BBNG3103

OUM BUSINESS SCHOOL

SEPTEMBER 2019

BBNG3103

INTERNATIONAL BUSINESS

MATRICULATION NO : 931227145374001
IDENTITY CARD NO. : 931227-14-5374
TELEPHONE NO. : 014-5093293
E-MAIL : eyesyahirah@oum.edu.my
LEARNING CENTRE : KOTA BHARU LEARNING CENTRE

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Table of Contents

1.0 INTRODUCTION ...................................................................................................................... 3

1.1 INTRODUCTION ON INTERNATIONAL BUSINESS AND THE FACTORS CONTRIBUTING TO ITS

DEVELOPMENT. ........................................................................................................................... 3
1.2 WHY ARE GLOBALIZATION AND INTERNATIONAL BUSINESS IMPORTANT? ................................ 3
1.3 DRIVERS OF INTERNATIONAL BUSINESS ................................................................................... 4

2.0 IDENTIFY AND DISCUSS 1 TRADING PARTNER OF MALAYSIA : CHINA ....................................... 7

2.1 OVERVIEW OF CHINA – MALAYSIA ........................................................................................... 7

2.2.THE MAJORITY OF THE PRODUCTS EXPORTED FROM CHINA TO MALAYSIA ............................... 7
2.3 THE MAJORITY OF PRODUCTS IMPORTED BY CHINA TO MALAYSIA ........................................... 8
2.4 TRADE FEATURES BETWEEN CHINA AND MALAYSIA ................................................................. 9

3.0 EVALUATE THE TRADING PERFORMANCE OF MALAYSIA WITH THE SELECTED TRADING
PARTNER FOR THE YEARS 2016 - 2018. ....................................................................................... 11

3.1 2016 ..................................................................................................................................... 11

3.2 2017 ..................................................................................................................................... 12
3.3 2018 ..................................................................................................................................... 12

4.0 SUMMARY ........................................................................................................................... 13

REFERENCE ................................................................................................................................ 14

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1.0 INTRODUCTION

1.1 INTRODUCTION ON INTERNATIONAL BUSINESS AND THE FACTORS

CONTRIBUTING TO ITS DEVELOPMENT.

The term 'globalization' is rooted in the word 'global' in many ways depending on the type of
globalization that occurs. According to the Dictionary of the Fourth Edition, 'globalization'
means 'the process by which an activity (economy, culture etc) is transmitted or expanded
internationally or internationally, especially with the availability of communication systems,
open policies etc'.

Economic globalization focuses on economic activities that transcend international borders.

Various definitions by various scholars try to imply this. Azlah, Suaibah, Rozeyta &
Syaharizatul (2003) cite Allison's definition of globalization as economic

"... the global economic integration is mainly related to the movement of trade, capital, labor
and information-based technology between countries."

Abdul Rashid (2004) refers to economic globalization as "... the process of increasing the 'flow'
of goods, capital, labor, services, information and financial restrictions through the world".
This process of deregulation involves deregulation in which laws relating to trade between
countries are restructured to facilitate the countries involved in transacting.

From the definitions shown above, it is clear that globalization of the economy is inevitable.
The rapid development of the world and the expansion of relations between nations have made
the globalization of the economy inevitable. Even globalization of the economy
not only enhances economic transactions between countries but also as a medium of diplomatic
relations that needs to be maintained.

1.2 WHY ARE GLOBALIZATION AND INTERNATIONAL BUSINESS

IMPORTANT?

As other organizations, firms, and people have expanded the access of theirs to online
resources, goods, providers, and markets across broader geographical places, they've also be
deeply affected (negatively and positively) by conditions outside the home countries of theirs.

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Globalization describes the ongoing social, financial, and political process which deepens the
relationships and expands the interdependencies amongst nations - the people of theirs, their
organizations, their firms, as well as the governments of theirs. International business entails
almost all commercial transactions - governmental and private - between parties of 2 plus
countries. Worldwide competition and events affect nearly all companies - small or large.
Nevertheless, the international environment is much more complicated and different compared
to a firm 's household setting.

1.3 DRIVERS OF INTERNATIONAL BUSINESS

a) Globalization of Markets

It describes the merging of national markets into a single large global industry. Now selling
worldwide is a lot easier on account of falling barriers to cross border trade. A business does
not need to be the dimensions of these multinational giants to facilitate as well as gain from the
globalization of areas. It's essential to provide a regular product to the global. But very

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important differences continue to exist between national markets as consumer tastes, legal
regulations, preferences, cultural systems.

