Introduction to Global Business Analytical Essay

Introduction, stemming immigrants’ influx, legal system, foreign aid and savings push, foreign direct investment (fdi), relevant international business concepts used in the analysis.

With the continued integration of the global economy, more countries are finding it necessary to cooperate with each other for the good of their individual economies. Physical barriers to interaction, such as geographical location, have been rendered irrelevant by the technological advancement that has improved communication and interaction between countries.

Today, many countries of the world are moving toward adapting a democratic system of governance in order to link their national political ideology with the shifting world order. This essay analyses the aspect of international integration with particular reference to Australia.

With elections just about to be held, Australia faces the challenge of reducing its international cooperation and being sidelined economically by the international community.

This is as a result of the new economic policy that has been proposed by the opposition coalition and which will be implemented in case the coalition gets elected into office. It seeks to reduce foreign spending by proposing that such funds be channelled toward strengthening infrastructure.

Increased influx of immigrants into Australia poses a grave danger of reducing the economic well-being of the country. Most of the immigrants are running away from the poor conditions in their countries as they seek for employment and other advantages that are unavailable in their native countries. In most cases, such immigrants lack competitive skills and are least likely to find better paying jobs in Australia.

Thus, their presence in Australia only strains the economy as it will be upon the government to cater for their basic needs. The government will be forced to buy food, medicine, and pay for their housing, instead of channelling funds to other important development courses (Watts, 2002).

Australia must strengthen its political economy in order to address this menace effectively. This will involve introducing political policies that work in tandem with both the legal and economic systems of the country. In strengthening the political system in order to achieve this objective, the opposition coalition will have to concentrate more on achieving collectivism as opposed to individualism (Chiswick & Hatton, 2003).

Border security must receive adequate funding from the government to improve on its effectiveness in addressing the increase in the number of illegal immigrants coming into the country. The state must be the principle owner of all security systems such that it may manage the entire situation with the focus of benefiting the society.

However, in pursuing collectivism, the opposition coalition must ensure that it also supports individualism in order to benefit from free market economies, as well as democratic political systems. In other words, the coalition government should only insist on collectivism in very few critical aspects, such as issues to do with the overall security of the country, but allow individualism to prevail in other sectors.

Achieving the intended control mechanism that would help the Australian government to put the influx of immigrants under control would require a comprehensive and highly effective legal system.

A civic law would be the most appropriate choice in enabling the opposition coalition to achieve its objective. Under this legal framework, the government will give consideration to a comprehensive set of laws that will be organised into appropriate codes for ensuring that the appropriate channel is followed.

However, the Australian government must also consider international integration even as it addresses the challenge of illegal immigrants into the country. International conventions on immigrants and asylum seekers exist, to which all United Nations’ member states must ensure they adhere to even as they ratify their own domestic laws (Boeri, Hanson & McCormick, 2002).

It would be illegal for Australia to come up with laws that neglect and undermine the rights of the immigrants who seek to settle into the country. Regardless of the legality of the immigrants’ actions, Australia has a jurisdiction to ensure that it incorporates international law requirements on immigrants if it has to be considered as a member of the international community.

Any deviations might see the country’s human rights records being blacklisted. This is a move that would further affect the country’s interaction with other international community (Cavusgil & Tamer, 2008). Contravening the international convention on immigrant’s rights could see Australian companies and products being denied entry into other international markets.

This would mean reduced revenue for the country. Equally, such contraventions could also see foreign companies bypassing the country and establishing operations in other markets. Such a move would deny the country employment positions and opportunity for raising more revenue through taxation.

In essence, while the question of illegal immigrants is one that affects Australia directly, the government must consider globalisation effects when handling the issue. The internal interests of the country must be protected, at the same time giving due consideration to the international standards and practices when handling the matter (Watts, 2002).

The Coalition government’s plan to pursue massive cuts in foreign aid funds puts Australia’s commitment to fighting global poverty levels at a collision course. With the advent of globalisation, all countries in the world have a role to play in ensuring that the global economy achieves a single objective and mission (Ram, 2004).

By virtue of its economic standing, which is relatively superior compared to those of a majority of the developing nations, Australia must show more commitment in helping to reduce the global poverty levels. No move that seeks to reduce its ratio of foreign aid to poor nations should be condoned (Quartey, 2005).

Any attempts by an individual country to strengthen its economy while doing very little to assist the struggling nations is likely to backfire because of the complex integration of the global economy (Ouattara, 2006). It is critical that Australia enhances the improvement of her economy through improving infrastructure, but the mission should not affect its commitment to alleviating global poverty levels.

Like all other developed economies in the world, Australia relies on the developing economies for marketing its processed goods. Developing nations must have the financial ability to acquire finished goods from Australia in order to enable the country’s economy hold on to its progressive agenda (Organization for Economic Corporation and Development, 2009).

Withdrawing financial aid to these economies, therefore, limits their ability to strengthen the individual economies. It reduces their buying power, thereby limiting the overall global market power (Morrissey, 2001). This means that such a move could trigger another global financial crisis because most of the poor nations will lack the ability to acquire manufactured goods.

Given that most of the developed countries are the ones manufacturing these goods, they will lack the necessary revenues because their targeted markets, mainly the developing world, will not be in a position to cater for the demand due to of lack of funds (Facchini & Mayda, 2008).

The Coalition government, therefore, should realise the fact that strengthening the infrastructure while reducing the foreign aid ratio might not necessarily lead to an improved national economy. It would, instead, subject Australian multinational corporations operating in these economies to tough economic situations, including losses that may eventually see the companies shut their operations down.

The Coalition government can still come up with a policy that would see it acquire funds to improve on its infrastructure, while at the same time maintaining or even increasing foreign direct investment to the developing economies (Tavares, 2003).

This can be achieved through the government working hard toward securing investment opportunities for Australian companies in the developing economies. Australia stresses on individual goals because it pursues a democratic political system. This means most of the companies in the country have their own financial capital which they decide to spend without seeking the approval of the country.

Thus, Australia can influence these companies to expand their operations through establishing operations in foreign economies, particularly economies that are considered to be developing. Such a move would see the firms expend their capital base in those countries, thereby increasing the overall FDI from Australia.

Developing countries benefiting from such expansion programmes by Australian multinational corporations would have the advantage of enjoying additional employment opportunities that would, in turn, increase the revenue amounts acquired by the developing economies.

Australia would also benefit because the multinational companies would increase the market opportunities for their goods by virtue of operating within the developing economies. This would, in turn, increase their profitability. This way, the government’s decision to lower its direct foreign aid ratio and, instead, use the funds to strengthen its infrastructural base would not affect the global economy negatively.

The gap created owing to the reduction in foreign aid would, in turn, be filled by way of FDI through increased activities of the multinational companies (Organization for Economic Corporation and Development, 2009).

The Coalition government must be at the forefront in writing off debts owed to it by developing economies as a way of fighting global poverty levels. Australia can use such scenarios to influence its debtors into relaxing stringent barriers into their markets such that multinational corporations from the country can have an opportunity to operate in these markets (Quartey, 2005).

This will be beneficial to both economies because Australia will benefit from increased revenue due to availability of a ready market for its companies, while the developing countries will have additional employment opportunities for their populations.

National differences in political economy

This concept is relevant for application in addressing Australia’s intent to limit the influx of illegal immigrants into the country. For Australia to come up with mechanisms that will enable it to critically address this menace, it will have to ensure that its political economy is rightly set for this purpose (Sitkin & Bowen, 2010).

The economic, legal, as well as political subsystems will be expected to be interdependent such that they interact with each other effectively in order to influence results.

This concept is more relevant for this scenario because the solution to increased illegal immigration lies beyond national politics only, yet the issue might appear to be internal.

The government will have to consider its political system with regard to acceptable national principles before executing its remedies. Failure to observe such an important global rule in determining the political economy could see the country get sidelined by the international community (Watts, 2002).

Globalisation

The theory of globalisation applies relevantly well with the Coalition government’s decision to cut its foreign aid ration to the developing economies. The global economy is so much integrated that any decision arrived by an individual nation concerning how to spend its financial wealth must give due consideration to the global economy first (Wild, Wild & Han, 2010).

This theory is useful in my opinion because globalisation means the global economy is an average result of the actions by individual nations of the world. Any decision to eliminate or lower foreign aid meant to fight poverty in the underdeveloped world means even the developed countries will face the repercussions (Chiswick & Hatton, 2003).

For the global economy to register marked improvement, all countries in the world must work toward eliminating poverty. Any individual efforts to spur internal economic growth might not provide positive results because the external economy has more influence towards the internal economy.

Australia has for many years faced the challenge of illegal immigrants who seek for asylum in the country. Addressing this menace requires a sound political economy that will ensure that proper legal and economic frameworks are put in place to work interdependently. This will ensure effectiveness is achieved in controlling the influx.

However, the political economy must take into consideration the international convention that governs treatment of immigrants. While the immigrants negatively affect the Australian economy, the authorities must ensure that the corrective mechanisms put in place do not violate the refugees’ rights. Failing to observe such an international principle could see the country get eliminated by the international community.

The plans by the Coalition government to cut down on foreign aid in a bid to save funds for purposes of improving the infrastructure may also fail to register the anticipated economic growth. All countries in the world must seek to address global poverty levels to be able to achieve economic growth.

Boeri, T., Hanson, G., & McCormick, B. (2002). Immigration policy and the welfare state . Oxford: Oxford University Press.

Cavusgil, S., & Tamer, (2008). International business: Strategy, management, and the new realities . Upper Saddle River, NJ: Pearson Prentice Hall.

