globalEDGE Blog - By Author: Matt Smith

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.

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.

This week we will be posting a series of blogs examining the increasingly important economic relationship between China and the United States. We will cover a variety of topics, ranging from trade, to high finance, to manufacturing. We hope you enjoy it!

The U.S. commercial service specializes in helping U.S. businesses expand internationally. Recently, they posted three interviews on their website which focus on business opportunities in India. If you are even considering India as a potential market, you should take a minute to learn from the experiences of people in these interviews.

One of the more interesting subplots of the environmental movement that has popped up lately is the potential of lithium-ion batteries to replace gasoline in automobiles. Lithium-ion batteries are lighter, more energy dense, and lower-maintenance than some of their more conventional counterparts.

U.S. and Peruvian exporters received good news last February, when a new trade promotion agreement between the countries took effect. The agreement has a number of upsides for both countries, such as the fact that 80% of U.S. goods exported to Peru now enter duty-free.

Check out this interview from the International Trade Administration for more details on how your business can take advantage of the agreement.

You can also learn about other trade agreements with Latin America in this interview from the Small Business Advocate

Russia has endured a long courtship period with the World Trade Organization - 16 years of talks and counting - yet official membership has always remained just out of reach. There are currently 153 members in the WTO, ranging from Albania to Zimbabwe. Russia is now the only BRIC country not to join, and is by far the largest economy of all the world’s non-members.

In response to the growing need for globally-minded business leaders, more business schools are now offering international MBA programs. The easy way to create such a program is to throw in a few international business courses into the school’s core curriculum. Yet many of the top American b-schools wouldn’t exactly be “international” if they basically stuck to the same curriculum while catering primarily to American students on U.S. soil. More and more schools are now courting foreign students, and some are even transplanting faculty and students alike to sister schools abroad. A recent article by Latin Trade encapsulated the trend very well.

The International Trade Association launched a great blog last month, which you can check out by clicking here. The blog offers information on how trade can help your business, trade policy, and general awareness of topics within trade.

We wanted to let you know about a free webinar that will focus on how your company can take advantage of trade agreements to maximize its bottom line. The webinar will take place on June 2, at 2:00 EDT, although registrants will be able to access the event at any time after that date. Registration is available here.

How can a used car be worth more than a new car? How can a car increase in value the second it is driven off the lot? The answer is that these events only happen in Venezuela. The UICIFD Blog recently had a post about this strange phenomenon in the Venezuelan car industry. 

Be sure to check out our blogroll to read other great blogs.

If you think the financial crisis is throwing a wrench into your business plan, try running a distillery in Nepal. This article by Forbes tells the story of the Himalayan Distillery Group Ltd., or HDL, and their struggle to run a profitable business in the face of corruption, power outages, and kidnappings.

“Bailout” has become an all-too-familiar word as of late, but a Russian auto industry bailout brings an interesting (though not entirely positive) twist to the dreaded word. The goal of this particular bailout is aimed more at social stability than in creating a leaner and more competitive industry for the future. The Russian bailout will focused ensuring employment of autoworkers by avoiding layoffs - in spite of plummeting demand.

It was easy to run a profitable outfit when the Chinese economy was booming. Double-digit GDP growth, combined with strong demand for cheap Chinese exports fueled a tidal wave of successful startups. Investors shoveled tremendous amounts of capital into these young companies, but many were more concerned with “getting into China” than with investing in a particular company. As a result, many companies that would not have been financed during low-growth periods were given a shot.

The globalEDGE team is constantly striving to improve our site and develop valuable new content for our users. To that end, we created the first online edition of the International Internships Directory. The Directory is a reference guide for students, faculty, staff, and administrators to help match students with international internship opportunities offered by two- and four-year colleges and universities, governmental agencies, non-profit groups, private organizations, and corporations.

We hope you enjoy this new feature, and please let us know if you have any suggestions on how we can improve globalEDGE.

Could the winds of globalization be changing course? It’s probably too early to tell, but there are some pretty striking statistics that suggest the global trade climate may be changing.

The global economy has never before been so tightly interwoven between countries, and the current recession is clearly anything but typical. As consumers around the world tighten their belts, producers naturally trim their output. This scenario is playing out in nearly all countries, but the rate of change between exports and imports varies greatly from country to country. The magnitude and direction of these changes could have drastic implications for the future of globalization.

The University of Pennsylvania produces a great publication called Knowledge at Wharton, which provides in-depth analysis of current business topics. They recently came out with a 17-page Special Report on the affects of the oil bust on Middle Eastern economies. It covers several topics ranging from the region’s Sovereign Wealth Funds, to women’s rights, to business transparency.

