What are the advantages of trade between UK and developing countries such as India and China?
If one looks back around a hundred or more years ago, life was certainly simpler than it is today. This refers to the fact that there have been a plethora of developments that have impacted everyone. The developments that one may consider in particular are technological ones as well as intellectual ones. Some may even go as far as asserting that each of these drives the other.
However, because of more awareness and technological development, life today is more complex than it was before. In every field one considers today, things are generally more complex. The business environment is a good example, as it is one that is influenced by an array of newer ideas as well as new technology. The technology mentioned here refers to the inventions or innovations that have made globalization possible. Business in today's world has to consider this macro economical phenomenon, as it is a major part of the business today. Globalization does not only affect international trade, but also has an impact on trade within each country. In addition to talking about the unavoidable globalization aspect of business today, it is important to focus on business ideas and relationships that form a major part of them.
An example of trade relations is the trade relationship between China and the UK. While discussing trade between these countries, it is important to briefly address historical aspects of these relations and the conditions through which each country has emerged. Each of these countries has survived periods in history in which people have faced high rates of unemployment. Between the years of the First and second World Wars, many countries had become protective over their trade. They began to focus on supply of materials and services within their own countries rather than imports. This was to deal with unemployment. However, it is thought that this did not work either, as many people still went unemployed. This point has open to much debate in the past. However, now, in contrast to the imposing of quotas on countries like China (that is capable of mass production), it is interesting to research the advantages of trade between UK and developing countries such as India and China. In view of trade agreements signed, it is interesting to learn about the trade advantages between UK and China or UK and India in comparison to trade relations between regions, such as the EU and China.
In order to understand the advantages of the UK trading with countries like the India and China, there is need to understand the track record of each of these Third World Countries. The UK needs to determine from this history whether trading with them would be viable enough, and it also needs to know whether there are particular risks involved. In order to review the trade relationships that each of these countries, in particular China, their past trade relationship with the European Union is of importance. The trade relationship between the European Union and India has apparently been a smooth one in contrast to the trade relationship between the European Union and China. While the EU affirmed positive gains for India when it was expanding, it appears that India fears of some of its industries suffering have been minimized. In fact, India has gained significantly since the expansion of the EU. China's trade relationship, in spite of its large-scale progress in commodity trade, has had obstacles along the way. The most recent of these is the controversial quotas recently applied to its textile exports to the EU and the US. In view of the reasons for which the EU and the US have imposed these quotas, the UK should be cautious about further developing its trade relationship with China. The advantages that the UK can have by trading with developing countries like China and India need to be determined through understanding their trade relationships and also understanding their ‘Advantages'. While China has an Absolute Advantage over the UK in many commodities, India is said to have a Comparative Advantage over the UK. In view of the advantages that these two developing countries have, it is thought that it would be more advantageous for the UK to trade with India. Not only would the UK's trade relationship with India be safer, it would also be more advantageous.
In order to conduct a study and answer the above research question, there is need to understand what can be deciphered from the matter to be reviewed. The matter reviewed will essentially consist of authentic material that is concerned with the relationship between China and the UK as well as European Union, and also the trade relationship between India and the UK. The WTO principles will also be discussed along with its preceding agreement for member countries. Further, there will also be a brief description and discussion of different trade theories and models that apply to international trade. These will all be theories that will aim at exposing different aspects of trade relationship between the UK and countries like India and China. The literature review will be analyzed thoroughly in order to expose the underlying answer to the research question.
Sources for the literature review are ones that are relative to the issue and are authentic, as they are taken from books and journals, as well as official websites, newspapers and magazines. Sources used in the literature review are relevant to the area of study as well as other relevant views that help in exploring this area of study as deeply as possible. In addition to the use of the sources mentioned above, the important factors belonging to field studied here are obtained from other studies and presentations, which means that this is a qualitative study. This helps to bring together a wider range of opinions and facts that can be analyzed from different angles. Careful analysis will be carried out in order to answer the research question. After analyzing the facts presented and making use of opinions as well, the study will be concluded.
Economic Functions through Globalization
Since technological advancements have promoted more effective communication around the world, international business has been greatly facilitated. Many economies have grown as a result of better communication. The European Union and particularly China have ameliorated their means of business because of effective communication. Certainly, these effective means have enhanced the speed with which trade has taken place.