Chiswick, B. R., & Hatton, T. J. (2003). “International migration and the integration of labor markets.” Chapter 3 In. Globalization in historical perspective , eds. M. D. Bordo, A. M. Taylor, & J. G. Williamson. Chicago, IL: University of Chicago Press, pp. 65-119.

Facchini, G., & Mayda, A. M. (2008). From individual attitudes towards migrants to migration policy outcomes: Theory and evidence. Economic Policy, 56, 651-713

Morrissey, O. (2001). Does aid increase growth? Progress in Development Studies, 1 (1), 37-50

Organization for Economic Corporation and Development (2009). DAC News: Development Aid 2008 . Paris: OECD.

Ouattara, B. (2006). Foreign aid and government fiscal behavior in developing countries: Panel data evidence. Economic Modeling, 23 , 506-514.

Quartey, P. (2005). Innovative ways of making aid effective in Ghana: Tied aid versus direct budgetary support. Journal of International Development, 17 , 1077-1092.

Sitkin, A., & Bowen, N. (2010). International business: challenges and choices . New York, NY: Oxford University Press.

Tavares, J. (2003). Does foreign aid corrupt? Economics Letters, 79, 99–106.

Watts, J. R. (2002). Immigration policy and the challenge of globalization . Ithaca, NY: Cornell University Press.

Wild, J. J., Wild, K. L., & Han, J. C. Y. (2010). International business: the challenges of globalisation, 5th ed . Upper Saddle River, NJ: Prentice Hall.

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What Is Globalization in Business?

Four business professionals discuss globalization

  • 22 Jun 2021

As technology and transportation have advanced, business has become increasingly global. In addition to new challenges and international tensions, purposeful expansion has brought new jobs, customer audiences, and economic opportunity.

What Is Globalization?

Globalization is the increase in the flow of goods, services, capital, people, and ideas across international boundaries, according to the online course Global Business .

“We live in an age of globalization,” says Harvard Business School Professor Forest Reinhardt, who teaches Global Business. “That is, national economies are ever more tightly connected with one another than ever before.”

Whether you’re looking to learn more about your international company or thinking of expanding your business into other countries, you need a strong foundation in the basics of globalization in business. Here’s a primer on what it means to be an international business, factors to consider when approaching the global business landscape, and how to build your knowledge.

Access your free e-book today.

What Does It Mean to Be an International Business?

An international business is any company that operates and produces or sells goods between two or more countries. There are three ways a business can be considered international:

  • It produces goods domestically and sells domestically and internationally.
  • It produces goods in a different country but sells domestically.
  • It produces goods in a different country and sells domestically and internationally.

If your business falls into one of these categories, there are two types of international business models to consider: transnational and multinational.

Transnational corporations have offices in multiple countries, each responsible for a different facet of the organization. For instance, marketing may be based in London, research and development in Bogota, and software development in New York.

An example of a successful transnational corporation is NestlĂ©, which splits business operations for each of its brands by region. There are over 100 NestlĂ© offices worldwide with distinct responsibilities. For instance, the NestlĂ© Research Center is located in Switzerland, which acts as the hub that oversees each brand-specific research and development center, of which there are 23. All NestlĂ© offices operate under the company’s headquarters in Switzerland.

Multinational corporations also have offices in multiple countries, but unlike transnational corporations, each is a microcosm of the larger organization. This means each office has, for example, its own leadership, marketing, sales, research and development, technology, and human resources teams. An example of a multinational corporation is PepsiCo, which has 32 offices across 24 countries.

If you’re considering which international business model to implement for your growing company, know that each has its pros and cons. Transnational corporations typically have the benefit of everyone on a specific team being located in the same office, although this may change with the rise of remote work . Being in the same office can decrease miscommunication and reinforce the idea that each office is an integral part of the larger company. Multinational companies may not beget this same mindset, but they benefit from having someone from every team present in each office. This can enable them to collaborate and tailor efforts to the audience in their specific location without juggling time differences and language barriers to collaborate with other teams.

There’s no one-size-fits-all approach to globalization; only you can decide what works best for your business.

Related: Why Study Global Business? 5 Benefits to Consider

Facets of Global Business to Consider

Globalization doesn’t just refer to the location of a firm’s offices and customers—it also encompasses the nuances and economic factors of conducting business internationally and existing in a global economy. Even if your company operates domestically, globalization can influence the way you do business. Here are a few factors to consider when thinking about how global business impacts your organization:

  • Politics and laws : International politics can color relationships between nations and regulate what products are allowed in and out of their borders. Keeping up with current events can help you prepare for the business impacts of shifts in policy and foreign affairs.
  • The environment: There’s no global issue more pressing than climate change. Unfortunately, globalization can contribute significantly to its negative effects due to increased transportation of materials and products, business travel, and the number of factories. If you’re engaging in global business, keep sustainability in mind to avoid contributing to climate change.
  • Macroeconomics: Principles of macroeconomics can allow you to compare countries’ financial health on a one-to-one basis and draw connections between trends. Some metrics to know include:
  • Gross domestic product (GDP)
  • Unemployment rate
  • Inflation rate
  • Degree of income inequality
  • Currency exchange rate
  • Human rights: Because laws dictating human rights—including labor laws—differ from country to country, operating as a global business requires research and critical thought to ensure you’re not exploiting people for labor, even if it’s technically legal. Ethics are required for making decisions that may cost your business money at the expense of protecting human rights.
  • Cultural differences and language barriers: Operating a global business requires knowing and respecting other cultures. Without understanding the areas you do business in, you could unintentionally offend someone and harm your working relationships. In the case of language barriers, this may require you to hire translators and multilingual employees to bridge the gap.

Which HBS Online Business in Society Course is Right for You? | Download Your Free Flowchart

Learning More About Globalization

If you’re interested in furthering your knowledge of the global business landscape, one easy way to do so is by reading international news. Try incorporating foreign cities’ local news into your daily intake to gain perspective on the state of their economies.

Additionally, consider taking an online course like Global Business . You’ll learn how to assess macroeconomic situations; gauge the short- and long-term effects of inflation, trade, and investment; and use insightful frameworks to plan the best global strategy for your organization.

Are you interested in exploring the nuances of the international business world? Learn more about our four-week online course Global Business and other Business in Society courses. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

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Global Business and Ethics, Essay Example

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Introduction

Global means anything that has taken place internationally. Things like business nowadays compete for the global market. Countries like China have seen it better to compete with other superpowers countries like United States of America through the global market. If you look around, it can be noticed that almost everything we use come from china. U.S is able to use something from china because of globalization business. Due to that, lit can be concluded that global business is a form of a business reaching any corner of the world at any time (Chazok, 2002).

Ethical Dilemma in Cotton Company in South Africa (SACC)

SACC is a company that makes cotton in South Africa. Since it is a world wide organization, it comprises of different people coming from different background and religion. A problem occurred in one of its branches in Nigeria. The company was linked with many countries around the world like the United States of America. Being one of the African’s companies, the employees were to work full time depending on the clients decisions from either America whose local time is different from the African’s time. They used a lot of funds to put everything like the contacts in order. The employees wanted to be paid additional salaries because they could work overtime. The translators were to travel from different countries together with the brokers to avoid language barrier. But after a long run, the company succeeded by compiling with all the ethics of a global business. The business could travel in every part of the world since there was no any language barrier. All other companies were happy with how they were operating the business and the number of the clients increased which boosted the income of the company.

Ethical Issues That Became Evident as a Result of Globalization

When a company is dealing with any business which is global, it is important that there should no differences at top of the mind. The best thing is to understand the marketplace since your clients, vendors and business partners might not be having the same stand point on ethics and proper deeds than those you have in your own company (Zacharias, 2000). Therefore the following ethics became evident as a result of business globalization:

Understanding where you are doing business. Those who entered global market place required a global state of mind. People interacted internationally and acquired other people’s way of communication, feelings and ideas. It taught the members of the company on how to approach each person politely. This is because each person from different country comes from different background and different culture (Zacharias, 2000).

Be available and understand your global market. This forced the company members to corporate all the days to see things running smoothly. Other members from diverse countries wanted to be assisted all the time (Zacharias, 2000). Therefore the company taking any business globally was to have any contact or internet for communication around the world. Some found it difficult due to the time zones. Some of the companies could make a profit or loss and even others could loss the market because the products could not reach in time.

Do what your mother taught you. When dealing in business on a global level, some of the basic rules still apply which is play by the rules. Under the Foreign Corrupt Practices Act, it is illegal for any individual, firm or anyone in connection with the firm to pay, offer to pay or bribe in any fashion foreign government officials to obtain or retain business. One exception to this act is where firms will pay lower level government officials to secure routine government actions (Zacharias, 2000).  Getting into the global marketplace can be both challenging and extremely rewarding. Just be sure that you’re informed and ready to handle the additional responsibilities this work provides and you will have much success.

Ethical Perceptions Across Cultures in Regards to the Dilemma Situation

Culture is also part of the global business problem. For many companies, we find that the culture is based on the ethical judgment. However it is not the basis for arriving at dependable standards of ethics, more than the law is. To clarify the point, a particularly precarious implication which comes as a result of combining decision making with culture provides the decision maker with sort of safety if everything is not understandable within an organization. Therefore the company owners should deploy those who understand a culture of a country to the same country. But for those who are not any culture apart from theirs should be given an opportunity to trade within. That is why we call a company’s. The culture also plays a big role in making of any decision affecting global business. The worse part of all is when the leadership responsibility use culture as part of personal safety for humorless decision making, (Blanchard & Peale, 1988). This is a clear indication that companies should not take culture as an easy thing to work it out

Risks and Consequences That Was Associated With the Dilemma

For there was no easy solution, it forced the institution to rush to adopt codes of ethics. This also led to addition of ethic courses, hiring of hundreds of consultants through the reinforcement of the students leadership. It forced the students to be prepared with skills on how to decide and solve the problem on their own without involving the staffs within a workplace. The legalities cannot be handled by one person but requires the involvement of all the people within a stakeholder (Zacharias, 2000). There should be the participation of the experts in the required field and knowledge of what is to be done. Resolving such an ethical dilemma needs some skills for negotiation as well as the application of the new employability skills which includes, respect for others, ability to work together and honesty. But we get that today businesses have trained those they employ in critical thinking and conflict resolution skills needed for ethical decision making. Also schools are following the same trend by ensuring that all their staffs and students have advanced with the legalities that should be used to govern the decision.

