1. Limited financial regulation and enforcement
The less robust financial regulation system in Asia presents corruption risks and legal compliance issues for American companies that must comply with the Foreign Corrupt Practices Act. The ownership of wealth in Asia is generally highly concentrated, which contributes to the acceleration and agility of domestic businesses and the economy.
Yet, this relative economic transformative speed encourages corruption and back-channel methodologies, and American companies operating under compliance protocols may be less competitive in this particular climate. For instance, the government in China established five to ten year plans for local businesses ...view middle of the document...
The Impact of International IP theft report has determined that the U.S. loses over $300 billion per year on exports to Asia.
This reveals the need for companies to develop innovative products and services that can differentiate their enterprises from the competition and prevent intellectual and technology theft. However, american enterprises are not protected under the local legal system and struggle to adapt to this unstable environment and thriving counterfeit market. Questions exist about the impartiality of the judiciary and its ability to set meaningful precedent.
4. The unique business culture
The unique business cultures and non-Western political ideologies in Asia intensify protectionism towards the domestic economy, particularly in China and Japan. The interference of the government in the private sector can impede business contracts, erode partnership stability, as well as pressure American companies to incorporate domestic interests in their local partnerships.
South Korean government has heavily regularized foreign investments and favors domestic industrial conglomerates, the chaebols, to drive the country’s rapid economic growth. Thus, it has become the norm for American companies to create partnership with domestic enterprises in South Korea to enter the particular market, at the cost of losing total control of management.
Executives in American companies must adapt to the particular business ethics in Asia and adapt to the heavy clout of political and business connections that can impact their market performance.
In addition, to match the increasingly sophisticated consumer demands in Asia and adapt to the different business cultures, companies must heavily invest in development of their own corporate culture, via infrastructure and people, as a means of mitigating detrimental impacts of the domestic business culture. The development of a corporate culture within a non-Western business environment is a significant expense and reveals...