WHAT THE NEXT TEST WILL COVER

OUR LAST TEST COVERED THROUGH GREATER CHINA’S PHILOSOPHIES
BELOW ARE THE OBJECTIVES OF WHAT WILL BE COVERED IN THE NEXT TEST ON MONDAY APIRL 27.


LANGUAGE
Understand the importance of language in conducting international business.
Ustda
Tian Jin economic/technology development zone
Mofert
Commerce daily

Occam’s razor

1. Be able to compare the efficiency of the Chinese language versus the English language in terms of their grammar, logic, word count
2. Be able to recall the basic logic of the Chinese language
3. Be able to write the Chinese character for wisdom
4. Be able to explain the Chinese character "hui" means wisdom

FOOD
1. Be able to recall the business implications of food in doing business in China:
a. Business budget
b. How to plan for banquets
c. Seating arrangements
d. Who pays
e. Preference for food
f. Chinese customs on who pays


II. POLITICAL AND ECONOMIC SYSTEMS

When Finished Studying This Section, You Will:
XX
1. Be able to describe China's political systems.
a. Be able to recall the political systems in Taiwan, mainland China and Hong Kong
b. Be able to recall a key factor that helps you understand the political behavior of countries which have been influenced by Chinese culture
c. Be able to recall recent developments in the political systems of Taiwan, mainland China and Hong Kong
d. Be able to explain why personality cults are still possible in countries which have been influenced by Chinese culture
e. Be able to recall 3 GENERAL business implications of China's political systems.
(1) Approvals from the top
(2) How to use high‑level government officials' visits to enhance business
(3) Multi‑level CONTACTS
(4) Visits of corporate officers
BE ABLE TO DESCRIBE 2 OF THESE GENERAL IMPLICATIONS
f. Be able to recall 5 SPECIFIC examples of how China's political systems affect doing business in China
(1) Beijing Jeep
(2) MOFERT and payment
(3) Airbus
(4) F‑16's
(5) Taiwan and political relations
BE ABLE TO DESCRIBE 3 OF THESE EXAMPLES.
EXAM TO COVER UP TO HERE , INLCUDING THE VIDEO.


Economic Systems
1. Be able to compare China's 3 economic systems.
a. Be able to recall the relative shares of state versus private production of the three economies
b. Be able to recall the relative degree of economic control by the three economies
c. Be able to recall and compare the three economies economic growth rates for the past 40 years
d. Be able to recall and compare the three economies' per capita incomes ‑‑ 40 years ago and today
II. Trade and Economic Development
1. Given data on china's economic growth, be able to explain why the three economies growth patterns differ.
Hk 5% growth /year since 1952
Prc 2-3% growth
Hong kong laissez faire
Prc communist
Roc mixed economy
Roc 8.3%
Mixed economy needs to control prices of non-competitive markets, preferably at p=mc.also, they NEED TO HAVE ANTI-TRUST LAWS WITH TEETH
COMMUNIST COUNTRIES

DIFFERENT SYSTEMS
PHILOSOPHICALLY FLAWEDYIN AND YANG TRIES TO DESTROY OTHER.
ECONOMICALLY INCOMPLETE – SUPPLY SIDE ONLY
NO LINK BETWEEEN CONTRIBUTION AND REWARD
[MANAGERIALLY INEFFECTIVE]


2. Be able to recall what the engine of growth of the three economies should be
TAIWAN EXPORTS BUT NOW SHOULD EMPHASIZE MORE ON ITS DOMESTIC ECONOMY
HK STILL EXPORTS ???? BECAUSE OF THE PRC
ENTREPOT
PRC – DOMESTIC MARKET

3. Be able to explain why each economy should have the engine of growth cited in objective #2.

FOR MAINLAND CHINA, FIRST MAKE THE PEOPLE RICH, THEN USE THE DOMESTIC MARKET AS ITS ENGINE OF ECONOMIC GROWTH.

WHEN THE SYSTEM CHANGES:

COMMUNISM DOESN’T WORK; IT WILL COLLAPSE.
COMMUNISM IS:
PHILOSOPHICALLY FLAWED –
ECONOMICALLY INCOMPLET – SUPPLY SIDE ONLY
MANAGERIALLY INEFFICIENT – NO LINK BETWEEN CONTRIBUTION AND REWARD

PRIVATIZE AND PRIVATIZE CORRECTLY.
EFFICIENTLY AND FAIRLY


GOOD EXAMPLE: NONE THAT I KNOW OF.

