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1.    Why do you think is important to cultivate guanxi in China?

The relationships in guanxi are supported by high level of personal trust and they are also linked to higher level of guanxi’s performance in china. Guanxi is frequently used by new-venture investors to mitigate the various uncertainties they encounter in today's business climate and to enhance judgements of their businesses.

2.    What ethical issues might arise when drawing on Guanxi to get things done in China?

Bribery is both an ethical and legal concern in the United States. Should we conduct business with individuals who demand favours in exchange for a favour, or vice versa? What if that's your only option for doing business? These are difficult issues to address. If a company in the West was devoted to high ethical standards, it would never engage in guanxiwang. To work in China, they would have to defy their convictions.

3.     What does this suggest about the limits of using Guanxi for a Western business committed to high ethical standard?

Equal opportunities are highly valued in Western society and viewpoint in general (not only in the economic sphere). If this situation had occurred in the Western corporate sector, it would have raised concerns about not only ethical standards but also a slew of regulations. As a result, Western firms devoted to a high ethical standard and strict adherence to the law would refuse to engage in guanxi. However, this might be a stumbling block for them if they try to grow into China, since they may run into restrictions prohibiting them from engaging in certain commercial activities.

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Read the enclosed case and answer Question 1 -4 herein.

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Watch the video entitled "Guanxi" and answer the following questions:
1. Why do you think is important to cultivate guanxi in China?
2. What ethical issues might arise when drawing on Guanxi to get things done in China?
3. What does this suggest about the limits of using Guanxi for a Western business committed to high ethical standard?

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PASINDU UPEK NURANJITH KALUHATH ABREW, MD RAIYAN SADID SARKER, ABDULLAH EVNA JAFAR, BINULA DEWMITH DANTANARAYANA

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PASINDU UPEK NURANJITH KALUHATH ABREW, MD RAIYAN SADID SARKER, ABDULLAH EVNA JAFAR, BINULA DEWMITH DANTANARAYANA

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Argentina

Commercial Risk
Foreign Taxation - Argentina is not only a highly taxed country (both federal and provincial), but the system is quite complex and difficult to grasp. In order to avoid problems with the Tax Authorities, foreigners should be aware of the Argentinian tax requirements and obligations. The tax rates are progressive and range from 5%-35% depending on the resident foreign company’s annually adjusted income levels.

Currency Risk
High-Levels of Bureaucracy – Thanks to Argentina’s high administrative levels, foreigners must go through a multitude of procedures such as company formation, financial reporting, the processing of a visa, international trading and tax compliance.
In 2001 Argentina faced an economic crisis, which made history with the largest ever sovereign debt default of more than $80bn (£42bn).

Country Risk
Argentina has traditionally been a somewhat limited market for international trade, contributing for 32.4 percent of its GDP in 2019. (World Bank). Nonetheless, the administration has attempted to lessen protectionism, and the enormous drop in volume of imports and exports in 2020 was caused by the worldwide economic crisis that followed the advent of the COVID-19 pandemic, with automobile exports suffering the most drastic loss, while oil seeds, cereals, and dairy and meat goods suffered the least. Argentina exported USD 65.1 billion in products in 2019 and imported USD 49.1 billion, according to the most recent WTO figures. In terms of services, the country imported 19.1 billion USD and exported 13.9 million USD. The outcome was bolstered by the country's abundant grains and oil seeds harvest, which translated to a considerable increase in the value and volume of exports, mostly of grains and oil seeds, laird, cooking oil, and various meats.

Cross-Cultural Risk
Unfavourable Labour Laws - In Argentina, employment law typically favours the employees. This can cause substantial financial and legal burdens for employers should an issue or problem arise in the workplace. Often, foreigners of recently formed Argentinian companies are unaware of the legal obligations they have to their employees.

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Group members:
Benyamin Al Mehdi, Muhammad Waleed Usmani, Kairu Jesse, Bushra Rahman.

Country risk by Kairu Jesse

1. Unfavorable geographical location

The land locked stagnated nation suffers a loss due to it’s location, this is worsened by the presence of mountains which make it difficult to construct proper roads, railways and pipelines, making one of the most important acts of international business (transportation) almost impossible, hence leading to a degradation of the economy

2. Political instability

Recently it has been witnessed as the Taliban have regained position of the nation, this has caused turmoil and the information spread through the media and social media at large has instilled fear, making it a major country risk. This creates a negative image and perception in the eyes of the investors, Hence scaring Opportunities such as FDI’s and so on.

