
The Economic Times. (2010). India, China dominate exports to UAE. Web.
Trading Economics. (2012). China GDP Growth Rate. Web.
Williams, D. (2012). China Business Etiquette, Culture and Manners. Web.
Xiaotian, W. (2012). China Plans New System to Facilitate Cross-border Yuan Use, Improve Trade. Web.
