Assignment Sample on MMN324978 Global Finance
Background and context of the problem
The focus area in the study is the Trade War between the United States of America and the Republic of China that has been going on for years after globalisation for dominating the international market place in order to generate maximum revenue and increase corporate powers. China economic reform 1978 is the starting point of trade war between both powerful nations over the globe. Chinese economic reform has transformed the perspective of business engagement and marketing policies of Chinese companies operating in the local and international market place from multiple dimensions and affected companies that originated in other countries. Economic reform is centred towards developing the social market economy by implementing Chinese characteristics in different industrial practises. On the other hand, American Marketing characteristic is based on the capitalist nature of practice in business in local and international marketplaces and the conflict between these two countries has resulted in the development of multiple trees and their uses of trade.
The trade war between China and the USA has created multiple problems for performing free and fair business in the international market place by Creating multiple rules and regulations. According to the view of Carvalho et al. (2019), the continuous competition between socialist and capitalist thoughts and practises has created divergence between business interest and collaboration between companies of both the countries. In the year 2018, the Trump government has developed multiple trade barriers and tariffs for the purpose of reducing the US trade deficit transformation of American trade policy from multilateral free trade agreement to bilateral. As per the view of Bolt et al. (2019), development of trade deficit for the purpose of balancing activities and flow of export and import wait multiple taxes and filter process has created conflict and tension between United States of America and China. This process has led towards the development of indirect trade war between both the countries and focuses on the development of competitive product and Technology for beating each other in the long run of international market competition. As argued by Li et al. (2018), the potential problems created by the trade war between China and the US include violation of intellectual property rights by the development of multiple counterfeit products and copies of software. This activity also created great tensions between these two superpowers and established negative trade relationships for entering in the marketplace and business collaboration. Transformation of US trade policies from multilateral to bilateral has reduced business opportunities for Chinese companies to operate in the American Marketplace and reduce their Global customer to a great extent.
The major outcome of the trade war are financial loss of US based companies, increasing cost of manufacturing, higher price of consumers, slowdown of economic and industrial growth and increasing business ethical problems. As per the view of Bolt et al. (2019), American companies had lost $316 billion by the end of 2020 due to implications of new trade barriers that restricted business performing in Chinese Market players. The transformation of government policies to integrate from multiple dimensions has created a problem for both Chinese and American companies for performing effective business in the international market place resulting in continuous financial loss. In the words of Kapustina et al. (2020), trade war has also contributed to increasing manufacturing costs for American companies due to restrictions on outsourcing from China and free movement of workers. Continuous increasing of manufacturing cost has also created problems for retention of customers due to increasing cost of product and services from the customer end. These activities have also resulted in a slowdown of economic growth due to limitations of marketing performances and increase of trade barriers in different sectors and industrial areas (Li et al. 2020).
Increasing restrictions in performing cross-border business due to the contrast between socialist and capitalist philosophy has minimised business opportunities for small and medium companies due to minimum funds and maximum expenses for operating in the international marketplace. According to the view of Chong and Li (2019), increasing ethical business problems is another potential issue that can be observed in the context of trade war between China and the United States. Competition between both the companies for dominating the international market place has increased practises of counterfeit and misuse of intellectual property for competing with all means necessary and created ethical business problems in the global context. These activities have negative effects on corporate ethics and management of transparency in business operations and marketing practises of various companies from different sectors and create economical problems such as trade deficit and inflation problems to a great extent (Itakura, 2020).
Recommendations
Development of an appropriate solution for reducing the contribution of us and China in increasing trade war is necessary for minimising its negative impact on globalisation and economic growth of both the countries. As per the view of Itakura (2020), maintenance of international politics and business collaboration by identifying mutual ground and common interest can contribute in bringing international peace for developing new business relations that can be beneficial for both the countries through movement of goods and services along with sharing of ideas and technology for improving human development and human survival possibilities. The most potential approaches that can be considered for reducing the negative impact of trade war and economic growth and business development are market analysis and cost calculation, improvisation of duties and tariffs, increase in CSR of Companies and adaptation of cultural globalisation (Liu and Woo, 2018).
Market analysis and cost calculations: Development of multiple reports from market analysis of financial loss that has been dealt by Chinese and American companies in the past years due to the trade war can help in convincing governments towards initiating negotiation for establishing free trade between the countries for economic and financial benefit. According to the view of Kwan (2020), due to trade war companies of both sides have received Limited opportunities of exploring the market place and connecting with customers. Getting into effective conclusion by discussing and analysing with economical and financial experts from both the parties can help in finalising deals in order to ensure reduction of negativity and weak relationship between US and China. Cost calculation of increasing manufacturing expenses of multiple companies originated from America due to restrictions in Outsourcing services and Labour from China can help in convincing the American government to focus on the development of multilateral trade policies for opening multiple windows for practising international trade with the benefit of globalisation (Lau, 2019).