Nowadays what countries should understand is that a good business must be a global one. Let them take their products to other countries. Doing this can lead to the interactions between the countries and it can also lead to peace worldwide. A country might have fear of attacking another country since they depend on it for a certain product or for any survival (Chazok, 2002).

Chazok, R. (2002). The Power of Global Markets . New York: Macmillan Publishers.

Zacharias, A. (2000). Culture and Global Business. Business Week, March 28. pp. 13.

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Global Business Essay Examples

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Topic: Business , United States , America , Central America , Infrastructure , South , People , Development

Published: 03/08/2023

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Business opportunity in Central America is very promising because of various reasons that this write-up will discuss. To begin with is that Central America makes a growing market for the exports of United States. These products are highly accepted and have close to forty million potential customers. For example in 2011 there was approximately $ 31 billion worth of goods exported to Central America (U.S. Commercial Service, 1). Secondly Central America has not yet developed fully its domestic manufacturing capabilities. Due to this it depends on a high proportion of imports. About 50% of its imports come through the US ( U.S. Commercial Service, 1). Another important point is that the dollar is accepted in the region thus makes business easier. It is also important to consider communication. English is widely spoken in Central America. This is paramount as it will make understanding easier, lead to shared meaning and eliminate issues of language barrier. Another item would be infrastructure. In order for a place to excel in business, it has to develop and make sure that it has outstanding means of transport. Central America has infrastructure development going on and this includes airports, roads and ports. This is being supported by the World Bank, IDB and CABEI, there are also foreign agencies fostering this development like USAID and MCC among others. Central America also has strong ties with the US and it is committed towards security and development. Ensuring proper security will attract people and business as it will make them feel safe as they conduct their businesses or even as clients come to buy their products. Strong ties with the US means good business in the place as they have strong support from the US. Free Trade Agreement with the US has benefits such as exports enter duty free, there are also low tariffs, there is equal access to services such as insurance and telecommunications and finally improved investment and business climate. There are some similarities in international business between South Asia and Central America. For example both regions depend on grants and loans. South America suffers public debts and fiscal deficits while Central America is poor (Guasch, Suarez and Gonzales 6). Secondly, both regions aim at improving infrastructure. South American government is committed to improve the roads and railways in the urban areas to enhance business. On the other hand as discussed earlier Central America is being supported to improve roads, ports and airports to improve infrastructure in order to boost business. It is also important to highlight some differences like South Asia is less globally integrated while Central America has strong ties with the US in order to access the global markets. In terms of population, we would compare two countries in the two regions. In south Asia there is India which is the second most populous country with a population of approximately 1.2 billion people. In Central America this is also the same thing observed in El Salvador which is the smallest country in the region but most densely populated. Finally the last thing to discuss in this write-up will be comparing the cultures and in the influence they have on business in the two regions. South Asia is mostly predominated by the Chinese Culture and the local culture. The Chinese culture enforces collectivism, rationality and self -reliance. Self -reliance is all about bringing independence. Due to the local culture there is a wide range of colonial experiences and religious traditions. There is also traditional humanism. Humanism would make business better as people will treat each other with hospitality. In Central America there is emphasis on the importance of the family. In this case it is common in this region for people to hire family members or for family members to look for employment together. There is also low individuality which brings about harmony and good relationships. Another element is High Power Distance this is all about addressing people formally and social courtesies.

Works Cited

Guasch Jose, Suarez Liliana and Gonzales Veronica. Competitiveness in Central America; The Road to Sustained Growth and Poverty Reduction. Centre for Global Development. 2013. Pdf file. U.S. Commercial Service. Opportunities in Central America Business Development Conference & Trade Mission. 2013

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Navigating the ethical horizon of global business.

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President & Founder at APS Global Partners Inc. | President & Founder at Medias Health Inc.| Forbes Business Council Influencer.

Ethical considerations have become more critical in the ever-evolving landscape of global business. As a seasoned business consultant with two decades of hands-on experience, I have witnessed the transformation of business ethics from a mere checkbox on corporate governance to a cornerstone of sustainable and responsible business practices. In this article, I will delve into the realm of business ethics, exploring its evolution, challenges and the imperative for companies to integrate ethical considerations into their DNA.

The Evolution Of Business Ethics

Over the years, the perception of business ethics has shifted from a regulatory requirement to a strategic imperative. In the early years of my career, ethical considerations were often viewed as a necessary evil, something to be complied with rather than embraced. However, as the global business community faced scandals and crises, the tide turned, and businesses began to recognize the intrinsic value of ethical conduct.

Today, business ethics is not just about adhering to laws and regulations; it's about fostering a culture of integrity and responsibility. It encompasses a broader spectrum of considerations, including environmental sustainability, social responsibility and business transparency. This evolution has been driven by external pressures and a growing understanding within organizations that ethical behavior is a key driver of long-term success.

Challenges In Upholding Business Ethics

While the evolution of business ethics is commendable, the path to ethical business conduct is challenging. One of the primary obstacles is the pressure to deliver short-term financial results, often leading companies to compromise on ethical standards in pursuit of immediate gains. The temptation to cut corners, engage in dubious practices or prioritize profit over principles can be overwhelming, especially in competitive industries.

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Additionally, the interconnected global business environment introduces complexities that demand heightened ethical awareness. Companies operating in multiple jurisdictions must navigate diverse legal and cultural landscapes, requiring a nuanced approach to ethics. Balancing the interests of various stakeholders, including shareholders, employees, customers and the community, poses another significant challenge.

The Imperative Of Business Ethics

As a business consultant who has witnessed the fallout of unethical practices, I firmly believe that a strong ethical foundation is not just a moral imperative but a strategic necessity. Ethical conduct is not merely about avoiding legal repercussions but building trust with stakeholders and creating a resilient and sustainable business model.

Building Trust

Trust is the currency of business. Companies that prioritize ethical behavior build trust with customers and employees, suppliers and investors. Trust is a valuable intangible asset that, once lost, is challenging to regain. Establishing a reputation for ethical conduct can differentiate a company in a crowded marketplace.

Long-Term Sustainability

Ethical business practices are intrinsically linked to long-term sustainability. Companies prioritizing environmental, social, and governance (ESG) factors are better positioned to weather economic downturns, regulatory changes, and public scrutiny.

Employee Engagement and Retention

A commitment to ethical conduct fosters a positive workplace culture. Employees are more likely to be engaged and committed when they perceive their organization as socially responsible and ethically conscious. This, in turn, enhances employee retention, reduces turnover costs and attracts top talent.

Enhanced Customer Loyalty

In an era where consumers are increasingly conscious of the ethical practices of the companies they support, businesses that prioritize ethics enjoy a competitive advantage. Ethical behavior resonates with consumers, increasing brand loyalty and positive word-of-mouth marketing.

Practical Strategies For Integrating Business Ethics

For businesses looking to embed ethics into their DNA, several practical strategies can be employed:

Emphasize commitment from leadership.

Ethical behavior starts at the top. Leaders must demonstrate a sincere commitment to ethical conduct, setting the tone for the entire organization. This involves espousing ethical values and making decisions that align with those values.

Establish robust ethics policies and training.

Establishing comprehensive ethics policies and providing regular training ensures that employees are aware of ethical expectations and understand the consequences of unethical behavior. Regular updates and reinforcement of ethical guidelines are essential in a dynamic business environment.

Use transparent communication.

Open and transparent communication is vital for building trust. Companies should communicate their ethical principles, actions and outcomes openly to stakeholders. This includes acknowledging mistakes, addressing issues promptly and sharing successes related to ethical conduct.

Integrate ESG.

Incorporating environmental, social and governance factors into decision-making processes is critical. This involves considering the impact of business activities on the environment, promoting diversity and inclusion, and ensuring sound governance practices.

Engage stakeholders.

Actively engaging with stakeholders, including customers, employees, suppliers and the community, can help businesses understand and address the diverse expectations and concerns of different groups. This inclusive approach contributes to the development of ethical and sustainable business practices.

The journey towards ethical business conduct is a dynamic and ongoing process. I have seen the landscape evolve from a focus on compliance to a genuine commitment to ethical behavior as a strategic imperative. Businesses that prioritize ethics stand to gain more than just compliance. In an era where ethical considerations are paramount, integrating business ethics into the core of operations is not just a choice; it is the key to a prosperous and sustainable future.

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essay about global business

School of Business

A. Gary Anderson Graduate School of Management

essay about global business

Studying Business Around the World

In August 2023, 12 students, family members, and friends traveled to Egypt, Jordan, and Israel—a “bucket list” trip, says Professor of Practice Sean Jasso , who directs the global education program at the School of Business.

Each December, a dozen students also travel to Washington, D.C., and about 25 students take an annual trip to Oxford, England.

“A global mindset enables students to broaden their perspectives on everything,” says Jasso. “The whole point is gaining confidence and strengthening their overall competitive value in the labor market.”

