Management Matters

The Chinese Market

Economic times seem to continuously change, and one might question who is controlling it all. This week the Preside of the United States and the President of China met. A number of growing economic concerns were the topic of discussion that included meeting with prominent business people from China and the United States.

For years the companies of American have been concerned about the incoming Chinese goods into America. So many of the goods brought into the United States were so cheap that it made it difficult for American companies to sell the goods manufactured in America. Everyone has seen it, in stores all over, it seemed that anything that comparing goods if it came from China it was cheaper. Many experts according to a report in the New York Times said that China is keeping its currency unnaturally low to allow for such trade to continue. One expert reported that even though the Chinese currency had risen on the world market that it was still incredibly undervalued.

Currently at issue for American companies and companies from many countries is the limit of access to sell goods within China. Because of a number of policies in China, preferential treatment and aid is given to companies selling within China that foreign countries do not have. The result of these tactics make it difficult for American companies to break into a market that is the second largest in the world. The playing field isn’t level. The American government suggests it wants to make a deal with China to allow increased trade between the two countries. It seems like a struggle between the two countries both of whom mainly want to expand business opportunities for their own economy and companies within the respective countries. For many of us this seems to be of little importance, but even if you are just working in manufacturing, these issues affect the future of your job.

Many Advantages to Offshore Banking

One can list a number of possible advantages to choosing an offshore bank. The question remains is it right for you and will those advantages actually apply. Every person’s financial situation is different from others. What you intend to do with your savings in the future is also different from others. Carefully consider the use of such banking before choosing to send your money outside the country.

It may be more stable to send your money to a bank outside the country. If you live in a country where political upset may cause a negative effect on your bank and lead to the possibility that your money will be lost, putting your money in an offshore account may be an advantage. The opposite is also true though. If you live in a country that is relatively safe from such turmoil, it may make more sense to keep your money local. Ask yourself the question before depositing your money overseas: What if the country that I keep my money in has the problems?

A second advantage is that the bank in another country may not report your interest income to the government of your country. If this is true, you stand to make more money because it won’t be tax.This is not true. In the United States it is still illegal not to report your earned income from any interest earned regardless of where the money was earned. Don’t get caught by the IRS because you think you can get away with something, this is fraud in most cases.

Another advantage is that your money is available to you when you need it but kept safe and separate from your income at home. Make sure to check carefully how accessible your money is. You may not be able to get to it as easily as you could if it was in the credit union down the street. Do your research first, always.

Marketing is a Requirement to Your Business

Whether you are doing business in the United States or abroad, without marketing your business, you won’t get much of the action. To often a good business goes bankrupt, not because there is no need for the product or services, but for other simple reasons. It takes initiative to start a business, and it may take more understanding than an entrepreneur has. Hiring a marketing firm or market research help may be necessary to really get your business going.

Marketing is everything from setting your price point to getting the name of your company out into the public eye. If you don’t know what people pay on average for your product it may be easy to go out to look at local stores if that is your market. But what if you are selling a product overseas. This is where the help of a market research firm may help you. The cost of such research needs to be included in your business plan. It is great that you started a business but to be successful make sure you are working at a marketable rate.

Getting your name out to consumers and getting them to listen can be difficult today, since everyone and anyone seems to be advertising something. Don’t hesitate to approach people if you are working in a local market. If you are trying to connect into the global market, don’t hesitate to ask for help from a firm that knows how to get your name out. To get your business on the internet is easy but to get it recognized by a search engine takes resources and know how. Keep trying, keep finding new ways to connect with people. Social networking is the new thing, but try to get ahead, what will be next? Marketing is an intricate part of your business model.

What to Consider When Looking for an Offshore Investing Company?

When looking for offshore investing firms research it crucial. The more you know about the companies you are considering, the less you have to worry. The decision to invest is always a gamble and shouldn’t be taken lightly. Learn the law for the countries, because they are different around the world. It is best to choose a company that has an office in the US.

Next, gain as much knowledge as you can on the investment. Learn the investments potential and risk. This will ensure that there are no surprises when it comes to you money. Don’t invest in something that you know nothing about.

Other companies in different countries have their own laws when it comes to investing. Make sure you will be able to have access to your money. There have been numerous scams over the years involving offshore accounts. For this reason learn as much as you can before investing and make sure it is legitimate.

If you get involved with a scam it will be hard if not impossible to get any of your money back. International laws are much different than the US laws making it pretty much impossible to take legal action.