BAD EXAMPLE: PG&E
PRICE > MARGINAL COST

ECONOMICALLY MEANS AT PRICE = MARGINAL COST
CONTROL PRICES OF MONOPOLY AT THIS POINT
P= MC FIRST ORDER CONDITION FOR MAXIMATION OF TOTAL SOCIAL ECONOMIC WELFARE.L
\
STATE OWED FIRMS WILL SURVIVE
PRIVATE FIRMS WILL FLOURISH

WORKERS WAGES WILL RISE

DEMAND WILL RIISE è
P UP Q UP AND PROFITS UPD è INVESTMENT UP èK/L (CAPITAL/LABOR RATIO) UP è PRODUCTIONS COSTS DOWN èSUPPLY UP è
P DOWN Q UP AND PROFITS UP è ETC. ETC. ETC.
TARGET FOR THE COUNTRY IS FULL EMPLOYMENT



4. Describe how exports helped sustain almost 9% growth per year for the past 35 years In Hong Kong And Taiwan.
TAIWAN WAS SMALL
NO POLITICAL BACKLASH
DOMESTIC MARKET TOO SMALL … E.G. CLASS
IN 1952 $200/YEAR/PERSON
8.5 MILLION PEOPLE
$1.7 BILLION/YEAR = SIZE OF MARKET IN TAIWAN IN 1952
IN 1952 $1000/PERSON/YEAR IN THE WORLD
2 BILLION PEOPLE
WORLD MARKET = $2000 BILLION/YEAR
SO, IF TAIWAN SOLD EXPORTS TO THE REST OF THE WORLD, IT WOULD INCREASE THE MARKET FOR ITS OUTPUT BY 1146 TIMES.


SO DEMAND UP èP UP, Q UP, PROFITS UP èI UP èD UP MORE
(SINCE AD = C+I+G+X, THEN IF I UP, AD UP)
DOMESTIC COSTS LOW, INTERNATIONAL HIGH è PROFITS HIGH, SALES INCREASE è INVESTMENT UP
SO FAR, WE HAVE MORE SALES, MORE PROFITS
IF I UP èK/L UP (CAPITAL LABOR RATIO)èEFFICIENCY UP è COST OF PRODUCTION DOWN èSUPPLY UP (OR SHIFT TO THE RIGHT)èP DOWN, Q UP
THE STUFF OF ECONOMIC DEVELOPMENT: LOWER PRICE AND MORE OUTPUT èPROFITS UP èI UP
THIS PROCESS CONTINUED FOR MORE THAN 50 YEARS …

THIS IS HOW TAIWAN GOT TO GROW AT 8.17%/YEAR FOR THE PAST 55 YEARS.

7. Be able to recall two ways by which the PRC stimulated its exports.
KEPT WAGES LOW – KEPT PEOPLE POOR
ALSO POOR PEOPLE DON’T BUY MUCH STUFF
DEPRECIATE THE CURRENCYPOR
TERMS OF TRADE WORSENS
1983 RMB2/US$
TWO BOWL OF FRIED RICE/BIG MAC


2007 RMB8/US$
8 BOWLS OF FRIED RICE/BIG MAC
POOR CHINESE PEOPLE ARE GETTING POORER ..



Be able to explain why the PRC should not follow the same path of economic development as Taiwan.


Be able to recall two ways by which the PRC stimulated its exports.
KEPT WAGES LOW – KEPT PEOPLE POOR
ALSO POOR PEOPLE DON’T BUY MUCH STUFF
DEPRECIATE THE CURRENCYPOR
TERMS OF TRADE WORSENS
1983 RMB2/US$
E.G. TWO BOWL OF FRIED RICE/BIG MAC


2007 RMB8/US$
E.G. 8 BOWLS OF FRIED RICE/BIG MAC
POOR CHINESE PEOPLE ARE GETTING POORER ..

Be able to explain why the PRC should not follow the same path of economic development as Taiwan.