There are many opportunities like these for students to learn abroad. Visit the UCR Business Global Programs overview to learn about the options.

In the last year, students from the UCR School of Business, home of the A. Gary Anderson Graduate School of Management made educational journeys that greatly enhanced their knowledge of global business practices:  

Over 10 days in August 2023, the UCR Business cohort traveled to Egypt, Jordan, and Israel exploring the region’s entrepreneurial economy, including women in leadership, the customer service-centric society, and examples of foreign direct investment. The immersive journey showcases the instructive startup culture in Tel Aviv, as well as one of the largest cities in the world, Cairo, and its contrasts in antiquity and modernity.

UCR students in Egypt 2023

Over the last 13 years, hundreds of UCR Business students have spent spring break in residency at University of Oxford’s Mansfield College in England. The Oxford Young Entrepreneurial Leadership Program is an intensive week of lectures and tours—including the BMW Mini Cooper manufacturing facility known for its supply chain efficiencies and globalization. Students take a close look at European business norms and trends, as well as focusing on entrepreneurial awareness, intellectual creativity, and strategic leadership capabilities that may be applied in all industries.

UCR students in Oxford 2023

Washington, D.C.

The annual DC Intensive Program brings students in direct contact with policymakers, business leaders, and policy scholars at George Mason University’s Schar School of Policy and Government. The visit to the nation’s capital includes briefings with a lobbying firm, the Department of Agriculture, the Federal Reserve, and private tours of national and cultural monuments. During the December 2023 visit, students examined political polarization, gender and race in the policy context, and national security and intelligence.

UCR students in Washington, D.C. 2023

Faculty Led Education Abroad Programs (FLEAP)

Over three weeks, the London Leadership Experience, which is part of the Faculty Led Education Abroad Programs, covers two leadership courses intended to push students out of their comfort zones. The curriculum includes visits to the offices of Google and Deutsche Bank, and students present projects to be judged by panels of international business leaders.

“These stretch assignments enable students to grow,” says Assistant Professor of Teaching in Management Kyle Ingram , who leads the London Leadership Experience. “Through these experiences, you begin to see the world differently and thereby grow leadership capacity.

“Personally, I can't think of a better opportunity to engage in a stretch assignment than an international experience.”

FLEAP courses occur during the summer and are for UCR students and led by UCR professors. Courses cover a range of majors and are planned for travel to several countries.

UCR students in London 2023

View more information, please visit:

UCR Business Global Programs

UCR Education Abroad

Global Business Challenges

Hello Ladies and Gentlemen,

Today, I want to talk to you about international trade and how it influences businesses worldwide. Specifically, I will address two of the three topics this speech assignment requires using the global sportswear giant Nike as my case study. In this speech, I will look into the challenges that multinational corporations encounter while conducting business globally and discuss strategies for addressing the cultural consequences of international trade and investment. Many challenges must be overcome when a firm wishes to grow its operations globally. To successfully engage in international trade, businesses must have a firm grasp of the economic, cultural, legal, and political elements. When doing business on a global scale, a company must contend with a different regulatory environment than it would confront at home. Businesses operating internationally must adhere to each nation’s laws and regulations. For instance, Nike was once the target of criticism and protests from human rights groups over allegations that the company exploited child labor to produce several products. As a result, businesses must follow the rules of the nations in which they operate and those of the United Nations and the International Labor Organization.

The possibility of fluctuating currency rates is another challenge for businesses engaging in international trade. A corporation must deal with fluctuating currency exchange rate risks when doing business in multiple countries. Because the exchange rate can raise manufacturing costs or lower sales revenue, it can significantly affect the company’s bottom line. As an example, Nike buys its raw materials from a variety of nations and distributes its wares to consumers all over the world. Hence, they should consider how currency fluctuations affect their business and implement contingency plans if necessary. Let’s discuss the implications of culture on international projects. A business must consider cultural differences between countries while expanding operations globally. Language barriers, as well as disparities in social conventions and ideas, are examples of cultural differences. We are all aware that the global market is becoming more intricate and varied all the time. Successfully competing in today’s global marketplace presents unique challenges for businesses due to the wide range of cultural norms and expectations present around the world. Using Hofstede’s Cultural Dimensions Model, Nike has discovered a technique to control cultural consequences effectively.

Hofstede’s Cultural Dimensions Model is a theoretical framework for exploring the effects of cultural differences on attitudes, norms, and practices. Power distance, individualism vs. Collectivism, masculinity vs. Femininity, uncertainty avoidance, long-term focus vs. short-term focus, and indulgence vs. restraint are the six dimensions of this model. For Nike, these factors have served as a framework for responding to cultural shifts in international markets.

A power distance exists when subordinates in an organization have come to tolerate and even expect a hierarchical structure. Nike’s management approach has been altered to account for the fact that power distance differs from one culture to the next. Nike teaches its workers to respect those in positions of power, to defer to them, and to work together effectively in such settings. When interacting with people in positions of authority, Nike always uses their proper titles. Conversely, in societies with a small power distance, Nike chooses a more decentralized organization that places a more significant premium on employee initiative. For example, Nike managers tend to be more authoritarian in countries with a high power gap, such as Japan, and more collaborative in nations with a low power distance, such as the United States.

Individualism versus Collectivism refers to how individuals are integrated into groups. Depending on the society, Nike recognizes that individualism vs. Collectivism is valued more highly. To successfully advertise in other countries, Nike must adapt their advertising campaigns, product designs, and marketing methods to reflect local customs. Nike’s marketing campaigns target consumers in different countries by highlighting distinct cultural values, such as the significance of family and community in collectivist nations or the pursuit of personal success in more individualistic nations. Certain countries, like the United States, emphasize individualism while others, like Japan, value collectivism, and Nike is aware of this. Nike, for instance, has put a premium on fostering a sense of community among its Japanese suppliers and retailers.

Masculinity vs. Femininity refers to the extent to which a culture values traditionally masculine or feminine traits. A culture’s masculinity or femininity level can be understood by the degree to which it prioritizes aggressive and competitive male traits or nurturing female traits, such as compassion and empathy. Nike does well by considering these cultural distinctions when creating and promoting new products. For example, in cultures that value masculinity highly, Nike advertises its products as more aggressive. Nonetheless, societies that value Femininity is more likely to stress safety and nurturing. In the United States, Nike’s “Just Do It” campaign runs on the premise that if you put your mind to something and work hard at it, you will eventually achieve your goals.

Uncertainty avoidance refers to the cultural openness to ambiguity and uncertainty. Nike is aware that some cultures are more comfortable with certainty while others are more comfortable with less defined boundaries. Nike will set high standards for its products and services in these communities. For example, in some European countries, Nike provides detailed instructions on how to use their products and what to expect from them, which helps to alleviate any uncertainty or confusion.

Long-term and short-term dimensions refer to the degree to which a culture prioritizes immediate gratification instead of investing in the long term. Nike is aware that some societies place a higher priority on the preservation of history, customs, and norms. Nike will highlight their products’ cultural significance and roots in these regions. Nike, for instance, offers a series of products in Japan under the brand name Nike Japan, these shoes and other apparel feature a variety of traditional Japanese themes and details.

Indulgence versus restraint is a factor that indicates how much freedom people in a culture have to give in to their emotions and gratify their wants. More restrained cultures tend to be more disciplined and self-controlled, while more indulgent ones encourage their members to live life to the fullest by giving in to their every desire. In indulgent cultures, Nike markets to consumers by appealing to their baser instincts. In the United States, Nike’s marketing campaigns frequently use phrases like do it and Unleash your inner athlete to appeal to people’s yearning for individuality and independence. Nike’s marketing campaigns in conservative societies emphasize the importance of discipline and self-control. Slogans like discipline are vital, and The harder you work, the better you become; frequently used in Japanese Nike ads to appeal to consumers’ desire for self-improvement and strict self-control.

In conclusion, conducting business on an international scale can present enterprises with several challenges, but it also offers a great deal of opportunity for development and expansion. For companies to succeed in other nations, they need to have a solid comprehension of the cultural norms and regulatory frameworks unique to each nation in which they intend to do business. Businesses are responsible for ensuring that they comply with the rules and regulations of the countries where they conduct business and take measures to mitigate risks such as fluctuations in exchange rates. Finally, companies must understand the cultural norms that prevail in the nations where they conduct business and modify their practices accordingly to be compatible with the local culture. As potential future leaders in the business world, we need to have a solid understanding of the opportunities and challenges posed by international business to make well-informed choices that will contribute to the growth and prosperity of our respective organizations.

Thank you for being here today. Your attention and engagement mean a lot to me, and I hope you have gained something valuable from my speech.

REFERENCE LISTS

Bartley, T. and Child, C., 2014. Shaming the corporation: The social production of targets and the anti-sweatshop movement.  American sociological review ,  79 (4), pp.653-679.

Coombs, W.T. and Laufer, D., 2018. Global crisis management–current research and future directions.  Journal of International Management ,  24 (3), pp.199-203.

Daniels, J.D., Radebaugh, L.H., Sullivan, D.P. and Click, R.W., 2014.  International business . Prentice Hall.

Ghauri, P. and Cateora, P., 2014.  EBOOK: International Marketing . McGraw Hill.

Khlif, H., 2016. Hofstede’s cultural dimensions in accounting research: a review.  Meditari Accountancy Research .

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China’s Global Business Cultural Analysis

Global business cultural analysis of China provides important information that investors and businesses need to understand to undertake successful business ventures. The analysis of communication, religion, ethics, values, attitudes, manners, customers, social structure, organizations, education, Hofstede’s cultural dimensions, SWOT analysis, and foreign direct investment provides a comprehensive business cultural analysis of China.