This should not turn people away from offshore accounts, because if you do your homework you will find reputable companies to invest. There are great companies overseas that you can trust with your money. A reputable company will work with you and make sure that you are satisfied with your investment. They will also make sure you have access to your accounts when you need them.

Investors consider offshore accounts to save them money. There are certain laws in place that saves the investor from certain taxes on their overseas accounts. There are different privacy laws to ensure your information is safe. This saves the investor in the long run, since the tax laws will protect their accounts.

What are the Differences Between International and Domestic Markets?

Domestic marketing takes place within one’s own country, while international marketing takes place outside of one’s country. One of the major problems between domestic and international markets is the language barrier. The language barrier makes obtaining and interpreting research data difficult. Many words have different meaning in other countries.

It is truly amazing that one simple word can mean something different around the world. This is an example of how United States words are used in different countries and there meaning:

French fries are called chips in Britain
Soccer fields are called pitch in England
Porches are called gallery’s in the Caribbean and stoep in South Africa
Ghost or Monster’s are called duppy in the Caribbean, wendigo in Canada and taniwha in New Zealand
Bar’s are called a boozer in Australia, New Zealand and Britain there are also referred to as hotel’s in Australia and a pub in Britain
Soccer is called football for the rest of the world
Festival is called feis in Ireland
Police are called Mountie in Canada, bobby in Britain, Police wallah in South Africa and a loo in Britain
Barbecue is called a Barbie in Australia and braai in South Africa
Trucks are called lorry in Australia and Britain

Here are just a few more interesting examples of different countries:

A simple sign in a Bucharest hotel lobby: “The Lift is being fixed for the next day. During that time, we regret that you will be unbearable”.
In a Japanese information booklet concerning the use of a hotel’s air conditioner: “Cooles and Heates”: “If you want just condition of warmin your room, please control yourselves”.
At a Acapulco hotel: “The manager has personally passed all the water served here”.

These are very interesting facts about the differences in domestic and international markets. Make sure you understand the language, when investing your money in international markets.

Attracting Busines: How to Get Your Business Booming

Wanting to expand your business or draw in more customers? Expanding your clientele and attracting business is a great way to not only bring in more revenue but also a good way to make sure your business stays relevant. Keep your finances organized and up-to-date with the latest financial software like Netsuite. Here is a look at some ways to get your business booming.

The first step you will want to take to attract more business is by making your business more attractive. If you work out of a store or building complex make sure to make the atmosphere welcoming, clean, and professional. Even if you are just starting out and do not have the financial means to hire a professional decorator you can still go a long way by simply keeping the space clean and adding a few simple, personal touches. However, don’t blow your budget with decorating or unnecessary expenses. Make sure your professional environment is welcoming, but doesn’t break the bank. Keep track of expenses such as these by using reliable software, like Netsuite. This will help you manage your accounting and financial needs while keeping them organized for tax purposes. You never know what itemized deductions could apply come tax season.

Another key step to attracting business is ensuring your employees are friendly and professional. Be sure to go over how important it is for employees to greet customers and try to offer their help.
If you are the only employee remember to smile and be polite, even if it is just over the telephone. Smiling and being polite can go a long way to bring customers back and maybe even have them refer your business to their family and friends.

Lastly, go to work happy! The more you enjoy your job and are showing how happy and positive you are the more customers will see and sense this. When others sense that you are happy and positive it in turn makes them feel this way and this encourages them to come back.
If you find you are having a bad day or your days starts out wrong try to take a few minutes to yourself and take a look at how to turn things around and make the day start going the way you would like it to.

Even Purely Domesic Firms have International Ties

Even a purely domestic firm has International ties. The world is a global marketplace and thus all firms have a global market impact by contributing to the GDP (Gross Domestic Product) of their country. In addition, all firms are impacted by the global economy and other factors because it impacts local and International lending rates. Even companies with no debt or credit lines expect a modest return for their savings accounts.

The marginal cost to finance operations for a purely domestic firm is more expensive than one that considers its International options. Global banks with global lending options will look to interest and risk rate aversion to find the best options for the company. One can say that the marginal cost of financing operations is lower for a multi-national firm because of the increase in the universe of lending sources and access to foreign funds. Thus, one can deduce that a mult-national corporation has lower operating costs just by participating in a global lending market.

But, even though there may be low rates in remote countries, access to those funds may be hard to obtain. Interviewing global banks is one way to research information, one can also easily calculate the openness of a country with some general widely published figures. One can measure the openness of an economy by measuring a few simple things. If you take the imports plus the exports and divide that total by the GDP you find the openness of an economy. GDP is an indicator of the overall economic activity of a country, but it is by no means a complete measure of a country. There are many additional factors to consider when dealing with a specific country, namely risk factors. The banking and economic crisis of the last few years has made banks and lenders very risk averse.

