Emerging Market-The Challenges And Opportunities Investing In China Essay

Emerging Market-The Challenges And Opportunities Investing In China - Essay Example It is evident that the emerging markets have flexed their muscles in the global arena, and their effect is expected to increase the more. Companies that have invested in these markets have enjoyed and are continuing to enjoy revenues that emanate from these transactions. China is among the emerging markets that has contributed a great mile to the spending of a huge clientele-base, and that has also attracted numerous multi-national companies (MNCs). With the country expected to dominate the global market by the year 2030, challenges are also not devoid from these transactions. This essay shall attempt to discuss the concept of ‘emerging markets’ using the case study of China. Additionally the essay shall keenly analyze the opportunities and threats facing the investors that are likely to invest in this emerging market. 2.0. Body 2.1. Definition of ‘emerging market’ In the thought of Beridze (2008), emerging markets refer to the nations that have actively bee n involved in business activities that have seen their fast growth as well as a huge development in the industrialization process. Among these countries that are termed to be emerging range from Brazil to China. As seen in the research conducted by Palepu & Khanna (2010), China has retained her position as the third in the list of the emerging markets. ... A good example is China that is export-driven with strong capital inflows and investments from well-capitalized banking institutions. Jain (2006) indicates that the markets are expected to stabilize by the day. Additionally, the growth of the world’s economy is expected to emanate from the emerging markets, and 70% of the growth is anticipated according to the economists (Kvint, 2009). Despite the varying interpretations of the term, the fact about the entire aspect is that emerging markets have been instrumental in recording an increase in the capital share in the world economy, and that their GDP is on the increase. As seen in figure 1, China may be defined as an emerging market as emerging markets are ones that are undergoing transformations from third world countries to developed countries, whilst their markets are now reduced to free markets from the state dominated ones (Enderwick, 2012). On another viewpoint, Mody (2004) says that emerging markets are slowly freeing up both internally and externally, due to the processes of economic reforms, that need to incorporate the rapid economic growth. It is evident that the country has opted to increase their role in the market, and minimize the chances that the government will have avenues to control the planning of the market. Pragmatic ideologies have in this case taken the day in the case of China’s economy. Its emergence cannot be alienated from the fact that the country has shed more energy in perfecting its contribution in the manufacturing industry as opposed to other countries that have opted to focus on the service industry whilst others in the agricultural sector. Figure 1: Real GDP growth (%) in the BRIC and US economies Source: IMF, World Economic Outlook (International Monetary