The world of trade and the complexities of trading and management of products or services. Otherwise known as sourcing, your supply chain, purchasing, PLM (product lifecycle management), and the business of buying and selling of products.
How business is done between two companies involves the country, the people (Internal/External), the politics, and power struggles.
Understanding tariffs, quotas, duties, taxes, and control of the inflow and outflow of goods as everyone country, every business, and every person wants a gain and benefit.
What are some of the challenges, opportunities, and threats?
Deals with products or services that are sold, transferred, or exchanged to the agent, wholesaler, brand, retailer, and/or consumer within the geographical boundaries within the country or traded to different countries around the world.
Most countries control their imports and exports by managing their GDP (Gross Domestic Product) or GNP (Gross National Product) to determine their countries economic strength. GDP focuses on products produced with the countries boundaries (local scale) and GNP focuses on products produced by enterprises that are owned by residents of that country (international scale).
Many countries need an export/import license to control the flow of products and services. Below I dive deeper into understanding what affects trade between two countries.
Many importing countries disagree with another countries control of their currency fluctuation for the benefit of purchasing goods from their country. The country receiving the products from the export country claim that the currency is devalued and being unfairly sold at lower prices to their country.
The fact is that the manipulating country reduces the demand for its own currency while increasing the demand for foreign currencies that allows them to sell their products for cheaper. This also makes the importing countries domestic production less attractive.
Diving deep into currency manipulation you would need to look at the foreign exchange reserves, monetary policies, and compare it over a monthly, quarterly, and bi-annual period to discover irregularities.
Fair Trade Practices
The basis of the bilateral economic relationship and trade deficit comparisons of each country that determines if the relationship is unbalanced, unfair, and damaging to their economy.
How did the countries import and exports compare for the country that they are trading with? Comparing the GDP or GNP to see if the trade is favored to one side or equal.
Unfair Trade Practices
Unfair trade practices, was the company’s product or services deceptive? Unlawful, fraudulent, or cause injury to the consumer?
The current dispute between the USA and China stems from unfair trade practices. The USA has imposed punitive tariffs on goods being imported into the USA from China.
The current discussions between the leaders of the USA and China should be based on mutually respect, equality, and honesty. But it seems to go deeper than the surface, and there is a battle to understand and control the what, when, and how of what is being said and done.
One challenge is proprietary information, it is known that many products are copied within the Chinese marketplace and sold within the country and possible exported around the globe. This affects the company who owns the proprietary as its cheats them of revenue and profits. China is aware of this issue and has reduced the fraudulent practices to bring clarity to the consumers and the marketplace.
Another challenge is China’s alleged cyber economic espionage against international firms because or lack of enforcement of intellectual property rights (IPR) that affect the economic interests of those international firms.
This can be called “Dumping” when a country or company exports a product at a price that is lower in the foreign importing market then the price in the exporters domestic market.
Many countries have established an anti-dumping duty which is a protectionist tariff that domestic government imposes on foreign imports that it believes are priced below fair market value.
Many countries do this as consumer protection from misleading or aggressive selling practices.
The current state
Allot of the current actions are derived from fear, not knowing what may happen and how to avoid any mass security threats on their nation.
China disagrees and is deeply concerned with the USA unfair trade practices claims on China. China believes that the USA has made groundless accusations that are totally unacceptable. China is hoping the USA will adopt a constructive attitude.
One of the major concerns is the security concern derived from technology exports, what information is being collected, for what purposes, for whose benefit? And how does that jeopardize the importing countries stability.
China is being focused on, as it is the largest global exporter, well many other emerging countries export market to the USA grows at unprecedented rates. Back in 1990 Japan was the leading country and concern for the USA, which was replaced by China, and the fact is many other countries are looking to replace China in the future. It is a fact that China’s global business is in decline.