The Gold Standard Revisited

: Image via Wikipedia

There are many strategies to guarantee global security and safety in a country’s currency. The United States was on the gold standard for many years. The US maintained a sufficient amount of gold to back-up the currency that was in print and also measured the stability of a currency based upon 1 Troy ounce of gold. The Gold Standard was put in place to stabilize a currency and it also allowed a global currency trading market to exist. For exchange rates could be pegged to a global commodity, gold. If a country had more gold they also had more liquidity and if they had less gold they were less liquid and able to borrow against their currency or print more notes.

The gold standard promoted price stability in the long-run because gold was a rare commodity and something that was known and valued on a global market. It is also something that can be stored and will not change with extreme hot or cold temperatures. But, in the short-run, the gold standard actually causes large swings in price and currency valuations.

At the end of WWI, the United Kingdom had extremely high inflation and they were unable to go back on the gold standard. In the 1920′s & 30′s the global gold standard collapsed. The United States and their trading partners established the Brenton Woods Agreement. It created the International Monetary Fund, Established standards for tariffs and GATT and set the first exchange rate system which pegged many International currencies to the US Dollar. The US Dollar was then pegged to $35/troy ounce. This was a huge advantage at the time for the United States since it owned over 60% of the world’s gold. Shortly thereafter, the Federal Reserve was established to watch over the United State’s monetary policies and currency rates. It has been speculated that the world would be better off back on the gold standard, but it would be difficult to implement.

Dollarization and Exchange Rate Agreements

There are several International Exchange Rate Agreements in place today. A country may choose any type of trade-rate system. But, they must be careful because the country’s currency value in the world economy can drastically change if they chose an exchange rate system that is not favored by the major economic powers of the world.

Dollarization is an example of an applied trade-rate system. In this system, the local economy accepts both the local and another widely used currency. For example, Argentina’s local currency was almost phased out in the late 1990s, at which time the US Dollar was then adopted as a second local currency accepted by most merchants. Europe also saw this dual currency situation during the Euro-Dollar transition. Many merchants began accepting their own local currency in addition to the Euro. There are also some countries that abandon their local currency completely in favor of another widely used instrument. This applied trade-rate system is called Dollarization. The problem with Dollarization is that the country that adopts another currency completely then gives up complete control of their monetary policy to the other nation. So, if a country accepts the US Dollar as their country’s only currency, they have no power or say on the US Fed’s interest rate changes or anything else to do with the US Dollar. The local economy of that country has staked its future on the US Dollar and the United State’s ability to hold down inflation and keep the currency’s value ratio high.

Some of the Exchange Rate Agreements in place include (from most restrictive to least restrictive) No Separate Legal Tender, A Currency Board, A Pegged Currency, A Pegged Currency with Bands or Watermarks, The Crawling Peg, A Managed Float and an Independent Float. It is up to each monetary policy board to decide which Exchange Rate Agreement makes sense for their currency holders and to maximize the value of the currency on the world market.

Seigniorage: The Art of Printing Money to Pay Debts

An important foreign and domestic currency concept to understand is something called Seigniorage. This directly impacts inflation because the country in question basically prints additional paper currency to cover government expenses. This is essentially a tax on all currency holders and local citizens of the country. The process of printing money is easy, but the governing bodies and monetary policies are quite complex. Countries have an inherent desire to keep inflation low and the purchasing power and overall value of their currency high. Countries that engage in Seigniorage typically do so by issuing bond or other financial instruments and pay them back with newly printed currency.

The aspects of Seignorage are quite problematic in areas that utilize a single currency across multiple countries. For instance, the European Union has a single currency and does not currently allow the additional printing of currency to offset bonds and other financial instruments. The reason for this is because the financial instruments are often developed by a particular country. If the European Union then decides to pay off those instruments with Euro Dollars, they are creating value for that particular country by offsetting an expense, but they are creating a liability for all of the other countries that utilize that currency.

Governments often tout the benefits of Seignorage to their constituants and currency holders. They often cite positive investments in both financial instruments and goods and services produced by that country. For instance, if the US issues debt that is paid back by printing additional currency, the holder of that currency will most likely buy US goods and services. While this is often a stated benefit, it is rarely realized and effective at increasing exports. What usually happens is that the country prints additional currency and then staves off inflation by reducing interest rates which triggers more borrowing and thus spending. So, in effect the benefits are masked by other movements of the financial monetary policy makers.