Commercial risk:

Inflation
Inflation in Afghanistan has experienced an increase every year with the exception of 2009. Some short-term increases in prices are often attributed to wars, which is a fundamental reason for yearly inflation in Afghanistan. On the other hand, wars often cause spikes in GDP, primarily due to an increased amount of production and reparations. This was not the case for Afghanistan, however. GDP, more specifically GDP per capita, remained relatively low as of 2013, despite increasing annually and ranked as one of the top 20 lowest gross domestic product per capita values in 2013.

Operation Enduring Freedom

The U.S. government used the term "Operation Enduring Freedom" to officially describe the War in Afghanistan, from the period between 7 October 2001 and 31 December 2014

Poorly developed credit (3% of GDP), fragile (30% of non-performing loans in June 2020), and dollarised (48% of loans, 61% of deposits) banking system.

High poverty (66% of the population), against a backdrop of informality, unemployment, and food insecurity.

Ethnic fragmentation and armed conflict, generating significant public spending (50% of the total), population displacements, and military and civilian victims (more than 10,000 civilian victims per year for the last 6 years).

CROSS CULTURAL RISK
Middle Eastern, and Islamic cultures more generally, such as Afghanistan and Pakistan, are consistently
regarded as high-context societies.
Direct vs. Indirect Communication
14 With respect to communication style, a clear majority of respondents (twelve of 17) found Afghans to
be more indirect than themselves. This is consistent with what is commonly assumed to be the hallmark
of high-context communication. Circumlocutions are often used to avoid naming problems directly, and it
is not acceptable to deny a request, even if what is demanded cannot be fulfilled. Such divergence in
communication style may lead to the misperceptions mentioned above (see section 3). With regard to any
potential resentment arising resulting from foreigners’ overly-direct communication style, however, only
one person of 16 felt his own frankness often led to irritation on the part of Afghans. This result may
reflect the indirect, ‘high-context’ communication style likely to conceal Afghans’ irritation from
foreigners
High vs. Low Time-Sensitivity
Time-sensitivitsitivity refers to culturally predominant attitudes toward time. High time-sensitivity implies
the strict observance of schedules and timetables, in a fashion similar to the abovementioned ‘poly-’ vs.
‘monochronic’ attitude toward time. Afghanistan is generally characterised as a ‘polychronic culture’,
with less emphasis on time as a quantifiable and allocable factor. In the author’s experience, this is
generally true, although there seems to be a gradient from rural (lower time-sensitivity) to urban (higher
time-sensitivity) people. Many Afghans have a low time-sensitivity, but modern (or, at least, urban) life is
encouraging the adoption of a Western attitude towards time, notably schedules and deadlines, not least
due to the exigencies created by modern government and the aid-and-development ‘industrial complex’.
Example: Two-thirds of people surveyed (eleven out of 16), however, said Afghans were clearly less timesensitive. A majority (13/16) also noted that problems arose either ‘sometimes’ or ‘often’ because their
agenda was overridden or ignored by their Afghan negotiation partner. As before, while Afghan culture is
not particularly time-sensitive, the attribution of this phenomenon entirely to culture should be avoided.
Violence, security problems and poor infrastructure (particularly roads) seriously compromise the
potential for time organisation and punctuality. Any given security incident may generate curfews and
other restrictions likely to postpone planned undertakings for several weeks, a phenomenon obviously
incompatible with meeting deadlines and schedules.

