University Of Finance & Administration INTERNATIONAL BUSINESS [ N_IB_B ]

1. UniversityOf Finance & Administration INTERNATIONAL BUSINESS [N_IB_B] Ing. Pavla Břečková, Ph.D. pavla.breckova@vsfs.cz

2. INTERNATIONAL BUSINESS • Part-time course = 4 guided consultations á 90 mins. • INTERNATIONAL BUSINESS [IB], characteristics, indicators. • WORLD BUSINESS TERRITORIES, challenges, integration, main trading blocks [TRIAD, BRIC] • GLOBAL BUSINESS ENVIRONMENT. • EMERGING MARKETS, characteristics, features, selectedmarkets in detail • BRICS in detail • Doing business in Asia • Foreign market analysis • PREDISPOSITIONS for working in IB, expatriation and HR in IB

3. COMPLETION terms N_IB_B • 4 lectures / guided consultations [GC] (per 90 mins) • Completion: credit • Completion CONDITIONS: • Active participation (presence) in GC min. 50% • Active involvement in the guided consultations • [active listening, discussing, reading, analyzing & interpreting of economic articles or case study results] • If unfulfilled => written TEST to prove the knowledge

4. LITERATURE SOURCES Povinná literatura / Mandatory reading: Charles W. L. Hill: Global Business Today, McGraw-Hill/Irwin, 7th edition, 2011 Doporučená literatura / Recommended reading: Allan Sitkin, Nick Bowen: International Business, January 2010. Stuart Wall, Dr. Bronwen Rees: International Business: A First Course, September 2009. Wild, J., Wild, K., Han, J.: International business: the challenges of globalization. 4th ed. – Pearson, Upper Saddle River, 2008. ISBN: 978-0-13-174743-6. Woods, M.: International business. Basingstoke, Palgrave, 2001. ISBN: 0-333-75979-6. Griffin, R.W., Pustay, M.W.: International business: a managerial perspective. 5th int. ed. - Upper Saddle River, Prentice Hall, 2007. ISBN: 0-13-233532-8

5. when you trade something out of the country. In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. EXPORT What is? Why to aim to world business territories? Why export is good for economy / country?

6. Emergingmarkets are nationswithsocialor business activity in theprocessof rapid GROWandINDURSTRALIZATION. Currently, there are 28 emergingmarkets in theworld, withtheeconomiesofCHINAand INDIAconsidered to be by far thetwolargest. The ASEAN–China Free Trade Area, launched on January 1, 2010, isthelargestregionalemerging market in theworld. Anemerging market economy (EME) isdefined as aneconomywithlow to middle per capitaincome. Such countriesconstituteapproximately 80% oftheglobalpopulation, andrepresentabout 20% oftheworld's economies. The term wascoined in 1981 by theWorld Bank. Onekeycharacteristicofthe EME isanincrease in bothlocalandforeigninvestment (portfolio anddirect). A growth in investment in a country oftenindicatesthatthe country has beenable to buildconfidence in thelocaleconomy EMERGING MARKETS What is an emerging market?

7. Lack of information (problematic data collection) EMERGING MARKETS [EM] entering Market SIZE Market INTENSITY– estimates wealth, buying power Market GROWTH rate – GDP, energy consumption etc. Market CONSUMPTION CAPACITY– spending capacity (% of middle class, core of buying power) Commercial INFRASTRUCTURE– chanels for com./distrib. Economic FREEDOM– free market principles domination Market RECEPTIVITY – market ‘openness’ Country RISK– of doing business Special problems related to entering EM EM’s market-potential analysis:

8. VIETNAM 80 million people est. 1945 division into 2 parts (Hanoi / Saigon – Ho Chi Minh City) Vietnam war 1963 – 73 Member of ASEAN Elements of free trade principles Dynamically developing

9. VIETNAM

10. VIETNAM + - • competitive advantage: persistence,hard-working, humility • education – better avg.in south Asia (no illiteracy) • not developed country but growing rapidly (7-8%) • relations (1/4 million of V.studied in CZ – backbone of V.economy) • bad infrastructure • no history and exp. in industry / engineering • corruption • QM missing => low VA industries, no experience • business culture (no long-term relations / businesses) • very low law enforcement • not fully liberalised envi 10.

11. Patience, long meetings / negotiations No long contracts – chaos: changing mind, no reliability in European understanding (effort to satisfy) No business drive in Euro perception (enq./offers – lengthy via email) Personal contacts necessary / local No win-win (‘loss of face’ danger) Business cards handling ‘YES’ even if meant NO No patience to build– interest in quickmoney Atmosphereof‘small business’ VIETNAM Business doing

12. VIETNAM Business doing

13. CHINA

14. CHINA + - • hard-working • education – in towns and industry areas • no-VA parts (or normalised) very cheap • massive gov. investments in infrastructure • railways net / HSR (but due to industrialization too busy) • rising prices • only large series / payments in advance • control (necessity of Chinese citizen in the business) - not fully liberalisedenvi • quality instability (no sustainable Q) • fractionalism • no ENVI issues / labour conditions 14.