The findings revealed that China is a high-context culture in communication and the Chinese popular religion, Confucianism, Taoism, and Buddhism are major religions that influence values, attitudes, manners, and customs of Chinese. Moreover, the findings reveal that family and occupational classes form the social structure of the Chinese community and social organizations such as the All-China Federation of Trade Unions, the All-China Women’s Federation, the All-China Youth Federation, and the Chinese People’s Association have marked influence on the establishment of businesses.

In the aspect of education, the findings indicate that literacy level is lower than that of the United States, but the current educational institutions offer a promising future. Hofstede’s cultural dimensions show that China has the same level of masculinity, but power distance index and long-term orientation are higher while individualism, uncertainty avoidance, and indulgence are lower than those of the US. SWOT analysis reveals that a large consumer population, cheap labor, one-party system, and increasing gross domestic product are strengths and FDI has been increasing exponentially in the past five years.

Introduction

Globalization has made the world a global village where manufacturers and consumers meet and perform business tractions. Although technology is standard across the world, culture varies from one region, locality, nation, or country to another. Culture puts barriers that restrict organizations, investors, and entrepreneurs from venturing in global arenas, which have different cultures from their host countries or native regions (Guang & Trotter, 2012).

Essentially, culture is a critical element that determines globalization and international business by influencing communication, social interaction, marketing, management strategies, advertising, e-commerce, consumer behavior, and other business operations (Ogbuigwe, 2013).

The existence of regional, national, and global culture implies that organizations, investors, and entrepreneurs have to develop strategies for overcoming cultural barriers and undertake their businesses effectively. The global business cultural analysis provides a lens through which organizations, investors, and entrepreneurs view global markets and customize their products, services, and processes to suit the cultural expectations of consumers. Therefore, the understanding of culture through cultural analysis is essential for it improves cultural competence, boosts business performance, and prevents wastage of resources.

As a case study, global business cultural analysis of China is essential because it promotes understanding and allows the design of effective business strategies to optimize cultural dimensions and overcome cultural barriers to the effective performance of business transactions. China is the main player in international trade because it is the leading economic powerhouse in Asia owing to innovations and a large consumer market. For the last decade, gross domestic product, working-age population, and per capita income have been increasing gradually and have positioned China in the international markets (Golley & Wei, 2015).

In this view, China is not only the producer of international products but also a great consumer of international products. The leading international companies such as Alibaba, Huawei, Lenovo, Samsung, Kingsoft, Joyoung, Xiaomi, and Neusoft have ventured into the Chinese market and seized sizeable market share. Therefore, the global business cultural analysis aims to enhance understanding of Chinese culture and the development of business strategies to improve the performance of multinationals in and out of China.

Problem Statement

Globalization compels multinational organizations to venture into global arenas, become competitive, and gain considerable market share for their products. However, before venturing into global markets, multinational organizations out to comply or overcome many factors. Usually, organizations have to consider exchange rates, inflation rates, regulations, politics, language, technology, environmental pollution, market demand, and culture of the target consumers.

Banutu-Gomez (2014) argues that culture is an important factor that requires consideration in the global markets for differences in cultures act as barriers to entry and successful penetration into target markets.

In this view, organizations without cultural competence are bound to fail in the international business for they cannot cope with cross-cultural challenges and barriers. A case in point is that of McDonald’s advert, which created an uproar in Chinese markets for it depicted a Chinese man as a beggar of discount, yet it is culturally disgraceful as per the Chinese culture. McDonald exhibited cultural incompetence, which hurt its marketing strategies and competitiveness in the Chinese markets. Therefore, organizations must gain cultural competence in various global markets for them to survive, gain competitiveness, penetrate diverse global markets, and access a considerable market share.

Research Questions

  • What are the major elements and dimensions of culture in China?
  • How are these elements and dimensions integrated by the Chinese conducting business in China?
  • How do both of the above items compare with the US culture and business?
  • What are the implications for US businesses wishing to conduct business in China?

Conceptual Framework

The conceptual framework illustrates cultural dimensions and major elements of international business contribute to Chinese culture. Figure 1 below shows that communication, organizations, religion, ethics, values and attributes, Hofstede’s dimensions, manners and customers, education, foreign direct investment (FDI), SWOT analysis, and social structure contribute to Chinese culture which in turn influences international business.

Conceptual framework depicting how major cultural elements and dimensions contribute to the Chinese culture.

What Are the Major Elements and Dimensions of Culture in China?

Communication, high-context culture.

Chinese have a tricky and subtle way of communication for they have a high-context culture and prefer non-verbal communication. Moreover, the Chinese are sensitive in their conversations and actions because their upbringing teaches them to avoid offending other people. In their conversations, Chinese keenly observe and interpret non-verbal cues such as facial expressions, gestures, and voice tone while communicating with people (Li, Canziani, & Hsieh, 2016). While listening to people talking to them, the Chinese exhibit little or no non-verbal cues to indicate their attentiveness to communication. Moreover, Chinese culture perceives eye contact as disrespectful during communication, and thus, they avoid eye contact while communicating with people.

Alphabets and dialects

When compared to English and other languages that use alphabets, the Chinese language uses unique alphabets. The Chinese alphabets comprise characters that symbolize concepts, whole words, and ideas. Although the written alphabets are the same, the spoken language differs according to dialects. According to Tan (2012), there are two main Chinese dialects, namely, Mandarin and Cantonese. Chinese in the Northern part of China speak Mandarin dialect while those in the southern part speak Cantonese dialect. Communication between two Chinese with different dialects is difficult because pronunciation and tone change the meanings of Chinese words. For the Chinese to communicate effectively, they ought to share language as well as dialects.

The major religions

The Chinese popular religion, Confucianism, Taoism, and Buddhism are three major forms of religion, which define and contribute to the formation of Chinese culture. However, the Chinese government recognizes the Chinese popular religion, Confucianism, Taoism, Buddhism, Islam, Catholicism, and Protestantism as established religions in China (Lu & Gao, 2016). The growth and advancement of these religions have made significant contributions to Chinese culture.

The Chinese popular religion is the most common form of religion because it has no institutional or canonical scriptures stipulating religious practices. The Chinese popular religion has its basis on Chinese mythology focusing on social solidarity, family, clan, lineage, and kinship systems embedded in communities, states, and the entire country. Confucianism is the oldest religion of China that focuses on the teachings of Confucius, a notable Chinese philosopher, who shaped the history of China.

Taoism is a traditional religion

Taoism is a common religion in China that stipulates philosophical principles that people should follow to live in harmonious life. It has contributed immensely to Chinese culture for it has scripture, which Chinese read and follow with a view of complying with religious requirements. Taoism is a powerful religion because it influences the culture of Chinese in China and regions where they reside (Lu & Gao, 2016). Moreover, Taoism has influenced the culture of people in Asian countries such as Hong Kong, Mongolia, Taiwan, Korea, and Malaysia. Taoism teaches religious values of simplicity, naturalness, spontaneity, humility, moderation, and compassion.

Buddhism and other religions

Buddhism is another dominant religion that has shaped the growth and development of Chinese culture for centuries. Essentially, Buddhism emerges from the teachings of Buddha Siddhartha Gautama, and it comprises morals, values, traditions, and rituals. Dominant religions such as Taoism and Confucianism have adopted and embraced teachings of Buddhism and incorporated in their religious teachings. Lu and Gao (2016) state that Taoism and Buddhism have intricate links since the translators of Buddhism’s scriptures used Taoist vocabulary. Vegetarianism, monasticism, and prohibition of alcohol drinking are the most important cultural values of Chinese culture adopted from Buddhism.

Religious ethics

Chinese draw their ethical values from dominant religions such as the Chinese popular religion, Confucianism, Taoism, and Buddhism. The teachings of these religions have shaped Chinese culture and consequently influenced the development of ethics. Chinese ethics revolve around the way of life, family, work, politics, governance, humanitarianism, social life, and power. According to Berger and Herstein (2014), the Chinese have a social system named guanxi that regulates and determines the emergence and sustenance of ethics and activities.

Guanxi stems from Confucian culture and has grown and become an invaluable network that strengthens business relationships via social networks and interactions. Berger and Herstein (2014) explain that guanxi plays a central role in the growth and development of businesses because it allows organizations to obtain information on government policy and market trends, reduce transactional costs, and promote the certainty of businesses.

Ethical issues

However, since guanxi is a personal asset, it has negative impacts on businesses because it hampers effective marketing, promotes corruption, and encourages employees to blackmail organizations. China is grappling with ethical issues such as corruption, tax evasion, and corruption. These ethical issues emanate from the government’s reluctance to tackle vices that permeate local and international arenas. As Western economies have prioritized good governance and business ethics, the Eastern economies including China have neglected them, resulting in rampant cases of corruption, tax evasion, and fraud.

Values and Attitudes

Chinese values and attitudes.

Chinese have positive values that are attractive to foreigners, which are benevolence, harmony, wisdom, honesty, righteousness, and courtesy. The value of benevolence is apparent in the way the Chinese have embraced core values of Confucianism in their families, friendships, and communities for they believe that unity is an essential element in society (Chan & Snape, 2013). The value of harmony is evident among Chinese for they live balanced and coordinated lives as exhibited by their way of doing businesses, comply with laws, act in a standard way, and advocate for a harmonious society. Wisdom is another value that enables the Chinese to differentiate between right and wrong actions.

