Selling to the Global Community

RUNNING HEADER: SELLING TO THE GLOBAL COMMUNITY

SELLING TO THE GLOBAL COMMUNITY

University of Phoenix

June, 2008

Abstract

Regardless of the success of your company on a national scale, to engage yourself in a successful venture outside of your borders requires several critical elements that one must acknowledge and apply with great care. One of those requirements would be to thoroughly research the cultural environment in which you wish to launch your product no matter how popular and indispensable you believe it might be. In the past, many national giants have hit the wall when introducing a foreign market or launching a new marketing campaign because of the cultural gap they encountered on the other side of their borders. Another way of preventing a flop on an international market is to carefully study the economical past of this country, which might differ quite a bit from the one the company flourished in

Background

In 2001, China became a member nation of the World Trade Organization (WTO). Case analysis of Citigroup in Post-WTO China, proves that Citigroup displayed adaptability in Citigroup’s attempt to expand operations in China. In addition, information is included regarding historical development in business processes needed for such an expansion. Lastly, WTO information regarding commitments made by China to liberalize its marketing regime displays the opportunities made available to Citigroup.

Citigroup’s Adaptability in China Market Expansion

On September 17, 2001, the World Trade Organization concluded negotiations on China's terms of membership of the WTO. For acceptance into the WTO China had to agree to certain changes to how it does business. China agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules (WTO NEWS: 2001 PRESS RELEASES Press/243, 2001). Among these is the following commitment involving foreign financial institutions:

Upon accession, foreign financial institutions will be permitted to provide services in China without client restrictions for foreign currency business. For local currency business, within two years of accession, foreign financial institutions will be permitted to provide services to Chinese enterprises. Within five years of accession, foreign financial institutions will be permitted to provide services to all Chinese clients (WTO NEWS: par. 5)

Establishing commitment affords a foreign agency equal right in the business environment of the host country in this case, China to Citigroup. The commitment schedule is the guideline, which determines the market access and national treatment obligations. This is known as most-favored nation (MFN) treatment. It is a general obligation that applies to all measures affecting trade in services. Although, China has made certain commitments to open its market to foreign business, its environment is unique. Although China has met the criteria to accord national treatment to foreign companies’belief is that China is structurally unable to make it a reality. According to James Kynge, 1999, In China’s case, experience and discernable economic pressures suggest that the equal application of transparent laws enforced by an impartial legal system may remain a mere concept for many years to come.

Expansion Challenges

Citigroup had obtained a limited license to perform corporate banking services, before China received WTO membership. However, since the China’s membership Citigroup wants to expand it presence in China. China has unique environmental challenges, which include:

1. Banking regulations, which require new branches to have a minimum of $72 million in operating capital. This is up from 15.7 million, in order to do local retail business.

2. Fear of Citigroup becoming a competitive threat to China’s struggling domestic banks, could cause the Peoples Bank of China (PBOC) to stop Citigroup’s China expansion plans. Giving early licenses to smaller foreign financial institutions could do this.

3. Current politics can cause economic failure resulting in high unemployment affecting expansion plans.

4. Citicorp must overcome human resource