Exporting Computers from China to Germany
In the recent years, international business and trade have become key components in the global economy. The exportation and importation of goods and services among countries worldwide has provided employment opportunities. Besides, the revenue that countries generate in the process has helped in the achievement of development goals in various countries as well as the entire world. With international business a major focus in this paper, the point of discussion, in this case, will be the exportation of computers from China to Germany. China’s fast economic growth has raised eyebrows among global economic and political superpowers such as the United States. However, the contribution of China towards global economic development should not be undermined, and other global powers should give China space to achieve her interest and objectives. The major computer company in China that exports its products to countries worldwide is Lenovo. The latter is a popular multinational computer technology company, with its headquarters located in China’s capital city Beijing. The company is famous for its designation, development, manufacture, and sale of quality personal computers, Smartphone, as well as other electronic gadgets (Ling, 2006). Its stake as the world’s largest personal computer vendor in terms of unit sales has made it attract customers from across the globe. Its operations are found in over 60 countries, and its products are exported to over 160 countries (Ling, 2006). One of the major importers of Lenovo’s computer products is Germany. It should be noted that the enhancement and development of exportation of computers from China to Germany have been facilitated by factor mobility. This is the ease with which factors such as capital, labor, land as well other production factors are moved from one country to another. Factor mobility between China and Germany has been seen to occur in three ways: foreign direct investment (FDI), immigration and emigration, and capital transfers. Apparently, apart from promoting trade and economic growth, factor mobility has raised social and political issues in the two countries (Michaely, 2003).
The exportation of Lenovo computer products from China to Germany has been hijacked lately by private entrepreneurs. These teams have used their ways and means of ensuring that profitability is achieved during the process. In this case, the team involved in the exportation of computer products to Germany aims at studying factor mobility further, and this will help them come up with a decision of opening facilities in other foreign locations. However, for the team, this is not the concern now as they are focused on expanding their customer base in Germany.
The fact that governments are involved in trade between countries is a setback for the team exporting computer products to Germany. Governments come up with rules, regulations, and process that, private individuals or teams are obliged to stick to in order to have smooth operations or transactions. In this case, the team exporting computers to Germany must do research on what registrations and processes it has to follow for the delivery of its products in Germany to be successful. In commencing the exportation of computers to Germany, the government requires that the team enter into a contract with the buyer on the specifications and price of the computer products (Bethlehem, 2009). Second, the government requires that the team should prepare a commercial invoice and packing list and send to the buyer, or still, the team can transmit the invoice and packing list electronically to the buyer in Germany (Bethlehem, 2009). As per the government’s regulations, the buyer should then pay the invoice issued by the team as well as pay the required bank services fees. Once that is completed, the government requires that the buyer should identify, select, contract, and pay a company to transport the computer products (Bethlehem, 2009). At this point, there must be a preparation of a bill of lading. Transportation then begins once the contracted transporting company picks up the goods from the team. Before the departure of the goods from China, it is a requirement that the goods be checked at the customs terminal for clearance purposes and payment of required custom fees (Bethlehem, 2009). The government requires that the exporter, in this case, the team must select and contract a clearing agent. After approval by the customs department, a transit document for the products is then prepared. Government policies require that customs officials should then verify the information provided by the team on the customs goods declaration. After the verification of the provided information, the cargo is then sealed and exported to Germany via the contracted transporting company (Bethlehem, 2009). The team would prefer a recognized airline industry in China to undertake the transportation process.
Regional trade organizations or associations play an integral role in influencing international trade that takes place among countries. In this case, the roles of EU-ASEAN Free Trade Agreement (FTA) will be essential in the exportation of computers from China to Germany. The EU-ASEAN FTA is in the forefront in solving trade disputes that may come up between Asian and European nations (Camroux, 2008). The other role of the association is to ensure there is an increase of investment and technical assistance making products meet the EU and Asian standard and expand export volume (Camroux, 2008). The FTA between EU and ASEAN also plays a role in curbing competition among countries since most of the ASEAN countries are known to produce similar products that lead to competition within the Asian region. Thus, EU-ASEAN FTA was set up to implement the theory of first come, first serve (Camroux, 2008). The association also comes up with flexible value-added rules that member states have to adhere to. It also emphasizes on member countries improving their products to prevent loss of competitiveness (Camroux, 2008). The responsibilities and roles played by EU-ASEAN FTA will boost the team’s profitability and competitiveness as compared to other companies and organizations within China and from other countries that export computers to Germany.