Honesty is a value that promotes integrity, credibility, and trustworthiness among Chinese. Righteousness is another value that Chinese cherishes as the core value of Confucian. According to Chan and Snape (2013), righteousness makes people humane and gentle for it creates a peaceful society where people champions the interests of the community and society. Courtesy is an important value that stresses the essence of prudence and modesty in complying with laws and rites in society. Regarding attitudes, the Chinese have unfavorable attitudes towards strangers for they have negative perceptions that portray them as lesser beings than themselves (Ramsay & Pang, 2015). In this view, it requires foreigners to have charisma while interacting and engaging them in business transactions.

Manners and Customs

Social etiquette.

Chinese have unique manners and customs that people should understand to engage effectively with them. In the aspect of greetings, the Chinese prefer formalizing their salutations. Chinese address each other by their titles and surnames for they consider salutations not only formal but also respectful. In a meeting or a social gathering, the Chinese recognize elders by addressing them first followed by other people (Cline, 2015). During greetings, Chinese bow their heads while greeting people and always consider handshake as a respectful way of greeting foreigners. While giving gifts, one should neither offer flowers nor wrap gifts in black, white, and blue wrappers. In dining, learn how to use chopsticks, let the host eat first, eat served food to satisfaction, and do no empty the serving tray.

Business etiquette

Chinese manners and customers require people to make appointments in an advanced period of one to two months. Chinese prefer the use of intermediaries in a formal introduction of a company before the actual meeting. Early arrival at the meetings is an important virtue of Chinese for they consider it respectively and solemn way of engaging in business (Cline, 2015). Chinese requires a presentation of the agenda before meeting so that they can familiarize with the contents and make clarifications if necessary. In meetings, the Chinese culture requires guests to wait for directions regarding where to sit and when to start presentations.

During a negotiation, senior people should lead to negations and comply with the requirements of the negotiating process. Confrontational and high-pressure approaches during negotiation are not appropriate for Chinese consider them intimidating and informal way of engaging in business (Jin, You, & Kang, 2013). Negotiators should expect that the negotiating process occurs hierarchically, and thus, they should not expect conclusive decisions.

Social Structure

Familial social structure.

The social structure of the Chinese comprises nuclear family, extended family, society, community, and the nation. Confucius taught Chinese to create and nurture five types of relationships in their families and community. These relationships are father-son, husband-wife, older sibling-younger sibling, friend-friend, and ruler-structure relationships (Hu, Lonne, & Burton, 2014).

In these types of relationships, the Confucius emphasized that people should comply with ‘the golden rule’ of relationships requiring them to do to others what they prefer to be done to them. In the extended families, a filial relationship is a core form of social relations because children have a moral and social responsibility of taking care of their parents. As the Chinese population is aging, about 12% of the population is above years old and are dependent on about 71% of the population who comprise the working age-group.

Occupational social structure

During the reign of the Qing Dynasty, the government categorized Chinese into four classes namely, peasants, artisans, landowners, and merchants. Artisans and merchants formed the minor category while peasants and landowners formed the main category. Government officials belong to the first class followed by peasants at the second class, artisans at the third class, and merchants in the fourth class (Zelin, 2013).

Working in a government is a privilege of the first-class Chinese while peasants are the second class Chinese who perform agricultural activities of keeping livestock and farming crops. Artisans make tools and process agricultural products such as silk, which they import to other countries. Merchants belong to the lowest class of Chinese who did not have the privilege of owning land, purchasing houses, and growing crops on their farms.

Organizations

Local organizations.

Chinese have social organizations dictating how people group and interact in the community. China has over 2000 social organizations out of which over 200 receive financial support from the government. Among the 200 social organizations, the All-China Federation of Trade Unions, the All-China Women’s Federation, and the All-China Youth Federation are three key social organizations that have considerable and extensive social influence and receive a lot of political support.

Yu-shek, Ngok, and Huang (2012) state that the All-China Federation of Trade Unions was instituted in 1925 and is the leading social organization with over 100 million members from local trade unions and industrial unions organizations.

The All-China Women’s Federation was established in 1949 as the social organization of women with the vision and mission to emancipate women from patriarchal chains, advocate for women’s rights, and empower them in socio-economic development (Angeloff, Lieber, & Jayaram, 2012). The All-China Youth Federation was established in 1949, and it is a broad social organization comprising the Communist Youth League and other social organizations that advocate for the issues of the youth.

International organizations

Another important social organization is one of the Chinese People’s Association for Friendship with Foreign Countries, which was established in 1954. According to Guo and Dalli (2012), such organizations aim to promote the relationship and friendship of Chinese and foreigners with a view of promoting trade relationships. Other notable and relevant organizations for international business are China Council for the Promotion of International Trade, Chinese People’s, and Western Returned Scholars Association. These social organizations play a significant role in international relationships and trade because they provide social institutions through which international organizations can use in creating their business networks and links.

The education system of China

The Chinese government provides education to its citizens through the Ministry of Education, which provides guidelines as well as funds required to implement stipulated the education system. In line with the universal trend of education, the Chinese education system offers a compulsory education for nine years to Chinese children. The nine years comprise six years and three years of primary education and junior secondary education respectively. The education system also offers three years of senior secondary where students complete their secondary education and proceed to technical schools, colleges, and universities.

The society considers a high school graduate as an educated individual with the ability to undertake businesses and earn a living. The Chinese government has constructed technical schools and universities, which have the capacity of enrolling over 20 million undergraduates. The analysis of the education system reveals that Chinese at par in education development with other developed nations.

Hofstede’s Cultural Dimensions

The six cultural dimensions.

These cultural dimensions are power distance index, uncertainty avoidance index, individualism, indulgence, masculinity, and orientation. In the dimension power distance index, China is at position 80 across the world, which means that there is a significant difference in power between superiors and juniors among the Chinese communities (Bishop, Hoang, Boone, & Steinberg, 2016).

The dimension of uncertainty avoidance index shows that the Chinese are ready to face uncertainties because they bend the rules to suit circumstances and make rules to avoid ambiguous instances. In the dimension of individualism, Chinese rank lowest in individualism for they are collectivistic society as evidenced by social groups they form to leverage their interests. In the dimension of indulgence, the Chinese exhibit restraint for their beliefs requires them to avoid alcohol and pleasure.

Chinese score average on masculinity because it is a patriarchal society where men dominate businesses and government jobs. According to Diaz et al. (2016), the Chinese rank very high in long-term orientation, which means that they persevere and persist in their pursuit of enduring objectives and achievements. Long-term orientation is evident in the way the Chinese take a long time to negotiate, gain trust, and build relationships.

SWOT Analysis

Strengths and opportunities.

SWOT analysis reveals that China offers lucrative business opportunities for international businesses. The chief strength of China is the greatest population of over 1.3 billion, which provides an extensive market for international businesses to exploit (Li, Li, Wu, & Xiong, 2012).

Like the strength, China has cheap labor that organizations can obtain and enhance their profitability. The one-party system is the strength of performing business in China because it streamlines structure the government and promotes quick decision-making and rapid resolution of economic matters. Increasing economic growth as evidenced by gross domestic product, income per capita, and FDI comprise an economic strength that attracts and retains investors. The opportunities for growth are the improvement of education, technological advancement, the growth of infrastructure, and the increasing consumer market.

Weaknesses and threats

The weakness of China is that it does not offer effective protection to intellectual property. Other weaknesses are high illiteracy levels, low economic status, high inflation rates, and the high cost of energy. The threats that China experiences in the global markets are increasing competition from the US, India, and Japan, global economic crises, increasing inflation rates, and protectionist measures.

Foreign Direct Investment (FDI)

Fdi and factors influencing it.

The analysis of FDI shows that China is among the leading countries across the world with high inflows and outflows of investments. Owing to the globalization forces and increased global trade, investors have been eying China as one of the favorable countries for investment. According to Chen et al. (2016), China ranks third as the biggest recipient of FDI and the project shows that it will overtake the United Kingdom and rank second after the US.

Cheap labor, a stable economic environment, high gross domestic products, and extensive market are some of the factors that contribute to increasing FDI. Financial data show that China registered $133 billion and $183 billion FDI in 2015 and 2016 respectively. Despite promising FDI, protectionist regulations, poor protection of intellectual property, and corruption are factors that hinder foreign investments in China.

How Are These Elements and Dimensions Integrated by Chinese Conducting Business in China?

Application of communication in business.

To conduct a successful business in China, local Chinese investors must understand the communication behaviors of local consumers. Local businesspersons in China often observe their conversation patterns to ensure that they do not contradict with the communication behavior of the local consumers, who often prefer non-verbal communication. When communicating with non-verbal cues, local Chinese entrepreneurs ensure that a lot of attention is placed on the use of eyes and hands. Eyes are considered important in the expression of an emotional conversation in China. Emotional expression is very significant in most of the Chinese business transactions as they portray business commitment and certain agreements.

The role of religion in business

The local investors in China often observe the main aspects of religion, which affiliate with business activities. Confucianism, Taoism, and Buddhism are highly regarded in business practices. The religious practices of Buddhism and Confucianism require individuals to promote harmony and silence, as silence prevents people from arousing problems. Therefore, in the actual business context, local Chinese investors have learned to avoid excess business arguments. Just as Confucianism and Taoism propose, Chinese businesspersons are always keen to observe the six core values while doing business transactions. These core values include interpersonal relationships, respect for seniority, moral cultivation, promotion of harmony, family orientation, face concept, and avoidance of conflict.

