For the last two decades, the world economic blocks have been hit by major economic events that have led to change in global factors, especially in finance sectors. Despite the global recession and many other issues that have shaken the world economies, Asia’s economy and particularly China, has remained on the upward growth and has become a trading powerhouse and a key growth engine globally today. According to the 2010 China Business Climate Survey conducted by the American Chamber of Commerce in China (AmCham-China), seventy seven percent of those who responded prioritized China as to be one of their top global investment priorities. A good percent of the respondents pointed out that they broke-even or were profitable in China despite the world economic downturn in the year 2009. In addition, eighty percent (80%) of the respondents had plans to accelerate their investments in the country in the following years. According to the Charlie Denson, the president of the Nike brand, China has moved from the group of emerging markets to the group of the fastest growing market in the world (Cheung, Kakkar, & Ma, 2011). According to him, they have the capacity to develop and they are building on it in an effort to be the world’s biggest market.
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Chinas economy has been growing with an average rate of ten percent (10%) since 1978. During the recession, China overtook the United States (U.S.) as the largest auto market and energy consumer (Cheung, Kakkar, & Ma, 2011). In addition, recently China overtook Japan as the second largest world’s economy after the United States. PricewaterhouseCoopers LLP estimates that, by 2025, the China’s economy will surpass that of U.S. and by 2050 it will be one hundred and thirty percent (130%) larger than it (PricewaterhouseCoopers, 2012). Although China has been growing at such high rates, its overall risk sharin across its provinces is relatively low in relation to those of other industrialized countries and particularly those of United States (Cheung, Kakkar, & Ma, 2011).
The population of China, which surpasses 1.3 billion, can provide an adequate market of its products in relation to United State’s value of approximately over three hundred million. This large population will provide market for its products in the course of its growth unlike the U. S. which will have to rely on exports. Given the current state of American debt, it needs other countries to buy its exports and invest their savings in America to support its financial system. In China there are significant savings and improved investments in developing countries (Genzberger, 1994).
In the same survey by the Am Cham-China’s 2010 survey, thirty eight percent (38%) responded as feeling unwelcome to compete in China (PricewaterhouseCoopers, 2012).this is due to the fact that Chinese people value their ways of life. In China, the presence of numerous dialects plays a crucial role in its economy. The rich history and ancestors exert a strong force to the citizens such that they believe that their institutions and processes are the best suited in helping their country reclaim its place as a leader in world’s economy. (Genzberger, 1994). On the other hand, the United States have a remarkably few dialects, thus there is no influence of history or more so the cultural beliefs in the manipulation of business policies.
With China being the fastest growing economy in the world, there are numerous opportunities of growth and development for companies in China compared to opportunities of the same companies in the United States (Genzberger, 1994). The overall changes in people’s way of lives and massive urbanization have created a large market for goods aand services in China. Companies that are aware of how Chinese people value their culture has reaped enormous profits from the Chinese business markets. Goo Dyear Tire & and Rubber Company has a state of art manufacturing plant in China to feed its market in China in addition to a sourcing center located in Shanghai which serves the rest of the world.
In America, the economic benefit of any transaction is valued more than any relational benefit. Chinese business ventures have been known to hold the relational benefit in front of any economic benefit that may arise due to cooperation. The political and family connections in businesses are more common in Asia than in the United States businesses. In the United States, professionalism comes before family relation (Lammie, 2005). In addition, China has very contradictory policies governing its business market. At one instance China is moving towards aligning its policies to those of the developed nations, while on the other hand, it is clinging on the policies that carry risks and challenges that are associated with business in developing countries (PricewaterhouseCoopers, 2012). This therefore shows that Chinese business market is unstable unlike the United States business market which is relatively stable due to its regulatory policies and the international market.
In conclusion, the global recession of the early 1990s, due to the tight anti-inflation policies in the leading industrialized nations and the uncertainty that arose due to the first gulf war, the 1997-1998 Asian financial crisis that was followed by a quick recovery, the global slowdown due to the dot-com bubble in 2000 and the terrorist attack in the United States in 2001 followed by the Iraq war in 2004, have shaped the world economies and policies as well as changing the source of financial cooperation’s all over the world (Chance, 2010).