Afghanistan’s Currency Fall. Afghanistan's currency fell to a new low after the acting central bank governor resigned, adding to the political upheaval that has been dragging on investor morale. According to Bloomberg data, the Afghani plummeted as much as 4.6 percent on Tuesday to 86.0625 per dollar, marking the fourth consecutive day of depreciation. Acting Governor Ajmal Ahmady stated on Twitter that the central bank was warned there would be no further dollar shipments on Friday, limiting its ability to supply cash and increasing panic. (Goyal, and Satija 2021) As the Taliban seizes control of the poor country and a shortage of US dollars causes panic, Afghanistan's currency has plummeted to new lows this week. According to Refinitiv, the Afghani traded at 86 per US dollar on Wednesday, down dramatically from around 80 a week ago. The currency depreciation reflects concerns about Afghanistan's future after the Taliban took control of Kabul, the country's capital. The Taliban is a brutal militant organisation sanctioned by the US and other foreign powers. (Egan, 2021)

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Cross cultural risk:

The lack of integrated knowledge and the possibility of subjectivity influencing the research design. For example, there is a risk for SME to understand the halal certification process in order to obtain the Halal certification. Furthermore, though English is widely spoken in business venues, Malay remains the official language for Malaysians. The use of second language in business talks entail a high risk of distorted messages.

With more than 30 million residents, foreign business travelers can experience plenty of cultural dilemmas here. The three most famous ethnic groups are Malays, Chinese, and Indians, and these different cultures heavily influence the way business is conducted in Malaysia.

Besides, there are many cultural norms and taboos. For instance, shoes should be removed before entering a person’s home or office.

Country risk:

Malaysia is threatened by an unstable political system coupled with the pandemic. Ethnic and religious disputes. Besides that, the centralized Malaysian political system suffers from bureaucratic delays, which generate many opportunities for corruption. According to the Business Anti-Corruption Portal, there is a widespread perception of corruption as common among the nation’s political and business elite, and bribery and other corrupt practices constitute serious problems for businesses operating in Malaysia. In Transparency International’s 2018 Corruption Perception Index, Malaysia received a score of 47/100, ranking at the 61st least corrupt nation out of 180 countries in the index.

Currency risk:

The government has been taking financial policy measures to strengthen its currency due to the low exchange rate has affected Malaysia's economy. For example, the exchange rate of Malaysia Ringgit to United States dollar (USD) for the first four months of 2019 averaged about RM4.1=US$1. But 2018 annual average for RM against USD was around the 4.05 range, 2017 was around RM4.30 and 2016 was RM4.15.

Commercial risk:

-        Very high private debt levels (80% of GDP)

-        Low fiscal revenues, lack of transparency in budget spending

-        Erosion of price competitiveness due to increasing labour costs

-        Budget income highly dependent on performances in the oil and gas

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Cross-cultural risk

Relationships between business partners are heavily valued in Japan. It is important to show the right level of respect and to be polite and diplomatic at all time.

Country risk

Complex procedures: organizations are required to communicate with several offices including the ward office, the local tax office, the labor standards inspection office…and more.

Commercial Risk:
Less population of English speakers (less than 8% speak English fluently) can risen the risk of commercial risk as the miscommunication might lead to the operational problem.

Currency risk

although yen is one of the most stable currency,  the outbreak of COVID19 could affect the reliability of the currency. Since the “carry trade” (low-yield currencies are borrowed and then sold for higher-yield assets) is one of the component that make the currency stable (creates periodic spikes), unstable world markets can affect the stability of Japanese currency.

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Canada
-Commercial risk:
Canada’s subtle but important differences from the United States can trip up the unprepared. Some sectors are restricted or inaccessible to foreign imports. U.S. exporters must conduct due diligence on market potential, understand differing provincial regulations and sales channels, and comply with bilingual labeling and packaging requirements, certification standards, and Canadian customs procedures.
Increasing competition in several sectors such as cosmetics, vitamins, electronics, and home furnishings translates into a need for competitive pricing, imaginative marketing, and deep discounts for agents and distributors. Other ways to differentiate from your competitors are to offer agents and distributors specialized training and flexible contract terms, or to offer end users after-sales support.
Some other issues that affect trade are for example terrorism, currency devaluations and trade agreements.

- currency risk:
Currency threat arises because of the version withinside the charge of 1 foreign money up towards another. Companies and traders having a commercial enterprise operation or belongings unfold around the sector are much more likely to enjoy foreign money threats.
Given the relative monetary power of Canadian currency, the U.S. dollar has a relatively excessive hobby charge amongst advanced economies
Although in the period of global economic uncertainty Canadain Dollar is considered to be one of the safest currency. Currency risk, generally called exchange-fee risk, arises from the extrude in fee of 1 forex in terms of another.
Investors and companies who have their assist in international countries can be easily affected by currency risk that can either give  unpredictable profit and losses.

