International Business - China are not produced by Chinese-owned companies but rather are produced by American and other foreign companies operating in China. A big company from the U.S. that is manufacturing in China is Wal-Mart, which has over 5,000 non-Chinese suppliers providing merchandize for its many stores in America. Hence, Wal-Mart reaps huge benefits from the fact that China keeps the yuan at the lower end. That's the irony, and American company doing business in China is more than happy to keep the value of the yuan low so its profits are more substantial.
Why is the value of the yuan relative to the dollar so important?
The Chinese government has the power to dictate the value of the yuan vs. The U.S. dollar. The fact is that a strong U.S. dollar makes it more difficult for American companies to export competitively and when the dollar is weak that can (and does often) reflect that imports are reduced and U.S. exports have more strength.
In other words, when China's yuan is very low against the dollar, Chinese exports are cheaper than American exports. Hence, it behooves China to keep its currency low, and on the other hand for American companies, they say that gives China an unfair advantage. According to the article "A Weak Dollar vs. A Strong Yuan," China has deliberately kept its yuan low, and this irritates the U.S. because American leadership (and Congress) argue that China should let the yuan appreciate or in other words China should encourage a stronger yuan. Some members of Congress call China out for manipulating its currency in order to give its companies an unfair advantage.
There is an irony within this situation and American companies are part of the irony. When it comes to ...
On the other hand, according to the article the U.S. dollar enjoys "an exorbitant privilege" because the dollar dominates in many countries. The U.S. is thus able to "borrow at a lower cost" and "print money at will," which does not always sit with the Chinese government, which has called for "an abandoning the dollar as a reserve currency." The Chinese government has suggested replacing the dollar with "Special Drawing Rights" (which has been promoted by the International Monetary Fund) as an international reserve instead of the U.S. Dollar.
Interestingly China, as America's number one creditor, holds about $2.2 trillion (allowing America to print money against these foreign exchange reserves. On the subject of those…
are not produced by Chinese-owned companies but rather are produced by American and other foreign companies operating in China. A big company from the U.S. that is manufacturing in China is Wal-Mart, which has over 5,000 non-Chinese suppliers providing merchandize for its many stores in America. Hence, Wal-Mart reaps huge benefits from the fact that China keeps the yuan at the lower end. That's the irony, and American company doing business in China is more than happy to keep the value of the yuan low so its profits are more substantial.
International Business Environment Outline and critically discuss the criteria by which they judge whether or not a country is stable. International businesses faces a number of risks when they decide to operate overseas. Their ability to make sound investment decisions and to address those risks is directly related to the stability of the country in question. Firms therefore need to develop mechanisms for measuring stability before making the decision to enter a
International Business of Starbucks Starbucks Corporation established in 1971 has its headquarters based in Seattle, Washington. The company is the leading and largest coffeehouse company, with a wide coverage of the market across the globe (Simon, 2009). It is a global coffee company and chain of coffeehouse stores, operating in over 50 countries all over the world. At its founding, it was a mainstream coffee bean roaster and retailer. The company
This plan is focused on financial stability and profitability, through the reduction of operational costs. In this business strategy, outsourcing plays a crucial role. References: Dunai, M., 2012, Hungarian town suffers as Nokia announces big layoffs, Reuters, http://www.reuters.com/article/2012/02/08/us-hungary-nokia-idUSTRE8171OU20120208 last accessed on March 21, 2012 Haikio, M., 2002, Nokia: the inside story, Pearson Education, ISBN 0273659839 Layard, R., Nickell, S., Eichorst, W., Zimmermann, K.F., 2011, Combating unemployment, Oxford University Press, ISBN 0199609780 Louis, P.J., Nokia
International Business 5 Pertinent Topics The Cultural Effect on International Business Description Political Issues Affecting International Business Description Regional Economic Integration AND INTERNATIONAL Business Description Impact of Exchange Rates on International Business Description Corporate Strategy in International Business Description An Analysis of International Business Today No one can dispute the fact that the world economy is increasingly globalizing as we move into the 21st century. As this internationalization of business grows, there is an increasing challenge being faced to deal with cultural
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