globalEDGE International Business Blog

One of the critical factors of having a large, successful international operation is having “feet on the street” in the country where multinational companies do business.  Recently, an article from ChinaDaily.com featured some staggering statistics about expatriates and the duration of their stay in the country.  Although business demands often dictate relocation by executives and their families, is this the most efficient use of resources?

According to the article, between 30 and 50 percent of expatriates who relocate to China go home before their anticipated departure date. Not only is this fact alarming, it brings to light the importance of understanding how culture impacts things beyond just product design and marketing.  Some might argue that this is just a natural attrition rate for executives who are placed in a new environment, and often, have new responsibilities.  Others might argue that the executive who took the position is responsible for understanding these changes before taking the job.

Regardless of which side of the argument you place yourself, this phenomena must be addressed and understood by multinational companies.  What is driving the early departure?  What are the most important challenges that need to be addressed by the multinational to improve international relocations?  Why do executives feel compelled to take on the challenge, but later feel comfortable reneging on their commitment?

To me, it is the responsibility of the multinational to take on the problem.  Although there are always going to be alterations to the original plan, the fact that some of the most valuable employees are unable to hold their original commitment demonstrates an underlying problem with the Human Resources Department.  Not only is it not efficient for employees to change locations and jobs more quickly than planned, it forces the company to backfill their role and continue the cycle.  Key constituents of these multinationals, namely the investors, should view operations such as this as insight into a potential shortcoming of core business functions.

It is well known that the auto industry has taken a hit across the globe. With sales and production down and several plant closures, it seems that things are looking grim. However, several Japanese automakers are thriving, not internationally, but in China.

China has just recently launched its brand new Growth Enterprise Market, a Nasdaq-style stock market that has been over 10 years in the making. Twenty eight small- and medium-sized companies will be debuting on the Gem as it is called, made to attract financing of new high growth industries. These industries include software companies, pharmaceutical firms and creative industries. But investing in these companies will be risky business, since there will less than 30 companies to begin with.

Poultry has been traded globally for years. Each individual country can not possibly produce everything it needs, making this trade a necessity. Of course, that does not mean that there hasn't been any problems. There are several past examples of poultry trade gone wrong, but as a result standards are higher, making trading less of a risk.

In 2004, China and the United States had a major rift in their chicken trades and there has been tension ever since. The initial problems were a result of the bird flu outbreaks. Following that, both countries temporarily banned the trade of poultry from one another. Soon after, China lifted their ban, but it was another two years before the U.S. followed suit. Around the same time, Thailand chicken exports were suffering because several countries refused to buy their chicken because of past outbreaks, even after the products have been inspected and deemed safe. It seems that there will always be tension over poultry trade.

Gary Locke, now a prominent figure in the U.S. Government is charged with the responsibility of forming U.S. Commercial policy across the globe.  Gary is a recent appointee into the Obama administration and career politician.  Prior to his current position, Mr. Locke served two terms as the governor of Washington.  Given his new role, the obvious question becomes: How will Mr. Locke’s policies impact global trade?  Here are two points to consider:

A recent ruling by the World Trade Organization (WTO) has those in the U.S. entertainment industry rejoicing. The ruling would force China to open the channels of distribution to free enterprise. This means that those from the U.S. in the entertainment business will be have their work distributed in a manner which should yield more profits. The ruling will play a major role in the complex relationship between China and the U.S. entertainment industry.

Sadly, this is the final chapter in our China and America blog series. We hope you enjoyed learning the many different aspects that make the U.S.-China relationship one of the most important in this day and age for the current global business climate. This especially holds true for the energy sector.

Anyone who has engaged in cross-cultural business knows that spending a little bit of time to understand the other culture will go a long way towards producing business success.

This is especially true in China, where business relationships usually require some form of personal relationship. In this country, business partners typically go through a long process of “courtship,” which will likely entail banquets and other events aimed at getting to know each other on a personal level, as well as a string of meetings where business progresses at a snails pace. This process is vital from the Chinese perspective, as the nation’s cultural values emphasize long-term relationships and prosperity over quick, impersonal deals.

This is the 2nd post in our series highlighting the economic relationship between the US and China. Today, we discuss trade.

China has three main goals it weighs when considering where to invest its vast sums of money. Those goals are “safety, liquidity, and profitability - in that order.” For many years, the result of this strategy has been to invest heavily in U.S. Treasury notes. As the Middle Kingdom’s coffers began to fill with dollar-denominated debt, the financial well-being of the entire nation began to be increasingly tied to the strength of the U.S. dollar. So it should not come as a surprise that declines in dollar value that have occurred in recent years have been met with consternation by the Chinese.