Hong Kong and the Global Economy Chapter 2 Hong Kong and the Global Economy

Factors affecting business decisions The business environment is affected by: Political and legal factors Economic factors Business Environment Technological factors Social and cultural factors Physical factors

Hong Kong’s economic and business relationship with the Mainland Hong Kong has a close economic and business relationship with the Mainland in the following areas: The flow of goods and services The flow of investment The flow of people The flow of information

Economic policies in the Mainland The Chinese government announced its open-door policy in 1978. It then started to introduce various reform policies to develop the economy. The reform policies include: Special economic zones and coastal port cities Enterprise reforms Financial reforms Entry into WTO

Business practices in the Mainland A country’s social, political and legal environment has a great impact on business practices. In China, business practices that affect business decisions include: The importance of guanxi Corruption Business ethics Flows of capital and information

Globalisation of business Globalisation is a series of ________, ___________, _______, ______ and _______ changes which have led to the increasing _________ and _____________ of people and firms around the world. economic technological cultural social political integration interdependence Changes in: Economic Social Integration Cultural Political Interdependence Technology

Globalisation of business In the process of globalisation, many firms have ________ their markets beyond the _______ boundaries of a single country. These firms have become ___________________ (MNCs). expanded national multinational corporations Examples of MNCs):

Globalisation of business Drivers of globalisation Since the 1980s, the process of globalisation has gained momentum. There are four driving forces of globalisation. The success of Japan and the ‘Four Little Dragons’ Economic reforms in China, India and Eastern Europe Development of information and communication technology Advances in transport technology

Globalisation of business Impact of globalisation on business Business managers should be aware of the impact of globalisation on business when making decisions. Expanding markets Recognising cultural differences Increasing competition and specialisation Encouraging global sourcing and outsourcing Encouraging technology transfers

Major international trade organisations The following international and regional trade organisations have been established to promote and facilitate international trade and investment. International Monetary Fund