These differences need that marketing techniques to be able to match the conditions in a nation.
For example, Wal Mart may still have to vary the product of theirs from country based on local
preferences and tastes.

b) Globalization of Production

It refers to the tracking down of services and goods from places around the world to make use
of national disparities in the price and quality of elements of production. The concept is usually
to participate better offering a product with low cost and good quality. For instance, Nike is
considerated among the major internet marketers of snow apparel and shoes on the planet. The
company has a few overseas factories where has accomplished a great production with cost
that is low. Unfortunately Nike continues to be a goal of protest and chronic accusations that
its supplements are probably available in sweatshops with substandard working conditions.
The company has signaled a resolve for strengthening working conditions, however in spite of
the reality, the episodes continue.

c) Falling Barriers to Trade and Investment

The dropping of barriers to firms are enabled by international trade to see the planet as the
market of theirs. The decrease of barrier to trade as well as investments likewise permits firms
to base creation at the perfect place for that task. Consequently, a firm may develop something
in a single country, create a component parts in 2 other countries, create the item in another
country after which export the completed product around the planet. The decrease of industry
obstacles has facilitated the globalization of creation. The evidence also indicates that
international immediate investment is participating in an increasing part in the global economy

d) Technological Innovation

Technological changes have accomplished advancements in transportation technology,

information processing, and communication, which includes the internet and also the World
wide Web (www). The most significant development continues to be advancement in the

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microprocessors after which worldwide communications are revolutionized by innovations in

wireless technologies, optical fiber, and satellite, and today the www and the Internet. The fast
growth of the web and also the associated www is the most recent expression of this particular
development. Besides, innovations have happened in the area on the transportation technology.
The development of business jet aircraft has decreased the time necessary to go from a single
location to the next. Right now New York is even closer to Tokyo than ever.

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2.0 IDENTIFY AND DISCUSS 1 TRADING PARTNER OF

MALAYSIA : CHINA

2.1 OVERVIEW OF CHINA – MALAYSIA

The diplomatic relations between China and Malaysia were formed on May 31, 1974.
Malaysian Prime Minister Tun Abdul Razak visited China, and signed an agreement, the joint
announcement of the Malaysian People's Republic of China's diplomatic relations with Prime
Minister Zhou Enlai. After the formation of diplomatic relations, bilateral relations between
the two countries have grown steadily. China and Mexico maintain good cooperation in
international trade relations for mutual benefit

In 1985, the Agreement to Avoid Double Taxation was signed. In 1988, the Shipping
Agreement, Trade Agreement, Protection Agreement, Trade and Aviation Service Agreement
was signed. The China-Malaysia Economic and Trade Joint Committee was also established.

In May 1999, Malaysian Foreign Minister Datuk Seri Syed Hamid Albar visited China and
signed a Joint Statement on the China-Malaysia Two-Way Cooperation Framework with
Chinese Foreign Minister Tang Jiaxuan. In 2000, Bank of China and Malaysian banks
established branches with each other.

In April 2002, the China-Malaysia Business Council was established. In October. In 2002, the
People's Bank of China and Bank Negara Malaysia signed the Two-Way Currency Exchange
(BSA).

Malaysia is China's second largest trading partner in ASEAN. In recent years, Malaysia has
been working hard to attract investment from China. The Malaysian government has also
introduced many preferential policies to encourage large Chinese companies to invest in
Mexico and seek profit in Malaysia. For example, bilateral trade between Malaysia and China
reached US $ 39.06 billion (RM140.6 billion) in 2008, a 10.3% increase compared to 2007

2.2.THE MAJORITY OF THE PRODUCTS EXPORTED FROM CHINA TO

MALAYSIA

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Based on the above data, it is clear that China's main exports to Malaysia are motor, electrical,
audio-visual, nuclear reactor, kettle, machine tool, steel, plastic and invention from plastic,
optical equipment, photography, medicine, and goods related substances, mineral fuels,
mineral oils and their invention; asphalt, steel products, vegetables and roots and edible herbs,
inorganic Chemicals, precious metals, and its compounds, and organic chemicals.

The top 10 types of products exported by China to Malaysia are in order of motor, electrical,
audio-visual, nuclear reactor, kettle, machine tool, steel, plastic and invention from plastic,
optical equipment, photography, medicine, and spare parts. related, mineral fuels, mineral oils
and their invention; asphalt, steel products, vegetables and roots and edible herbs, inorganic
Chemicals, precious metals, and its compounds, and organic chemicals according to the 2005
guidelines.

However, the order of these 10 major products began to change in 2006, namely motor,
electrical appliances, audio-visuals, nuclear reactors, kettles, appliances, steel, plastics and
creations from plastics, optical equipment, photography, medicine, and related substances,
steel products, organic chemicals, vegetables and roots and edible herbs, mineral fuels, mineral
oils and their creations; asphalt.

