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Asian Business Spring

Category: Economics 10th September 2019

Free essayIn the first part of the work, attention is paid to the question about the best business environment. First of all, it is necessary to choose the set of criteria that an Asian Business consultant will use during the investigation of the business environments in Indonesia, Thailand, South Korea, and Vietnam. So, since the company is the producer of automobile parts, it is important to explore the automobile market of each country as DWI will be able to find new partners in such area. Apart from this, the company intends on exporting its products to the USA and selling them in the South Asia and Asian markets. Thus, it has a sense to research the geographic position of countries, the domestic policies, and relationship the said state has with India, the United States, and South Asia.

The second part of the work includes analysis of all the advantages India and China have over others. The current economy situation in both countries is researched, and their main advantages and disadvantages have been revealed. As for the question about the better future, prior to actually answering it, a lot of the information has been analyzed and it has been possible to choose the country on the basis of these facts.

Question 1

The Republic of Indonesia is one of the emerging countries in the South Asia; and it has the largest economy in this region. Also, it is needed to pay attention to the fact that Indonesia is a member of G-20 major economies because the growth of the state economy accelerates to over 6% per year. The increase of gross domestic product is from $ 2,678,664 to $ 6,422,918 in period from 2005 till 2010. This macroeconomic characteristic shows that the country develops. Furthermore, a middle class in Indonesia is increasing as a result today; it is a significant consumer force in the Indonesian market. If the company enters a new market, it should explore all the abilities of this market. First of all, it is connected with customers and partners, labor, investment capabilities, and land resources. Clearly, the main clients of the producer of automobile parts are automobile companies, notably, automobile factories. Nowadays, General Motors, Toyota Motor Corporation, and domestic automobile companies have their automobile factories in this country because there are cheap lands and low wages for workers. However, the Republic of Indonesia is transforming from the great production center of automobiles to the great car sales market. The reason of this is the rising GDP per capita that has reached over $ 3,500 in 2012. It is necessary to underline that foreign investment has recently increased in domestic automobile companies because the domestic car sales reached a record high-level of car units. Also, Indonesia has a good relationship with the United States. The last one is one of the main consumers of Indonesian export. 9, 3 percent of the total export referred to the USA in 2010. As for India, it has also friendly relationship with Indonesia. If the company DWI intends to export their production in the USA, this state will not put tariff or nontariff barriers for such products since the USA has friendly relationship both with Indonesia and India. Furthermore, America is one of the greatest automobile producers, and such goods as automobile parts are a necessity for the American automobile corporations. In addition to all the information above, Indonesia is the island country that lies between the Indian and Pacific Oceans. So, the delivery of the products into the USA and South Asia will be realized using the sea transport. One of the greatest advantages of this country is the size of its area. This country is the biggest one in this region. Hence, the company DWI will be able to set up the factory in the fit place. The greatest advantages of Indonesia are a lot of cheap land, cheap labor, and a large number of automobile companies. As for disadvantages, Indonesia is the island country, so there can appear a range of troubles with delivery of goods in the foreign markets. Besides, the state has a great level of corruption and it can prevent DWI from setting up.

The Kingdom of Thailand is a country with population of 66 million of people that is located in the center of the Indochina peninsula. Among all the above mentioned countries, the Kingdom of Thailand has the best location. Needless to say, it is the nearest to India and China. Thus, delivery of technology and materials for factories from India and distribution of finished products in the South Asia and Asia will be cheaper than if the factory is located in another country. This state is a newly industrialized country and has an emerging economy. Today, Thailand is a major exporter since the export is more than two thirds of the Thailand GDP. In 2012, the increase of the Thai economy reached 6,4 percent per year. The main sectors in the Thailand GDP are the industrial and service sectors. The agricultural sector is also seen as one of the main, but it is necessary to underline that this sector shares only 8,4 of the GDP this year. The Kingdom is the second largest economy among the countries of the South Asia. The Thai automobile market is much developed comparing with Indonesia. Today, Thailand is called as “Detroit of Asia”. Such automobile giants as General Motors, Ford, Toyota, Honda, Mazda, Volvo, Mercedez-Benz, Nissan Volvo, and Yontrakit Motors have their factories in the territory of the country. This fact means that the DWI can find a lot of clients in the Kingdom. It is important to take into account that the majority of the said automobile companies are American, so the Indian company will have abilities to negotiate the contract with these enterprises about the delivery of its goods. However, the majority of the automobile factories produce pick-up, light, and medium tracks since these types of the automobile are the most useful in the South Asia in connection with bad roads in the region and tax policy of Thai government. For this reason, the top management of the company should think over its product line in detail. Thailand has friendly relations with the USA, India, and the countries of South Asia. However, the receipt of the license for import of these goods is required. That is connected with the equipment for automobile factories or materials for the manufacturing of automobile details or parts; they are free from the import license. So, if the company decides to deliver materials for the manufacture from India, it will not meet trade barriers.