The aim of the team in its efforts to export computers to Germany is to ensure maximum profitability. The team’s payment is through invoice paid by the buyer of the goods before shipping is done. This helps avoid confusion and payment disagreements when the computers arrive in Germany. However, the low value of the Chinese currency would be a challenge during transactions between buyers and the team exporting the products. Thus, a uniform and preferable exchange currency will be US dollars.
Every country, organization, or company has its reasons for exporting goods to various destinations. The general and global purpose of exportation of goods and services is the generation of revenues to be directed to other development sectors and projects. In this case, the team has various reasons for exporting its product to Germany. The team is exporting their computer products because the price for the products is higher in Germany. Thus, the team aims at making more money or profits (Johnson & Bade, 2010). The team’s aim is to remain competitive in the Chinese market; hence, it is exporting the products so as to earn income in foreign currency that help achieve strategies of counteracting local competition (Johnson & Bade, 2010). The team is also exporting computer products to Germany because of the increase in demand of the products. The team is also exporting the products to Germany because they want to establish a good rapport with German investors so as to boost their chances of being accommodated and accepted in German investment sector in the future (Johnson & Bade, 2010).
Without a doubt, there are a number of challenges that the team exporting their products to Germany would face. One of the challenges that the team is likely to face in exporting their products is the constant fluctuations in exchange rates (Siringoringo et al., 2009). That is to say, the team is likely to face losses when the exchange rates are low. The other challenge that the team would face in exporting its products is difficulty in dealing with cultural, legal and language barriers (Siringoringo et al., 2009). Apparently, the buyers of the products are Germans, and agreements during the process would be a great challenge with the varied cultures and languages. There is a possibility that the buyers would come up with extended payment terms, and this would be a drawback to the team. Another challenge in the process is that the team would find it hard maintaining a healthy cash flow (Siringoringo et al., 2009). Most companies and countries taking part in international trade have experienced the mentioned challenges, and the impacts have not been that attractive. In fact, studies on international trade indicate that most companies, organizations, or private investors have been forced to withdraw from international trade due to the challenges experienced (Siringoringo et al., 2009). The other challenge that the team would have is accessing required export documents. There are numerous documents that must be put in place by organizations, companies and individuals that aim at engaging in international trade. Such documents include but are not limited to commercial documents, financial documents, insurance documents as well as other trade-related documents. In this case, the exports that the team exporting the computer products would have to put in place include an international purchase order, an international commercial invoice, a packing list, an irrevocable letter of credit, a CMR transport document, a bill of lading, an air waybill AWB, inspection certificate, as well as a certificate of origin (Johnson & Bade, 2010).
Successful exportation and profitability of the computer products would encourage the team to adopt and embrace the exportation of other products such as phones, tablets, fridges, and television sets. The team would follow the same exportation procedure in making sure that its new products are successfully received by probable buyers or customers in Germany. Before then, the team will be forced to market its products in Germany and across the world in order to have a wide customer base. Some of the marketing companies that the team would capitalize on include mass media and social media. In the mass media, the team would target global television channels such as CNN and Al-Jazeera in popularizing its products. The team would also target social media websites such as Facebook and Twitter, and this is owed to the fact that the two media websites enjoy a large global following. However, there are a number of marketing issues that the team is likely to face. To begin with, the cost of marketing especially in the global media industry is high, and this would be a big challenge to the team in popularizing their products (Lamb et al., 2012. The team would also find it hard to find and recruit the top talented individuals who would boost the team’s products social website marketing (Lamb et al., 2012). The ever-present government regulations would also prevent the team from carrying out its marketing strategies (Lamb et al., 2012).