15. Smiles not usual in business Nepotism Patience – time to succeed Seniority respect Double check of mutual understanding / samples precision etc. Contract – precision (parameters, samples – signed etc.) CHINA Business doing

16. CHINA – business doing Guanxi (connectinos)

17. CHINA – maintaining harmony One should never do anything to cause a moment of public embarrassment. Chinese to use intermediaries to carry unpleasant news. Chinese society ishighlyhierarchical – respectthat. Relatives, friends, neighbors, classmates, and co-workers are all people to whom one bears some form of obligation. BUT No obligation is felt to others outside of one's circle.

18. CHINA – introducing / business cards handling • Hand business cardswithbothhands. • Examinebusiness card. • Putitintoyourjacketslowly. • Chinese surnames come first, not last. • Dropthe “deputy” in any official's title.

19. CHINA – civilized behaviour? • Ignore that! • Chinese habits some Westerners experience as offensive include: • belching and spitting on the street, • smoking cigarettes indiscriminately, • staring at foreigners, • laughing at mishaps.

20. CHINA – during meeting • Only leaders speak. • Foreigners introduce ideas, Chinese react. • Nodding is NOT agreeing. • Find a good interpreter and use him well: • Pause frequently • Avoid slang and colloquialism • Make sure he understands technical terms • But always talk to host, not interpreter • Always restate what was agreed on

21. CHINA – saying NO Chinese dont say NO • When negotiating with Chinese: • “inconvenient” • “under consideration” or • “being discussed”. = in reality means NO

22. CHINA – giving gifts There are many reasonswhyChinesegivegifts (askforfavor) and youcanevenrefuse a gift. Whenyou are visitingChinese, alwaysgivegifts. Chinesemay make severalrefusalgestures. Neverwrapgifts in white. Givegiftswithbothhands. Whatwouldbe a goodgift? Somethingtraditional, and BIG.

23. TAIWAN

24. TAIWAN Republic of China Capital: Taipei Population: 23 million Density: 668 /km2

25. TAIWAN + - • extremely hard-working • good knowledge of English (EU/USA education) • industrial tradition (cca 30 years) • no-VA parts (or normalised) very cheap • flexibility & professional approach (enq./ sampling / quality) • ISO norms not a formality • good infrastructure: airport / HSR • fully free market • raw materials import – dependence on China • changing EUR / USD • status manipulation + pretending “made in Taiwan” (PRC reality) • frequent typhoons (supplies postponing) 25.

26. Professional, very polite Business cards handling Quick response / sticking on agreed Willingness to sort out the claims No need to double-check understanding In machine production – taking shoes off in offices Strong green teas at business meetings TAIWAN Business doing

27. TAIWAN Business doing

28. INDIA

29. INDIA Capital: New Delhi / largest: Mumbai Language: Hindi, English Population: 1,118,521,000 Density: 361 /km2 GDP per capita: 3,100 USD

30. INDIA + - • good education, English • bank sector highly developed • large market with over 1mld. people / growing purchasing power • distinctive ability • secluded economy (extremely high import taxes) • changing EUR / USD • productivity 30.

31. English Demanding negotiations, long (several hours) Half-truths common Compromise necessary (Indian - bargaining) + keep the positions (manipulation resistance) Agreements – sticking on INDIA Business doing

32. State IB policy INSTRUMENTS

33. Summary of basic IB BARRIERS

34. Tariff & Non-tariff measures • have important effects on consumption, production & structure of a domestic economy • reason for imposing = e.g. protect infant industries NON-TARIFF Quota = qty restriction • TARIFF • Fiscal • Protective • Retributive • Prohibitive

35. Summary of basic IB BARRIERS

36. QUESTIONS to prove knowledge in IB – part 2+3 What is EXPORT? Why export is good for economy? Why to aim to world business territories? What is emerging market / emerging market economy (EME)?Typical features, examples… Why the EME might be interesting for investors from Europe? What do you know about Vietnam? What are the business practices? What do you know about China? What are the business practices? What do you know about India? What are the business practices? What do you know about Taiwan? What are the business practices? What are the trade BARRIERS? What Non-tariff restrains to trade do you know? What is Quota? What is Tariff (duty)? What is Nationalization? What forms it may hold? What is Dual-use in IB? What is SANCTION, what is EMBARGO?

37. INTERNATIONAL BUSINESS Thank you for your attention Ing. Pavla Břečková, Ph.D. pavla.breckova@vsfs.cz