Improvisations of duties and tariffs: Development of new business models with improvised duties and tariff policies can be considered as an appropriate recommendation for reducing trade war between China. According to the view of Kwan (2020), development of new agreements by assigning treaties for providing permissions to companies for operating in the Global Marketplace without any kind of dominance can encourage for establishing positive trade relationships for mutual growth and benefits. Apart from that, focusing towards finalising trade deals with access to water resources and customers by following International business laws and regulations by both parties can positively contribute in providing opportunities for small and medium companies in increasing the operational areas and production of organisational expenses. Government support with transparent discussion and open negotiation with consideration of best National interest regarding trade agreements is also necessary for improvisation of rules and trade tariffs for establishing trade without restriction.
Increase of CSR: Inclusion of Corporate Social responsibilities of Chinese and US companies for maintaining environmental sustainability and ethical implications of resource allocation is another potential recommendation that can help in encouraging towards reducing threat tension and focuses on common goals. As per the view of Itakura (2020), universal problems such as global warming and rising sea level are creating problems for America and China to a great extent by affecting primary production and livestock. Providing interest in the development of CSR is a strategy by identifying common problems that can help in increasing foreign investment and marketing opportunities for companies or border countries and increase national income by sharing technology and innovation.
Cultural globalisations: Government efforts towards cultural globalisation consideration for policy making purpose has the ability of increasing understanding of perspective and cultural differences between people of the United States and China. This area can positively contribute to the development of diversity in international marketing practises and encourage focusing on adopting multilateral trade policies for generating maximum marketing opportunities for the companies to establish positive trade relationships. In the words of Kapustina et al. (2020), focusing towards adaptation of cultural globalisation in developing marketing and business policies by companies can help in retention of investors and customers of the Chinese and American Marketplace for the benefit of the US-China economy. This process can positively contribute in development of quarters and licensing opportunities for small companies to enter the international marketplace with appropriate market entry strategy for practice and business in both Chinese and American marketing areas. In the words of Kapustina et al. (2020), development of advanced custom clearance and certified standard for import and export of product and services between the two countries can contribute in establishing trust and integration for future business development and existing trade wars.
Conclusion
Based on the above discussion and analysis it can be concluded that trade war between US and China has a negative impact on global economic stability and economical growth. Identification of common ground of political and economical entrance between both the countries is highly necessary for reducing the negative impact of trade war on financials and organisational sustainability. Ending the trade war can brain use opportunities for multiple to perform business without any kind of restriction for increasing operational area and generating maximum profit. Development of transparent trade agreements with the proper understanding and active negotiation skills are needed for solving trade wars and focus on developing alliances for establishing business relationships. Increase in partnership and cooperation between companies of the United States and China can focus on achieving goals of environmental sustainability by sharing Idea and Technology for development of clean fuel in order to fight against natural calamities and global warming. Development of a new business model with an improvised trade deficit from the interest of both socialist and capitalist perspectives has the ability of developing connections and concerns between both the countries for supporting business growth and development. Adaptation of cross-cultural management for understanding perspectives of people from different geographical and social backgrounds can positively contribute to the establishment of new ventures and business cooperation for mutual growth and development.
References
Bolt, W., Mavromatis, K. and van Wijnbergen, S., 2019. The Global Macroeconomics of a Trade War: The EAGLE model on the US-China trade conflict.
Carvalho, M., Azevedo, A. and Massuquetti, A., 2019. Emerging Countries and the Effects of the Trade War between US and China. Economies, 7(2), p.45.
Chong, T.T.L. and Li, X., 2019. Understanding the China–US trade war: causes, economic impact, and the worst-case scenario. Economic and Political Studies, 7(2), pp.185-202.
Itakura, K., 2020. Evaluating the impact of the US–China trade war. Asian Economic Policy Review, 15(1), pp.77-93.
Kapustina, L., Lipková, Ľ., Silin, Y. and Drevalev, A., 2020. US-China trade war: Causes and outcomes. In SHS Web of Conferences (Vol. 73, p. 01012). EDP Sciences.
Kwan, C.H., 2020. The China–US trade war: Deep‐rooted causes, shifting focus and uncertain prospects. Asian Economic Policy Review, 15(1), pp.55-72.
Lau, L.J., 2019. The China–US trade war and future economic relations. China and the World, 2(02), p.1950012.
Li, C., He, C. and Lin, C., 2018. Economic impacts of the possible China–US trade war. Emerging Markets Finance and Trade, 54(7), pp.1557-1577.
Li, M., Balistreri, E.J. and Zhang, W., 2020. The US–China trade war: Tariff data and general equilibrium analysis. Journal of Asian Economics, 69, p.101216.
Liu, T. and Woo, W.T., 2018. Understanding the US-China trade war. China Economic Journal, 11(3), pp.319-340.