2.3 THE MAJORITY OF PRODUCTS IMPORTED BY CHINA TO MALAYSIA

The order of these 10 main product types is different every year. This is due to the different
needs of Malaysia each year. This has influenced China's total export value to Malaysia.
Therefore, the changing order of these 10 major products and the value of China's exports to
Malaysia were based on the needs of the Malaysian market during those years. However, the
total export value of motorcycles, electrical appliances, audio-visuals remained at first place
each year as it recorded the highest export value compared to other products. For example, the
export value of motorcycles, electrical appliances, audio-visuals was 5.978 million US Dollar
in 2009. This product has the highest export value per year compared to other products

Based on the above data, it is found that among the main imports of China from Malaysia are
motor, electrical, audio-visual, nuclear reactor, kettle, equipment machine, animal and
vegetable oils, fats, candles; edible oils and fats, rubber materials and their invention, plastics
and invention products from plastics, wood and wood products; charcoal, mineral fuels,

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mineral oils and their invention; asphalt, organic chemicals, optical equipment, photography,
medicine, and related components as well as steel.

2.4 TRADE FEATURES BETWEEN CHINA AND MALAYSIA

a) Restrictions on Imported Goods

In Malaysia's total import tax rate, 27% of products are under the non-automatic control of
import administration licenses, primarily related to animal and plant products, timber,
machinery, vehicles and related transport equipment. Import of heavy machinery must be
approved by the Ministry of Trade and Industry Malaysia and import authorization is usually
given to products never before manufactured in Malaysia. This has caused similar types of
products from China to the Malaysian market to meet some obstacles.

b) Technical Barriers Relating to Trade

Malaysia restricts the importation of products containing borneol and aconite components.
There are restrictions where packages and advertisements are prohibited from using words such
as anticancer, contraception, impotence and kidneys, diabetes, rheumatism and other side
effects. In addition, Chinese products wishing to enter the Malaysian market, should refer to a
local registered company to apply to the Ministry of Health, the Malaysian Medicines Office,
submit a formula, obtain a "MAL" before being allowed to import and sell. The Malaysian
drug registration process is complicated and time-consuming, thus increasing the cost and risk
of Chinese medical exports to Malaysia. The Chinese have expressed concern over the issue.

c) Control of the Ministry of Health on the Importation of Livestock Products

According to the Malaysian standard, the importation of livestock products is subject to the
Department of Veterinary Agriculture of Malaysia or the Malaysian National Quarantine
Bureau. Written applications must be obtained before carrying out other import application
procedures.

In addition, the importation of meat and related products, poultry, eggs and so on must be given
halal certification. The issuance of certificates by the Malaysian Animal Board and the Islamic

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Development Council was made during a joint field examination. The Chinese company noted
that the halal certification process lacked sufficient level of transparency and caused confusion
during the monitoring conducted by the relevant parties. The Chinese have expressed concern.

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3.0 EVALUATE THE TRADING PERFORMANCE OF

MALAYSIA WITH THE SELECTED TRADING PARTNER
FOR THE YEARS 2016 - 2018.

China was Malaysia's largest FDI contributor in the last 3 years. But the bright relations created
by the prior Najib Razak administration had been shaken by a brand new government that
cancelled pipeline tasks really worth RM10 billion as well as seized back RM1 billion
previously given to the Chinese contractor. It reinstated the Beijing backed East Coast Rail
Link just after slashing the sale price by one third to RM44 billion. Other China projects such
as for instance the substantial Forest City property improvement within the Johor Strait will
also be under scrutiny.

3.1 2016

China continued to become the biggest trading partner with Malaysia for the 8th consecutive
year after 2009. In 2016, Malaysia's swap with China elevated by 4.4 % to RM240.91 billion.
Exports to China had been estimated at RM98.56 billion, declined by 2.9 % while imports

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elevated by 10.1 % to RM142.35 billion. Lower exports have been captured for commodities
and manufactured goods especially, LNG, natural man-made materials, palm-based agriculture
and palm oil products, oil products, producers of metal and also E&E products.
Nevertheless, exports of chemical substances as well as chemical based solutions, scientific
and optical equipment, prepared food, transport equipment as well as wood items registered
increases. China was Malaysia's biggest import source with 20.4 % share of complete imports
in 2016. Higher imports have been registered for chemical products, chemicals, E&E
products, and petroleum products in addition to machinery, parts and equipment. China
remained probably the largest import source after 2011, Japan, Singapore, followed by, the Usa
plus Thailand. These nations accounted for 53.1 % of complete imports. In 2016, ASEAN
contributed RM171.73 billion or perhaps 24.6 % share to Malaysia's complete imports.