Application of ethics

Dominant religions, Confucianism, Taoism, and Buddhism, are important in determining how the local entrepreneurs apply ethics in their businesses. In China, two important words, trust, and honesty define ethics in business transactions. In China, guanxi, the social system has been a predominant ethical platform that determines business interactions among the Chinese. The guanxi concept, as known in China, refers to a trust-based relationship based on personalized reciprocal relationships. Chinese investors use the guanxi idea to engage in business transactions that are based on personal mutual trust (Chen, Chen, & Huang, 2013). The guanxi is important in price negotiation, bargaining, and setting business agreements.

Values and attitudes are very important to Chinese investors. Chinese draw their business values from Confucius’s ethics. Confucius’s values include obedience, honor, respect, and harmonious relationships. While conducting their businesses, local Chinese investors have used these concepts to ensure that employees observe obedience, honor, and respect to the existing leadership (Ntongho, 2016). More often, employees of organizations are accustomed to respecting the leaders, honoring customers and other workers, and respecting the philosophies and traditions of the workplaces. Values such as collectivism have been used by the business owners to promote cooperation, employee cohesion, and harmony at workplaces.

Local business operations

Chinese have complex business manners and customs, simply because of an intersection between the Buddhist, Confucius, and Taoism ethics. However, local Chinese investors are very keen on the principles of manners and customs, and how they apply to their daily business operations. For instance, while undertaking their business negotiations, local Chinese businesspersons apply polite language, kind words, and attractive gestures in their business meetings, business negotiations, and business transactions. Also, handshakes are common, but limited to certain moral standards and one has to stay calm, collected, and controlled while engaging in business negotiations.

Utilization of social structure

Chinese exploit the social structure of families in their business by creating and customizing products to diverse family members. A Chinese family comprises the nuclear family and extended families. Since the Chinese population is aging, children have a noble role in taking care of their parents. In this view, businesses encourage children to purchase products to their aging parents as presents and provide adequate care.

Moreover, the Chinese exploit occupational social structure marketing their products to specific customers. Based on the occupational social structure, businesses target landowners and government officials for they belong to the first class, and thus, they have a higher purchasing power than peasants and merchants. Given that peasants are farmers, businesses target them as customers of agricultural inputs and sellers of agricultural produce. Chinese merchants are important in business for they aid in the distribution of products through retail and wholesale distribution centers.

Comparison of social organizations

While China has great social organizations representing the interests of all people, women, and youth, the US has disparate social organizations, which vary from one state to another. Every state in the US has social organizations that champion for different interests of social groups. As a collectivistic society, the Chinese have formed the All-China Federation of Trade Unions, the All-China Women’s Federation, and the All-China Youth Federation to represent all Chinese, women, and youth respectively (Ntongho, 2016).

Given that the Americans live in an individualistic society, they tend not to form social groups that advocate for their interests. Moreover, while China has international social organizations such as the Chinese People’s Association for Friendship with Foreign Countries, which it uses in promoting trade relationships between Chinese and foreigners, American does not have such social organizations.

Integration of education

Chinese have integrated the education system into their businesses for they recruit workers depending on their educational levels. The compulsory education offer to children up to junior secondary levels has significant benefits for it has increased literacy levels of its citizens and promoted their engagement in local business activities. Chinese society considers high school graduates as an essential labor force because they have adequate education to perform business (Ntongho, 2016).

Colleges and vocational institutions equip Chinese with special skills necessary for driving innovations in various aspects of businesses. China has immense opportunities in innovation and technological advancements, and thus, local businesses aim to tap technical skills from graduates. As the government has established universities and colleges, its graduates offer cheap advanced knowledge and skills.

Local application of Hofstede’s cultural dimensions

Since China has a high power distance index, businesses customize products according to social levels of the target consumers, such as peasants, merchants, artisans, and government officials. Chinese make or bend the rules to avoid ambiguous circumstances for they have a high level of uncertainty avoidance index (Bishop et al., 2016). Chinese apply their collectivistic attribute in businesses for they have established trade unions and business organizations that advocate for their interests.

In their businesses, Chinese businesses do not focus on products of pleasure such as alcohol and drugs because their level of indulgence is low. In the recruitment of employees, Chinese businesses prefer male employees owing to their masculinity tendency in cultural dimensions. In their businesses, Chinese take due diligence in business negotiations and take a long time to arrive at final decisions for their cultural dimension is a long-term orientation.

Optimizing strengths and opportunities

Since the population of China is about 1.3 billion, the Chinese exploit the local market by manufacturing quality and affordable products that meet the diverse needs of the locals. Since China has cheap labor, the Chinese do recruit locals and optimize their human resources to boost the profitability of businesses (Li et al., 2012). The regime of a one-party system is advantageous to locals because it increases the ease of doing businesses for they are insignificant hurdles in registering and running a business. The locals also utilize the economic strength of China to increase their sales because increases in the domestic product, income per capita, and FDI boost the purchasing power of Chinese. Regarding opportunities, local businesses recruit an increasing number of high school graduates as cheap labor, utilize technological and infrastructural development, and increase production to meet the increasing demand for products.

Foreign Direct Investment

Fdi in local businesses.

The local Chinese investors are very cautious about the behaviors of foreign investors. The Chinese investors are always aware that they can offset foreign competition through their complicated local etiquette, their unclear decision-making processes, and their reliance on interpersonal relations. In a fair deal, the Chinese often rely on the Confucius ethics that support personal mutual trust, which is the founding idea of all business negotiations (Ntongho, 2016). The idea of mutual trust has made local Chinese investors very competitive in negotiating terms of contract manufacturing, business partnerships, as well as in export and import affairs.

How Do Both of the above Items Compare with the US Culture and Business?

Communication similarities and differences.

Whereas the Chinese entrepreneurs prefer non-verbal communication in which the use of cues is most emphasized, Americans mostly prefer verbal and written communication mostly in American English. When verbal communication is used in China, the low tone is preferred, and the use of strong negative statements is considered very impolite. Handshakes are common in China, but the use of a short handshake is more preferred than the use of a firm handshake. A firm handshake in China may be perceived immoral, while in the US, it is considered as a sign of confidence and composure.

Religious similarities and differences

The US comprises an amalgamation of religious traditions in business. For the Chinese, religious intersection with business is grounded on the philosophies of Confucianism, Taoism, and Buddhism in which harmony is observed to be an essential element in business negotiations. However, the situation in the US is a bit different as most of the American business entrepreneurs believe in the separation between religion and business practices. Americans believe that business negotiations should be rooted in natural law, where inalienable rights apply. Moreover, Americans believe in life, liberty, and the pursuit of happiness as the main religious concepts that associate with business.

Chinese and American

As a social system, guanxi is the dominant business principle that determines the nature and strength of business interactions. With the social system stemming from Confucius’s ethics, investors apply it in creating and nurturing trust-based relationships. Chen et al. (2013) refer to guanxi as personalized reciprocal relationships based on the golden rule fairly treating each other. On the contrary, American investors are different, and in their business ethics, they prefer professional relationships based on rules and regulations. While Americans can do businesses with anyone based on specified terms and conditions, the Chinese tend to follow guanxi.

Similar values but different attitudes

Chinese and Americans share important values such as benevolence, harmony, wisdom, honesty, righteousness, and courtesy. As civilized societies, both China and the US advocate for values that promote humanity and encourage business growth. The shared values are very important for they have become the core values that Chinese and Americans advocate in their business transactions. However, the difference between Americans and Chinese is the attitudes they have towards foreigners. Chinese have negative attitudes towards foreigners and strangers while Americans have favorable attitudes towards foreigners and strangers (Ramsay & Pang, 2015). The difference explains why the US hosts people from diverse races and ethnicities than China.

Similarities and differences in manners and customs

Both Chinese and Americans formalize their salutations, addresses, and introductory meetings for they consider it respectful to recognize people formally. Moreover, both Chinese and Americans require their business partners to make appointments in time to allow them to prepare for meetings and anticipated engagements. However, the difference is that while the Chinese consider confrontational negotiation as informal and intimidating, Americans consider it a formal and persuasive way (Jin et al., 2013). Another difference is that Americans require presentation of agendas in the meeting while the Chinese require an advanced presentation.

Comparison of social structure

China and the US have a similar social structure family for it comprises the nuclear family and extended family. In this view, the nature of relationships that exist in both the Chinese family and the American family is the same. In contrast, the US and China differ in the type of social classes that people belong to. Chinese have social classes that classify Chinese according to their occupations, such as peasants, government officials, merchants, and artisans. In contrast, the social classes of the US classify people according to their economic classes, namely, the poor, the middle-class, and the rich.

Comparison of organizations

Chinese effectively utilize local organizations in their businesses. Local businesses in China are members of the All-China Federation of Trade Unions, which advocate for their interests as well as the interests of employees. As the Chinese recognize the interests of women, they established the All-China Women’s Federation, which is a powerful organization that women use in championing their interest in trade and economic circles. The All-China Youth Federation is a social organization that youth utilizes to voice and advocate for their interests in China. In shaping their influence in the international arena, the Chinese have international social organizations. Chinese use the Chinese People’s Association for Friendship with Foreign Countries in promoting trade relationships between Chinese and foreigners.

Educational similarities and differences

China and the US have some main differences in their education. The main difference in the education systems in that students go through the 6-3-3 education system to complete high school education while students in the US go through the K-12 education system to complete high school.

This implies that students in China and the US take the same period to complete high school education. While the Chinese government offers compulsory education up to 9 years of education, the American government offers compulsory education up to 12 years of education. Both the education systems of the US and China offer the same education in technical institutions, colleges, and universities. In this view, college and university graduates of Chinese and Americans have the same knowledge and skills, and thus, they can conduct business without significant restrictions.