Richer countries, like those in the European Union, have had the capital in to invest in ventures across the globe, and have subsequently thrived of other markets. China on its part has been faced with the necessity of keeping up to date its communications methods and systems. This has been one of the grounds for concern in the past few years, as China is a major player in international trade.
Businesses that were previously limited to UK markets have been extended to other places around the globe, as a result of globalization. Products that were freely available in one part of the world were easily spread into several others. The result of this was a greater influx of revenue earned, and the chief operating office or store would benefit in its original location. This is true to say for UK or US establishments that had chains in markets where labor is cheap.
Certainly, with the advantage that chain store provided businesses, it is no wonder why this example of international business has been a highlight in the trade arena. In addition to chain stores being lucrative earning opportunities, there are several other opportunities that have risen. In terms of considering economic conditions, it can be asserted that globalization has presented businesses in countries like the UK and US with ample opportunity for outsourcing work. This is quite a common trend now as there are markets available to countries like the UK that have cheaper labor. Outsourcing to places like India is common today because UK companies are known to save a great deal of revenue. They need not hire workers in the UK because they are more costly in contrast to hiring them in India. In time to come, more and businesses will be conducted this way through hiring labor outside the UK where it is cheaper. Therefore, it can be asserted that International Business is expected to undergo more changes in time to come. This is because of the fact that businesses are still in the process of realizing the scope of profits that can be earned. China is another country that has managed to take its products to other regions, and is still in the process of ameliorating its communication methods. However, it does not face significant obstacles in this regard.
Technological Developments that Impact Business Today
There are several reasons why some may believe that international business is modified by technology. This is perhaps because the causes of this are more evident in their physical form. Developments such as credit cards, swipe machines and e-commerce technology, etc, are few of the things that are implemented as part of everyday business (Kennedy, 2000, 34-9). With the use of credit cards, one can make an international business transaction. There is no need to travel to different parts of the world to get a particular product. Products that are affordable, like ones from China, can now be purchased while one sits at home [Taylor, 2002, 28]. Goods of various kinds are available through the Internet, and countries like China with a mass of products can serve one in almost any part of the world. This is possible because of products being available through the Internet and through payment with a credit card, etc. Here, one can see how important the establishment of the Internet has been in promoting international business too. The Internet is at the center of technology as well as economic and political conditions too, and it is almost always considered when controls are being decided upon regarding safeguarding international business. This refers to the fact that businesses are known to exchange vital data across it during transactions or other forms of communication through it.
Also related to the Internet-based technology is telecommunication that has been transformed too. This type of technology has made things more convenient for business individuals in different parts of the world. Countries like China have been working to make sure their systems are up to date and capable of meeting requirements of trading partners like the EU. Today, instead of business people having to meet in person, they simply have online conferences and conversations. Even prior to signing contracts and going through with business deals, these forms of corresponding are proving to be successful. China is no stranger to these forms of communication.
The Importance of the Trade Relationship between the European Union and China and What it Means for UK Trade with China and India.
Trade relations between the UK and China and the UK and India
British governments in the past have been known for their efforts to initiate business with China in the past. This is with particular reference to the period between the years 1949 and 1960. Prior to this period, like many other regions in the world, Britain too exercised protectionism. As far as trade is concerned with India, British governments during this time enjoyed trade benefits during its colonial days. Though this would be a subject for much debate, it can be asserted that the British East India Company is a pure example of this trade. Though one may argue that the Indian region in those times was subjected to British law, it still remains a significant mark in British and Indian trade relations. Since Britain in the past has had trade relations with China and India, today, it is not surprising that the UK would want to trade with these two regions, particularly because of the fact that they have benefited from these relations.
Trade relations between different countries are important as they each form a part of a larger trade environment. Considering the China-European Union trade relationship, it can be asserted that this trade relationship indeed forms a significant part of the overall trade environment. This is because of the fact that China is third on the list of countries that the European Union trades with. This means that the UK would be encouraged to trade with them more. What may be considered to be more significant is the fact that this trade relationship is one that has a long history to it, and has seen three different stages. Another interesting fact to note is that export and import volumes have always been on the rise between these two countries over the years.
Considering the fact that the UK has traded with India for many years and has done the same with China, the trade relationship between the EU and China is significant. In fact, it can be asserted that there are more similarities in trade relationships of the EU and China, and the UK and China. There apparently is not as much of a similarity existing when it comes to India. It appears that the UK and India trade relationship overshadows the European Union's interaction with India.