The Concept of International Trade - Essay Example

? RESPONSE TO INTERNATIONAL BUSINESS ARTICLE By + Profession’s Response to International Business Article William Browder (2011) recently featured an article about an investor who was giving his first-hand account of the awful experiences he had was an investor in Russia. He recalls that he was among the top investors in term of his portfolio. This is after the police department started making up claims of corruption and illegal operations in his business. The firm hired a young lawyer to look into the allegations and together with some investigation expert the young lawyer managed to find evidence of corruption conspiracy among top police officials and testified against them. He was later found dead; an article in the “Street Wall” describes his death as slow assassination. This is just one among the many adverse challenges that some investors who choose to invest in foreign countries face. In some nations, international businesses, whose home country is America or any other nation that the people in that country have stereotype ideas about often face challenges convincing the law enforcement officers that they are running their business legally according to the laws of that country. Other times it is not necessarily the stereotype ideas, but crude competition strategies by the businesses they met in the area. Some are hit with false acquisitions of corruption, mismanagement and evading taxes. In response to the article investors ought to be extremely selective of the nation they choose to expand their business internationally (Browder 2011). Investors who have had adverse experiences should have the opportunity to air their experiences so as to help other who are looking forward to investing in these foreign investor hostile nations. Many of investors from UK and USA who have had the opportunity to run businesses in Russia, apparently have recorded high levels of un-satisfaction running businesses there. Approximately 21% of them feel that the lack of transparency in Russian business laws and sophisticated hierarchies and legal procedures make it possible for the law enforcement officers to harass them (Meyer, Mudambi & Narula 2011). Russians also tend to rate highly in corruption and some local business owners who feel that these foreigners are a threat liaise with the law enforcement officer to accuse foreign investors falsely of fraud. Of all the complaints these investors raise, the least worrying factors to them are Russian Central Bank Policy, with only 9% complaining about it and corporate culture in Russia, which only about 11% of the investors feel it is a bother. The Russian government, however, insists that it is doing all it can to improve investor conditions in the country (Hill 2011). Russia is the world second largest oil producer in the world. This is the main economic activity. The government’s plans to diversify to other economic activities are usually challenged since this would lead to the end of the authoritarian governance. This another source of the many challenges foreign investors have to deal with when doing business in Russia. Many complain that the legal and government system, in the country is too bureaucratic, which makes it inefficient to handle the issues these foreign investors face daily. Many complain that for a legal process to go through it takes a long time. For example, the investor in this case had already been deported by the time it was discovered that the allegations against them were a conspiracy plan to get him out of business (Sauvant, Maschek & McAllister 2010). Despite having all these issues the government of Russia seems to be taking steps towards improving investment environment in the country. The government is encouraging foreign investors to invest in the country with the aim of diversifying and increasing its economic activities. Several earnest foreign investors have set up businesses in the country and have managed to make success stories in the land despite all the negativities some claim to have gone through while running businesses in the land. For the last two or so decades, Russian government has been developing and formulating a number of economic, legal and social institutions in an effort to create a more effective market economy. This government has been devoted to making its systems more modern and efficient than they are now. Besides the business and market systems the government is also committed to ensuring that the court systems also start to function efficiently so as to make the experiences of foreign investors better than they are today. It also aims at having policies that provide for investor protection, developing its capital markets and improving the efficiency of government services (Bayulgen 2010). This article on international trade seems to argue that the government of Russia is not making any efforts in making better the foreign investor experiences. It is necessary to realize that it is not an easy job for the government to deal with all the changes at ones. The progress is systematic, but with time there is hope that Russia will be a foreign investors’ friendly business hub. As Russian government works hand in hand with the business leaders, staffs members of the various countries and consumers of services and products these firms manufacture, it is bets that investors equip themselves with the relevant knowledge of how the systems work in Russia. They should also identify the friendly opportunities to invest in the country to avoid conformations with harsh competitors (Kuznetsov 2010). Identifying the market opportunities and taking the time to study and analyse the market makes it easier for the foreign investors to avoid instances where they conflict with the legal system of the country. This is because it is possible that some of the investors who have had unpleasant experiences doing business in Russia, may have found themselves in such a situation because they did not take their time to analyse the market and understand the needs of consumers in that market as well as the legal system of the country. This is because different government system have varied rules and regulations, and the markets are also different. Therefore, investors should take their time and gain an understanding of the rules and regulations of the nation before making any investments. It is possible that the investor in this article, did not understand he or she was carrying out business illegally in the country. This is because maybe in his home country the rules and regulations he or she was following are correct, but they may not apply in Russia. This conflict in the legal system can result in foreign investors having unpleasant experiences in a country when doing international business (Sornarajah 2010). Finally, Russia is a rising market and as such issues of corruption and crimes are present and will probably continue for quite some time. The government is trying to invest in anti-corruption programs that aim at reducing corruption levels in the country, but they are yet to be a complete success. For these reasons, the risks of economic crimes and disputes in Russia can be significant. Investors must be ready to respond to the Law enforcement and regulatory actions and must make plans to protect their business interest actively. If questions of integrity come up, the foreign investors should trust the courts to provide the best and most accurate solution. While in many ways investment opportunities in Russia, have significant upside potential, investors would do well to look out, look around carefully, and look for signs of business as usual, but also business as unusual. This will help them make accurate decisions that will not have adverse effects on them when doing businesses in the country (Torkkeli, et al. 2009; Holtbruegge & Puck 2009). In conclusion, the William Browder, in his article features the unpleasant experiences of an investor who was deported from Russia. This was after allegations were made against him and police took his business documents claiming they would help in further investigations. The writer also talks of the content fears the workers of the firm had and that a young lawyer whom the business had hired to look into the issue was found dead after testifying against senior police officials. He also talks of insecurities, which make it difficult for business owners and their human resource to work in peace. All these negativities exist in the Russian market since it is an emerging market and like all emerging markets, such incidences are common. It is therefore, advisable that foreign investors take into account all these limitations when investing in Russia. This will help them plan on how to defend their businesses from these issues. References Bayulgen, O 2010, Foreign Investment and Political Regimes: The Oil Sector in Azerbaijan, Russia, and Norway, Cambridge University Press Browder, W (14 February, 2011), “We are not safe doing business in Russia”, The Telegraph. Hill, C 2011, International business: Competing in the global marketplace Holtbruegge, D, & Puck, J 2009, Stakeholder networks of foreign investors in Russia: An empirical study among German firms, Journal for East European Management Studies, vol 14, no. 4, pp. 369-394 Johnson, D, & Turner, C 2010, International Business: Themes and issues in the modern global economy, Routledge. Kuznetsov, A 2010, Industrial and geographical diversification of Russian foreign direct investments. Turku School of Economics Pan-European Institute Electronic Publication, no. 7 Meyer, K, Mudambi, R, & Narula, R 2011, Multinational enterprises and local contexts: the opportunities and challenges of multiple embeddedness, Journal of Management Studies, vol 48, no. 2, pp. 235-252 Sauvant, K, Maschek, A, & McAllister, G 2010, Foreign direct investments from emerging markets: the challenges ahead, Palgrave Macmillan. Sornarajah, M 2010, The international law on foreign investment, Cambridge University Press Torkkeli, M, Podmetina, D, Yla-Kojola, M, & Vaatanen, J 2009, Knowledge absorption in an emerging economy–the role of foreign investments and trade flows in Russia, International Journal of Business Excellence, vol 2, no. 3, pp. 269-284 Read More