If to sum up all the information about the business environment in Thailand, such advantages as good location in the Asia region, a large number of future clients, increased state economy, and non-trade barriers may be distinguished. The set of disadvantages includes such facts as the following: 50% of the population is the labor force and 37% of it is employed in the agricultural sector; the majority of industrial enterprises are located near Bangkok; small area of the country, as a consequence, land is not cheap; the raising foreign debt of the country that makes the government boost the business taxes.

The Republic of Korea is one of the most developed countries in the Asia region. The standards of living are very high there. The country is located on the Korean Peninsula. Such countries as China, North Korea, and Japan are neighbors of South Korea. So, if the DWI factory is located in this region, the company will be able to distribute its products to the Asia and US markets easily. However the distribution of its goods to the South Asian automobile market will have some obstacles since the delivery to the last said market will occur through automobile or sea transport. If the company chooses the first variant, it can be expansive, but quite fast; if it chooses the second alternative, it is cheaper, yet quite long. The same troubles concern materials and techniques for the products manufacturing of the Indian factory. The owner of the company has no alternatives regarding the choice of the investment alternatives. It is important to pay attention to the relationship between South Korea and North Korea. Today, the relationship between these two countries is problematic. However, in 2012 the president of South Republic declared the firm resolution concerning their improvement. Furthermore, the Republic of Korea is the producer of nuclear arms. Due to this reason, the relationship between the Republic and the USA is strained. Moreover, both countries began military training exercises in March 2013. Such foreign relationships of the Republic show that the present policy problems are adverse for starting the business that tends to export its products to the USA. Clearly, the government of the United States imposes different trade barriers for the import of the South Korean goods. Furthermore, the labor in the Republic of Korea has high wages since it is well-educated, and the company will incur the high costs of the privet real estate. The automotive industry of this country is the fifth-largest in the whole world regarding the automobile unit production. The Republic of Korea is one of the most advanced automobile-producing countries. However, it is important to underline that only Asian automobile companies such as Hyundai Motor Company, Kia Motor Company, GM Korea Company, Tata Daewoo, Oullim Motors, and Ssang Yong Motor Company have their factories on the state territory. If to make all the pros and cons, opening the factories will be a great mistake of the DWI owner. Nowadays, South Korea has no perfect business environment for foreign companies.

The Socialist Republic of Vietnam is situated on the East of Indochina Peninsula and borders with such countries as China, Laos, and Cambodia. Clearly, DWI will have some problems with the delivery of all the needed equipment for the factory from the domestic country. However, if the company intends on entering to the South and East Asian markets with its products, it will be possible and quite easy since the good country location will assist in this activity. The economy of this country is stable and increasing, and standards of living are improved, yet they are not the same as in Indonesia or Thailand. This country is agricultural, and the main part of the labor force works in this sector of the economy. Vietnam export consists of agricultural items. However, it is necessary to note that automotive industry develops in the Republic because a lot of Asian and American companies such as Daewoo, Ford Motor Company, Mitsubishi, Toyota, Nissan, and Hino Motors produce their goods in Vietnam, but the majority of these companies manufacture motorcycles to great extent. If to compare these two industries, as a result, it can pay attention to the fact that the automobile market has a smaller size and its growth rate is lower. However, the automobile parts are among often imported items. This fact means that the company’s items will have quite a high demand in the Vietnam market, and the competitors are not strong because they cannot satisfy the demand on the domestic market. The Republic has friendly relationship with India and the United States, and it is in the neutral relation with China. Thus, the set of the main Vietnam advantages consists of the stable politic system, cheap labor, and a large number of automobile companies. The main disadvantage is the location of country and sluggish growth of economy. As a result, the Socialist Republic does not have a middle class.

If to summarize all the information above, consequently, the following situation can be seen. Today, South Korea does not have a convenient business environment for the Indian company with the above said goals. Thailand is not that place since the owner of small factories will incur expenses with wages for labor and cost of real estate. The DWI owner should think over about Indonesia or Vietnam. Before choosing one of the alternatives, he should make a good SWOT-analysis to appreciate all the company capabilities. Furthermore, DWI should extensively focus on creating clear goals for this factory.