3.2 2017

China carried on to be Malaysia's biggest trading partner for ten consecutive years after 2009.
In 2018, Malaysia's swap with China rose by 8.1 % to RM313.81 billion and constituted 16.7
% of Malaysia's total trade. Exports to China broadened by 10.3 % to RM138.88 billion, on
account of increased exports of chemicals as well as chemical solutions, E&E
solutions, liquefied natural gas (LNG), producers of metal, scientific and optical tools, travel
equipment and prepared foods. China stayed as Malaysia's biggest import source, accounting
for 19.9 % share of complete imports in 2018. Imports from China elevated by 6.4 % to
RM174.93 billion, aided by larger imports of E&E solutions, producers of metal,
chemicals and chemical solutions in addition to transport equipment.

China remained probably the largest import source after 2011, accompanied by Singapore, the
US, Japan and Taiwan. These nations represented 53.4 % of complete imports. Imports from
ASEAN amounted to RM223.9 billion or perhaps 25.5 % share of Malaysia's complete imports
as the EU accounted for 9.7 % share, with a worth of RM84.77 billion.

3.3 2018

Trade with China which assimilated 16.4 % of Malaysia's whole industry declined marginally
by 0.2 % y-o-y to RM26.51 billion in November 2018. Exports to China rose by 3.9 % to
RM11.65 billion, benefiting from increased exports of chemicals as well as chemical solutions,

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oil products along with LNG. Imports from China ended up being reduced by 3.3 % to
RM14.85 billion. When compared to October 2018, trade as well as exports contracted by 10.8
% as well as 22.9 %, respectively, while imports have been in place by 1.8 %. Trade with China
in the very first eleven weeks of 2018 broadened by 8.5 % to RM286.86 billion compared to
exactly the same period last year. For this particular time period, exports to China recorded a
good development of 11.3 % to RM127.4 billion, buoyed by larger exports of chemicals as
well as chemical solutions, LNG, E&E products, manufactures of metal and
scientific and optical equipment. Imports from China rose by 6.3 % to RM159.46 billion.

4.0 SUMMARY

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After the formation of diplomatic relations, bilateral relations between the two countries have
grown steadily. China and Malaysia have maintained good cooperation in international trade
relations for mutual benefit. The value of trade between China and Malaysia is increasing every
year. In fact, Malaysia has also become an important trading country for China in the ASEAN
(Association of Southeast Asian Nations). Such trust has led many Chinese traders to invest in
Malaysia lately. Therefore, trade and investment relations between China and Malaysia still
have tremendous potential for growth.

REFERENCE

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US set to overtake China as Malaysia's top investor. (2019). News Collection. Retrieved 3
November 2019, from https://newscollection.net/asia-pacific/us-set-to-overtake-china-as-
malaysias-top-investor/

Malaysia Imports | 2019 | Data | Chart | Calendar | Forecast | News .

(2019). Tradingeconomics.com. Retrieved 3 November 2019, from
https://tradingeconomics.com/malaysia/imports

Gan, Pei Boon. Pelaburan terus asing bagi syarikat Malaysia di China : struktur, motif dan
bentuk. 1998. Beijing: ShuWu chubanshe.

Boon, Wui Kong. Pelaburan asing langsung Malaysia di negara China : masalah dan strategi
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Analisa perdagangan dua hala China-Malaysia. Sirirat Sae-Lim. 1995. Kuala Lumpur: i-
Malaysia.

Kumar, N. (2017). Introduction, Drivers Benefits of International Business. Enterslice.

Retrieved 3 November 2019, from https://enterslice.com/learning/benefits-international-
business/

Abdul Rashid bin Maidan. (Mei, 2004). Ke arah penyertaan masyarakat Malaysia dalam
menghadapi cabaran globalisasi. Jurutera. Retrieved from
http://dspace.unimap.edu.my/dspace/bitstream/123456789/13789/1/CStory.pdf

Ahmad Farizal Hajat. (2 November 2012). AEON ambil alih operasi Carrefour. BH Online.
Retrieved from
http://www2.bharian.com.my/articles/AEONambilalihoperasiCarrefour/Article/

Asuki Abas. (15 April 2001). Bencana globalisasi – pegangan ekonomi rakyat tempatan akan
terjejas. Utusan online. Retrieved from
http://ww1.utusan.com.my/utusan/info.asp?y=2001&dt=0415&pub=Utusan_Malaysia
&sec=Rencana&pg=re_03.htm

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Azlah Md Ali, Suaibah Abu Bakar, Rozeyta Omar & Syaharizatul Noorizwan Mukhtar. (2003).
Membina daya saing usahawan Melayu menyusur arus globalisasi. Retrieved from
http://pustaka2.upsi.edu.my/eprints/359/1/Azlah%20Md%20Ali%2C%20Suaibah%20
Abu%20Bakar%2C%20Rozeyta%20Omar%20dan%20Syaharizatul%20Noorizwan%2
0Mukhtar-

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