Similarities and differences

A comparison of Hofstede’s cultural dimensions of the US and China depicts some similarities and differences. In the dimension of masculinity, China and the US have similar ratings for they are patriarchal societies. In the difference in cultural dimensions, China has higher levels of power distance index and long-term orientation than the US. In contrast, the US has higher levels of individualism, uncertainty avoidance, and indulgence than the US. In essence, Americans are more capitalistic, risk-takers, and exhibit indulgence than Chinese.

Differences in the SWOT analysis

Whereas the strengths of China are large population, cheap labor, one-party system, and economic strength, the strengths of the US are the largest economy globally, high per capita income, high purchasing power, technological advancements, protection of intellectual property, low illiteracy level. While the weaknesses of China are fragile protection to intellectual property, high illiteracy levels, low economic status, high inflation rates, and the high cost of energy, the weaknesses of the US are wealth disparity, stringent regulations, high prices of energy, and weak credit markets (Kristin, 2014).

Moreover, the comparison of opportunities and threats shows notable differences. The opportunities of China are in the improvement of education, technological advancement, the growth of infrastructure, and exploitation of the consumer market while the ones of the US are streamlining regulations, reduce taxes, create friendly foreign policy, and embrace cultural diversity. Threats of China are the global competition, inflation rates, and protectionist measures whereas the US threats are hostile foreign policy, racism, stringent regulations, and slow economic growth.

Comparison of FDI

As China and the US are among the leading economies of the world, their FDIs have increased rapidly in the recent past owing to globalization and increased bilateral trades. Nevertheless, the difference is that FDI of the US in China is higher than the FDI of China in the US. A comparison of openness to FDI shows that China has restrictive regulations and poor protection of intellectual property rights, which hinder investors. In contrast, competition and security issues are some factors that hinder China from investing in the US.

What Are the Implications for the US Businesses Wishing to Conduct Business in China?

Global business cultural analysis of China provides important information that the US Businesses or investors intending to conduct businesses in China need to consider to succeed in their businesses. Communication is an important cultural aspect that had marked influence on the way Chinese undertake their businesses. They should understand that China has a high-context culture, which requires the use of non-verbal cues, and then learn where and when to apply each of the two dialects, Mandarin and Cantonese, to communicate effectively.

Embrace Chinese religions

To conduct businesses in China, businesses need to understand how popular religions influence culture and consequently business operations. Essentially, investors should know that the Chinese popular religion, Confucianism, Taoism, and Buddhism are major religions that influence beliefs, norms, traditions, and ethics of Chinese, and thus, they should embrace and apply them in their businesses.

For people to undertake their businesses effectively in China, they ought to understand guanxi, which is a powerful social system that determines business relationships and the occurrence of vices such as nepotism, corruption, and fraud. As the Chinese derive guanxi from their ethical values of the major religions, understanding of Chinese religions and diverse aspects of guanxi is essential.

Values and Customs

Chinese have values that they cherish and advocate for in their businesses. In this case, foreign businesses from the US ought to understand that the Chinese share important values such as benevolence, harmony, wisdom, honesty, righteousness, and courtesy with them, and thus, they should capitalize on these values to be successful.

Chinese have established customs that they adhere to while undertaking their businesses and interacting with business partners. Social and business ethics of Chinese requires formalization of greetings, use of intermediaries in introductory meetings, a respectful making of appointments early, and gradual negotiating process due to long-term orientation.

Social Structure and Organization

Social structure.

Chinese have a social structure that classifies individuals according to their familial positions and occupational status. In this view, investors should understand that the social structure of Chinese comprises family and occupational classes, namely, merchants, artisans, peasants, landowners, and government officials, and thus, they should customize their products to suit these social classes.

Social organizations

China is famous for it has established social organizations that advocate for the interests of workers, youth, women, and foreigners amongst others. As a collectivistic society, China has established social organizations such as the All-China Federation of Trade Unions, the All-China Women’s Federation, the All-China Youth Federation, and the Chinese People’s Association for Friendship with Foreign Countries, which have a significant influence on trade relationships.

In education, the US business should understand that China offers the same quality of education like the US. However, the systems of education are different, and the level of literacy in China is lower than in the US.

US businesses should understand that China is different in most cultural dimensions of Hofstede. Hofstede’s cultural dimensions show that China has higher levels of power distance index and a long-term orientation, but it has lower levels of individualism, uncertainty avoidance, and indulgence than the US.

Economic Factors

Lucrative economic environment.

Businesses from the US should understand that they are moving from a competitive economic environment and a lucrative economic environment. Hence, the US businesses should understand that a large consumer population, cheap labor, one-party system, and increasing gross domestic products are some of the strengths of China while of improvement of education, technological advancement, the growth of infrastructure, and exploitation of consumers are some of the opportunities.

Leading recipient of FDI

The US businesses should understand that China is among the leading countries in receiving FDI, and thus, they should develop effective investment strategies. Moreover, the US businesses should consider that restrictive regulations and poor protection of intellectual property rights are chief inhibiting factors of investments in China.

Global business cultural analysis of China reveals important information that investors and businesses need to understand and employ for them to be successful in China. Essentially, the culture of China is unique because its communication, ethics, values, attitudes, customs, and manners emanate from major religions, namely, the Chinese popular religion, Confucianism, Taoism, and Buddhism.

Social structure classifies people into occupational classes while local and international organizations advocate for the interest of all people, women, youth, and foreigners. The education system reveals that China is catching up with the global trends in education, technology, and trade. Hofstede’s cultural dimensions show that China has higher levels of power distance index and a long-term orientation, but it has lower levels of individualism, uncertainty avoidance, and indulgence than the US. Large consumer population, cheap labor, and increasing gross domestic product are some strengths of China. Although FDI is increasing exponentially, restrictive regulations, and poor protection of intellectual property rights are some of the factors that limit the inflows of FDI.

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EU AI Act: first regulation on artificial intelligence

The use of artificial intelligence in the EU will be regulated by the AI Act, the world’s first comprehensive AI law. Find out how it will protect you.

A man faces a computer generated figure with programming language in the background

As part of its digital strategy , the EU wants to regulate artificial intelligence (AI) to ensure better conditions for the development and use of this innovative technology. AI can create many benefits , such as better healthcare; safer and cleaner transport; more efficient manufacturing; and cheaper and more sustainable energy.

In April 2021, the European Commission proposed the first EU regulatory framework for AI. It says that AI systems that can be used in different applications are analysed and classified according to the risk they pose to users. The different risk levels will mean more or less regulation. Once approved, these will be the world’s first rules on AI.

Learn more about what artificial intelligence is and how it is used

What Parliament wants in AI legislation

Parliament’s priority is to make sure that AI systems used in the EU are safe, transparent, traceable, non-discriminatory and environmentally friendly. AI systems should be overseen by people, rather than by automation, to prevent harmful outcomes.

Parliament also wants to establish a technology-neutral, uniform definition for AI that could be applied to future AI systems.

Learn more about Parliament’s work on AI and its vision for AI’s future

AI Act: different rules for different risk levels

The new rules establish obligations for providers and users depending on the level of risk from artificial intelligence. While many AI systems pose minimal risk, they need to be assessed.

Unacceptable risk

Unacceptable risk AI systems are systems considered a threat to people and will be banned. They include:

  • Cognitive behavioural manipulation of people or specific vulnerable groups: for example voice-activated toys that encourage dangerous behaviour in children
  • Social scoring: classifying people based on behaviour, socio-economic status or personal characteristics
  • Biometric identification and categorisation of people
  • Real-time and remote biometric identification systems, such as facial recognition

Some exceptions may be allowed for law enforcement purposes. “Real-time” remote biometric identification systems will be allowed in a limited number of serious cases, while “post” remote biometric identification systems, where identification occurs after a significant delay, will be allowed to prosecute serious crimes and only after court approval.

AI systems that negatively affect safety or fundamental rights will be considered high risk and will be divided into two categories:

1) AI systems that are used in products falling under the EU’s product safety legislation . This includes toys, aviation, cars, medical devices and lifts.

2) AI systems falling into specific areas that will have to be registered in an EU database:

  • Management and operation of critical infrastructure
  • Education and vocational training
  • Employment, worker management and access to self-employment
  • Access to and enjoyment of essential private services and public services and benefits
  • Law enforcement
  • Migration, asylum and border control management
  • Assistance in legal interpretation and application of the law.

All high-risk AI systems will be assessed before being put on the market and also throughout their lifecycle.

General purpose and generative AI

Generative AI, like ChatGPT, would have to comply with transparency requirements:

  • Disclosing that the content was generated by AI
  • Designing the model to prevent it from generating illegal content
  • Publishing summaries of copyrighted data used for training

High-impact general-purpose AI models that might pose systemic risk, such as the more advanced AI model GPT-4, would have to undergo thorough evaluations and any serious incidents would have to be reported to the European Commission.

Limited risk

Limited risk AI systems should comply with minimal transparency requirements that would allow users to make informed decisions. After interacting with the applications, the user can then decide whether they want to continue using it. Users should be made aware when they are interacting with AI. This includes AI systems that generate or manipulate image, audio or video content, for example deepfakes.

On December 9 2023, Parliament reached a provisional agreement with the Council on the AI act . The agreed text will now have to be formally adopted by both Parliament and Council to become EU law. Before all MEPs have their say on the agreement, Parliament’s internal market and civil liberties committees will vote on it.

More on the EU’s digital measures

  • Cryptocurrency dangers and the benefits of EU legislation
  • Fighting cybercrime: new EU cybersecurity laws explained
  • Boosting data sharing in the EU: what are the benefits?
  • EU Digital Markets Act and Digital Services Act
  • Five ways the European Parliament wants to protect online gamers
  • Artificial Intelligence Act

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