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They feel they have survived and overcome harsh business environment and want to operate in risky markets like Brazil. Some of them benefited from privatization or part-privatization. The current government dislikes the notion of privatization, which tends to improve businesses. But it likes national champions to succeed abroad. A government minister wrote the World Economic Forum in 1996 that it was not in the interest of the government for Brazilian companies to expand abroad. He said that capital was limited and they wanted to create local jobs. Brazil's laws also make the sending of profits from foreign subsidiaries back to Brazil impossible. They also refuse to recognize losses incurred abroad in company accounts. Some of the Bolivian assets of foreign investor Petrobras were nationalized by Brazil's president, Evo Morales. Multinationals are likely to encounter similar obstacles, but commodity producers, consumers or traders can be sure that their built-in comparative advantage will remain uncontested (the Economist).
Chinese banks, which have been infused foreign investment, do not seem to have become more efficient than those not infused (Hope et al., 2008). Furthermore, none of these foreign banks has proved to perform better than those not infused foreign capital. Not all partnerships in the arena have succeeded. Many opportunities accorded by strategic investment were limited and late. This can be attributed to inertia and slow-decision processes inherent in some local business partners. Management conflicts between foreign investors and partner shareholding and city commercial banks may be behind it. The success formula presents as the effective cooperation in management between the foreign investor and the higher-level managers of the local partner bank. Infusing new capital or introducing new financial products will not necessarily lead to success if management does not properly exploit new opportunities in the industry (Hope et al.).
Some shareholding banks have also been found to perform better than others without foreign investment (Hope et al., 2008). A survey of Chinese shareholding banks revealed significant differences in governance and information disclosure. They also differed in the capacity to deal with economic volatility and reporting financial need to shareholders. The survey also found great potential for foreign banking investors in China's city commercial banks. These banks are in early development stage and in search of suitable foreign investment. This is furthermore encouraged by the government. China views foreign investment as stimulating more effective competition in the banking industry. All banks operating in China since 2007 thrive in the same domestic international financial milieu and compete in the same level (Hope et al.).
Varying Ethical Business Practices in BRIC Countries
A recent survey found that Brazil and China observe ethical business practices less than the other two BRIC countries, India and Russia (Ardichvili et al., 2010). Employees of Chinese businesses had lower regard for such practices than those of Brazil. One explanation was that Brazil and China descended from communist economies and political structures. This could have established the direction of their business practices in general and in business practices in particular. The 2010 Edelman Trust Barometer survey conducted among the BRICs on ethical business practices showed that India observed the practices most at 69%. Brazil ranked second at 65%, China at 62% and Russia at 67% (Ardichvili et al.).
Survey findings suggested the need for a more detailed examination of the differences between each of the BRIC countries and the G7 countries; practical recommendations beyond general comparisons between the BRICs and G7; and a comparison between ethical practices in BRICs and other large and emerging economies, such as Mexico, Indonesia and South Africa (Ardichvili et al., 2010). The survey revealed the complicated nature of universal business norms and the threat of cultural differences on the business environment. Multinational companies facing increased threats are those operating under potential penalty for violating government regulations. These include or relate to Foreign Corrupt Practices Act, Federal Sentencing Guidelines for Organizations and Sarbanes-Oxley Act of 2002. These violations incur a loss of trust and will damage corporate goodwill and reputation. They also subject violators to financial penalties and fines, either at the individual or corporate level or both, and prosecution and sentencing of culpable corporate executive or employees (Ardichvili et al.). #
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"Global Economic Giants Brazil Is" (2010, December 15) Retrieved October 21, 2016, from http://www.paperdue.com/essay/global-economic-giants-brazil-is-5727
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Economic Globalization a positive trend? In order to fully understand the complexities of economic globalization, one must first sufficiently define the term in regards to how it is viewed in today's world. Thomas L. Friedman defines globalization as a system or a paradigm, "an approximate set of rules by which to conduct life," yet he also points out that globalization itself presently serves as a replacement for the old system begun and
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