-Cross-cultural risk:
Canada is located in North America & The Caribbean
FEDERAL GOVERNMENT: Constitutional monarchy that is likewise a parliamentary freedom and also a federation

LANGUAGE: English (official) 59.3%, French (main) 23.2%, other 17.5%.
Religion : Roman Catholic 42.6%, Protestant 23.3% (including United Church 9.5%, Anglican 6.8%, Baptist 2.4%, Lutheran 2%), other Christian 4.4%, Muslim 1.9%, various other as well as undefined 11.8%, none.
MAJOR ETHNIC GROUPS: British Isles beginning 28%, French beginning 23%, other European 15%, Amerindian 2%, other, primarily Asian, African, Arab 6%, mixed history 26%.

Experienced immigrants to Canada remain to experience high rates of underemployment as well as joblessness. An absence of recognition of foreign qualifications and also experience, language and interaction barriers, discrimination and also companies' requirement for "Canadian experience" all contribute to this disconnect.Lack of acknowledgment of previous experience/requirement for Canadian job experience .Canada has seen successive waves of immigration from the Netherlands , Germany and Italy, England and Ireland, China and Japan etc. Some of these migration waves have been resulted in considerable political and social conflict.

-Country risk:
Country risk refers to the uncertainty to invest in a country and specially the degree to which that uncertainty can lead to the losses for investors. This uncertainty can come from any factors including politics, environment, technology etc. It is risky to do business in those countries which has high political or environmental risk. Because in these country there is a high chance that investors will loss their money. Here we will discuss about the country risk a business person have to face to run his business in Canada.

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Risks & Their Examples

1.     Cross-cultural

·      Power relations in Philippine organisations are very hierarchical with the senior manager taking a patriarchal role at the tip of the pyramid. Employees rarely correct or challenge authority figures but follow their instructions uncommented.

·      Filipinos have a very relaxed approach to time which determines pace of life at work and outside. Deadlines and appointments are perceived as flexible rather than definite and finishing off a conversation properly is usually regarded more important than arriving on time. Foreigners often find it difficult to deal with this mañana lifestyle and the many delays they encounter when dealing with counterparts in the Philippines.

2.     Country Risk

·      The Philippines has improved overall in various competitiveness rankings over the past seven to eight years, though several declines were reported in the past year. However, the inadequate state of infrastructure remains a weak spot and investors also continue to cite government red tape, regulatory uncertainties, a slow judicial system, and corruption as challenges to doing business in the country.

·      The government’s infrastructure program (“Build Build Build”) failed to significantly spur economic activity in 2018 as Philippine annual GDP growth slowed for the second consecutive year to 6.2 percent in 2018, from 6.7 percent the previous year.

3.     Currency risk

·      Consumer price inflation soared further in 2018 and averaged 5.2 percent for the full year (higher than 2.9 percent in 2017), exceeding the central bank’s targeted two to four percent band.  Inflation accelerated for nine consecutive months from January 2018 and reached a high of 6.7 percent in September

·      The Philippine Stock Market was one of the world’s poorest performers in 2018, reflecting weak sentiments towards corporate earnings following the steep rise in the prices of commodities, depreciating peso, and slowing economic growth

4.     Commercial

·       Net foreign direct investment (FDI) inflow, which had been trending upward since the administration of former President Benigno Aquino III, reversed its uptrend and fell by 4.4 percent year-on-year to $9.8 billion in 2018 from a record-high of $10 billion, falling short of the $10.4 billion government projections for the year.

Source: https://www.export.gov/article?series=a0pt0000000PAuhAAG&type=Country_Commercial__kav

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Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements. Last Published: 7/17/2019

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.

Philippines Trade Development and Promotion

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Philippines - Market Overview | export.gov

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Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.

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In this chapter, we reviewed the four major risks that firms face in international business: cross cultural risk, country risk, currency risk, and commercial risk.
Identify one country that interest you, then visit globalEDGE™ or other websources and research the countries to uncover examples of each of the four types of risks.
If you are in globalEdge, research by entering the country name into the search engine. Then, under Quick Links, visit links such as the Country Commercial Guide and Economist Country Briefing. Illustrate each risk with examples.
For example, China is characterized by various cultural differences and a national government that tends to intervene in business.