Airline passengers in North America and Europe have increasingly demanded lower-priced fares, often at the expense of more comfortable accommodations. Our desire to snag the lowest rates has been aided by a proliferation of websites that allow consumers to compare rates between carriers.

Imagine you take a bag of flour from a store shelf. In the time it takes you to make your way through the check-out line, the cost of that flour may have increased 15%. This was the situation in Zimbabwe a few years ago, but unfortunately things have only gotten worse.

Microfinance institutions such as Grameen Bank have been tremendously successful in granting impoverished entrepreneurs access to small amounts of capital. The ability of these loans to improve the lives of their recipients made them a humanitarian success, while the incredible payback rates have made them a financial success.

A while back I wrote a post on the recent upsurge in piracy. At the time, a Saudi supertanker carrying $100 million in crude oil had just been commandeered, and the global shipping industry was unwillingly thrust into news headlines worldwide. In the end, the tanker was released for an undisclosed ransom, but the incident served as a catalyst for discussions on how to deal with the threat of piracy.

Navies from around the world have responded by sending ships to the coast of Africa to stave off attacks and hunt down the buccaneers. Even Japan sent forces to the region in a rare, post-WWII military action. The pirates are operating in an area larger than 1 million square miles however, making it nearly impossible for these forces to ensure the safety of shipping vessels. Shipping companies, consequently, must address the question of how they will manage the risk of piracy.

The world is shifting at an incredible pace. This video provides some shock value by showing just how dramatic some of these shifts are. Enjoy!

The Middle Kingdom has long been the up-and-comer among the world’s economic powers. The nation saw year after year of double-digit GDP growth, fueled by a strong manufacturing base and high demand for its relatively cheap exports. The global economic crisis has not passed over China however, and it now seems that the nation is being forced to slow its plans for growth.

We live in a world full of advertising. We see it on billboards, on TV, in the newspapers and online. The last time I went to the grocery store there were even LED advertisement screens hawking goods at the end of every checkout lane. Is there no place sacred anymore?!

The latest event in a recent upsurge in pirate activity off Africa’s coast was also the biggest attack yet. A Saudi Arabian supertanker carrying $100 million worth of oil was commandeered by pirates 450 nautical miles away from the Kenyan coastline. This attack was unprecedented in both the size of the target and its distance away from shore, and as such represents a higher level of boldness on the part of the pirates.

The shipping container is a simple tool that has drastically transformed the face of international business. There’s not a whole lot too it, really. It’s just a big box with some paint and doors. But no other object has been at the front-lines of globalization quite like shipping containers. To this end, BBC has undertaken a year-long project in which they are tracking the contents and movements of one container as it travels from port to port. It recently dropped off a load of fine whisky in Shanghai, and has since been loaded up with clothing bound for the U.S.

Last week I attended a luncheon hosted by the Global Business Club of Mid-Michigan, which focused in part on the importance of free trade. Erik Magdanz of the U.S. Department of State was the keynote speaker, and he had sparked my interest in some current free trade issues. One statistic in particular caught my attention – in 2006, countries that the United States has free trade agreements with accounted for only 7.5% of world GDP, yet they accounted for 42.6% of U.S. exports.

You may be shocked to learn that the liabilities of Iceland’s colossal banks are several times larger than the country’s GNP. Prime Minister Geir Haarde recently addressed the nation and warned that in the worst case scenario, Iceland “could be sucked with the banks into the whirlpool and the result could be national bankruptcy”. You certainly weren’t beating around the bush with this statement, were you Mr. Haarde? The very fact that the country’s leader made a comment with this strong language points to the gravity of the present situation.

Unfortunately things did take a turn for the worse this morning, with major credit lines to Icelandic banks being closed. Trading at the Iceland Stock Exchange was suspended due to the crisis. Citizens around the world are justifiably worried about their financial security, but it seems that Icelanders may have the most to worry about.

Never before has the American auto industry witnessed such a myriad of harmful factors that came about with the swiftness and magnitude of the present situation. The credit crunch, soaring gas prices, and an unprecedented collapse in demand for large trucks and SUVs all tangled together to create a perfect storm. The already ailing automakers are now struggling to cope with an 11% slide in U.S. sales so far this year. In the rest of the world, auto sales are either growing or experiencing a much more modest drop. Yet the financial collapse and rising oil costs are worldwide phenomena. So what makes the U.S. so much different?

A new release by the FTSE Group indicates that South Korea is now worthy of having its name placed among the ranks of the world’s elite “developed” markets. The FTSE’s listing of developed markets is closely monitored by investment fund managers, who use the designation as a means of allocating capital to various markets. South Korea’s new status means that it is likely to benefit from tens of billions of dollars in foreign capital. The boost to national pride from finally being viewed as “developed” is not a bad perk either…