In spite of the challenges that the team would face in the marketing of its products, one fact that should be ignored is that e-commerce would play an integral role in the team’s success and profitability. Not every person in the entrepreneurial and business world has a clear understanding of what e-commerce is, what it entails, and how to ensure it is implemented or achieved. E-commerce entails organizations, companies, and individuals trading in products and services through the use of computer networks, which currently is the internet. In this case, e-commerce would involve the team transferring funds electronically, advertising its products to the buyers through the internet, as well as using the internet to do other transaction during exportation. In order to be accepted in the German market, the team would have to ensure that it supplies high-quality products that would compete favorably with the local products in Germany. It would be essential to work within the foreign trade zones as per the government rules and regulations. This would ensure that the team runs its operations and transactions smoothly in Germany.
In order to ensure smooth operations and transactions during the exportation process, there are a number of ethical considerations that the team exporting their products will put in place. First, the morality of the members of the team as well as that of the potential buyers would be vital. Morality would enhance understanding and good relations during the process. Second, honesty of the buyers and the members of the team would also determine the success or failure of the process. Honesty would come up during payment of the invoice by the buyers and packaging by the team. It would be crucial that the buyers pay the correct and required. On the other hand, it would also be crucial for the team to package the correct products for the buyers. It is a common practice that corruption and bribery dominate exportation and importation activities that involve countries, companies, organizations, and businesspersons. Government laws and regulations prohibit corruption and bribery, and the repercussions of the two practices are hefty. A number of foreign companies have been shut down because of corruption and bribery. In this case, the team will try as much as possible to avoid involvement in corruption and bribery. Besides, the team will try as possible to avoid engaging in battles and conflicts with government authorities over violation of child labor laws. In achieving this objective, the team will ensure that employees provide their registration and birth documents during recruitment in order to do away with issues of uncertainty over employee ages.
Like any other company, organization or country, accounting standards would be vital for the team’s exportation process. The team would be forced to abide by the Chinese accounting standards, as well as the globally accepted accounting standards, so as to avoid interruptions and interference by government authorities. In this case, the team will allow the sharing of its financial statements with its buyers, and this will give the buyers an easy time interpreting the team’s financial records as well as assessing the exportation process. Owing to the fact that trade will be international; the team would prefer conducting the business in Dollars because of its global value and recognition. On the other hand, in overcoming cultural and language barriers, that are likely to be faced in the exportation process, the team would capitalize on using English as a language of communication because of its global popularity. Moreover, the team would ensure that enough employees are recruited in every sector to facilitate smooth operations and transactions. For instance, the team would recruit enough employees to facilitate marketing in the mass and social media platforms. The success of every organization depends on the motivation of employees and every stakeholder involved. Thus, the team’s members and other employees who will be involved in the exportation process will be paid on the commission since the team’s project is only starting up. However, as the project develops and expands, the employees will be paid on a monthly basis, and this will depend on the team’s profitability.
Bethlehem, D. L. (2009). The Oxford handbook of international trade law. Oxford [u.a.: Oxford Univ. Press.
Camroux, D. (2008). The European Union and ASEAN: Two to Tango. Notre Europe, 1-43.
Johnson, T. E., & Bade, D. L. (2010). Export/Import Procedures and Documentation. New York: AMACOM.
Lamb, C. W., Hair, J. F., & McDaniel, C. D. (2012). Essentials of marketing. Mason, Ohio: South-Western Cengage Learning.
Ling, Z. (2006). The Lenovo affair: The growth of China’s computer giant and its takeover of IBM-PC. Singapore: Wiley.
Michaely, M. (2003). Goods versus Factors: When Borders Open, Who Moves?. The World Economy, 26(4), 533-553.
Siringoringo, H. S. H., Tintri, D., & Kowanda, A. (2009). Problems faced by small and medium business in exporting products. Delhi Business Review, 10(2), 49-56.