Question 2

The People’s Republic of China and India are the giants among the emerging market countries. Over the third of the world’s population is accounted in these states, and these two countries could extremely influence the global economy even if their growth rates were not high. Nowadays, both countries compete for the title of the most developed country in the Asian region. This competition began over 20 years ago. In the recent 10 years, India and China have also been among the fastest growing economies in the whole world. Since 1995, China’s average income has increased ten times, and the Indian average income has increased nearly four times. However, such results have been achieved, using not the same political and economic systems. Today, the government’s statistics of the countries shows that the income of millions people have risen above the poverty line. However, it is necessary to underline that the inequality of incomes and environmental damage have also risen. So, if to take all the information above into account, the emergences of China and India have extremely serious implications for the rest of the world. Furthermore, it is important to note that China and India have completely different paths of development. The China’s economic model is based on the orientation of its manufacturing for export to all other states in the world. The integration of India with the rest world is intensified more and more, although domestic demand and services are at the heart of India’s economy. Consequently, the rest of the world can see such a situation when China becomes the workshop of the world and India is one of the main countries that create IT services and technologies. In addition, the growth rate of India is not so impressive comparing to China, but India has been able to achieve success in industries ranging from petrochemicals to software on the world stage. China’s goods are everywhere in the world. The range of these goods is very wide, beginning from T-shorts and air conditioners to component parts for IPod. The said items people buy all over the world. On the contrary, the Indian engineers are engaged in automatic processes in offices and pharmaceutical companies produce generics for customers from the whole world.

Today, it can be seen that these countries have chosen the way to the success and such growth by their own way. Having analyzed all the information about these two states, the greatest success might be achieved by India since it has quite stronger advantages over China. First of all, it is necessary to pay attention to the political situation in both countries. The Asian scholars suggest that the main advantage of India over the China is its soft power. The last 20 years for India have not been easy since politic situation has been unstable. The state has been managed by different political muscles. However, they had a single goal, as a result, and the rest of world knows the country as a strong competitor of China. Also, it is important to note that Indian politics is well-aligned with regional standards. The social and political systems are based on them. The People’s Republic of China has the intolerance of political pluralism, and whole world knows this evidence. India is much politer comparing to China as its domestic habits and ability to find a compromise are appreciated by the rest of the world.

Clearly, China started her reforms earlier; as a consequence, today the level of income in the country has surpassed India. However, this state is the greatest exporter of goods in the world. It is also the main disadvantage of the China economy since the state economy extremely depends on the global economy. China has suffered from the last international financial crisis in the greater extent than India. It is connected with the fact that the global level of demand for the Chinese goods was down since the human payment capability was down also after the global crisis. It is needed to note that 100 million of people were employed in the manufacturing industry. It can be supposed that the time stability of the Chinese miracle expires.

Nowadays, India and China are the best countries for foreign investments in Asia, and each government does all for the attraction of foreign capital into their countries. As a consequence, China has much more investment in its economy and it has started to be dependent on the foreign capital. However, it is not correct and the recent financial crisis has showed that.

Thus, the set of advantages of India is wide and it can be ranged for very long. However, the main disadvantages are still the same. The Republic of India is relatively poorly integrated among the East and Southeast Asia, and government has to create a set of required reforms. The country where one fifth of the state population live below the poverty line and one third of people still remain illiterate will not live well. In this context, China is a much stronger country. Despite this, both states are fighting against poverty. In India, the number of people who live below the poverty line declined from 33% to 22% from 1993 to 2009. In China, more than 400 million of people have been out of poverty since the reforms began. It is necessary to note than the population in India has grown in the recent years. Today, nearly 50% of Indian population consists of the youngsters before 25 years old. So, the state should provide the young labor force with good opportunities for employment. In order to do it, the government of the country requires a number of social reforms. First of all, it will be necessity to improve such areas as education, health care, and the regulation of labor intensive industries. Furthermore, one of the greatest problems in India is a high level of corruption. China does not have this disadvantage. As a result, it is not so corrupt, and this has promoted the faster growth of the People’s Republic.

If to sum up all the information above, it is necessary to note that China is a more developing country than India at this moment since India has not implemented the necessary social politics. Secondly, the country needs some hard and fast rules regarding corruption. The state should do everything possible to eliminate it not only in the everyday life of average people, but also in the top echelons of the power. If the country is able to fight its main problems, India will fill the China’s place in the world. This country has all the abilities to be the first in the Asian region since it tends not to be the first in manufactures, but it tries to be the first in the services. The latter area of business is appreciated more than production. China has staked on the cheap labor, and India has staked on the well-educated cheap labor. This difference draws attention of main foreign software producers to Indian specialists; consequently, it provides the attractive foreign investment to the country.

Conclusion

Writing this essay required learning a lot of information about the Asian region. It is possible to claim that this region has developed in last ten years. The countries of South Asia have a perfect business environment for doing business with foreign companies. The most developed economy of India seems to be most impressive. Till 2020, this country will be able to influence the global economy and monetary system, and in some years India will compete not only with China, but also with the USA. However, it will be possible if the government creates and applies correct social reforms.

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