Entry Strategies for International Markets
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International Business Development evolves through the normal processes of trade, foreign direct investment (FDI), capital flows, migration, and the advancement of technology in undeveloped nations [1]. With huge growth opportunities created by the emerging markets, such as India, China, and Brazil, more and more companies in both the developed and emerging countries take part in the international business. The developed countries have plenty of capital, while the developing countries have much cheaper labors, raw materials and much lower taxes. Thus division of work and then cooperation or exchange can give much more profit because both sides only do the things they really have relative advantages. The companies in developed can gain much more profit from the emerging markets due to the lower producing cost there, as well, the emerging can gain growth for their local economy, so both sides eager to do business with each other.
Now countries are doing more and more business in the international market. Like United States, in February, United States exports 116546.7 millions of dollars of products to other countries. On the other side, Emerging markets are now importing and exporting a great percentage of products in the global markets. Like China, now China passed German became the largest export countries in the world. In 2010, the Chinese total exports increased by 31.3%, to nearly 400 billion dollars. And in this year, the total exports are 30% of the whole GDP in china.
International business does mean a lot for the economy.
Sources: China National Bureau of Statistics, China Customs Statistics, Public Bank of China
Differences between domestic and international market
Conducting and managing business in an international market is much more complex than doing that in a domestic market. International market is quite different from a domestic market. There are a lot of differences between these two kinds of markets. In order to get a deep and full-scale understanding of the international market, these differences should be figured out first.
A domestic market usually has only one kind of money and one set of trade laws, while the international market uses many different kinds of money which fluctuate in their exchange value, and many sets of laws regarding international trade. The global market is much more complicated and on a larger scale than the domestic market. [2]
Here are the details about the differences between these two kinds of markets：
Economic environment: The international market has a much more complicated economic environment. There are different culture, different political system, different currency, and quite different consumer behavior. While domestic is much simple. The companies are familiar with the culture, political system, and consumer behavior very much. It is easy for them to start business in the domestic market.
Scope: Scope of international market is quite wide but the situation of international market is much more complicated. It includes not only merchandise exports, but also trade in services, licensing and franchising as well as foreign directly investments. Domestic market limited to a limited territory. Though the firm has many business establishments in different locations, all the trading activities are inside a single boundary.
Market Fluctuations: International market is more wide and complicated. Many different small markets interweave with each other. The whole market fluctuates according to the changes of every small market. Domestic market is limited to a limit territory. It is influenced less by the other markets changes. Thus compared with domestic market, international market is much more fluctuated.
Competitions: Companies those doing business in the international markets face a drastic competition with the companies not only for their only country, but coming from all over the world. So the competition in the international market is much more furious than that is in the domestic market.
Sharing technology: International market provides a