Over the past few decades, the world has gone into the age of globalization, which was defined as ‘the shift toward a more integrated and interdependent world economy (Hill, Cronk,﹠Wickramasekera, 2011, p.9). Yet, not only economy, but it also affects governments, business and society. In addition, globalization can influence transactional relationships (Paliwoda,﹠Slater, 2009, p.374) and bring more tight connection between countries (Zhou, 2010, p.1619). Therefore, international business, which as a consequence of globalization, has also grown dramatically for promoting the development of global economy.
Therefore, international business activities can be divided by international trade and international investment. Trade is the voluntary exchange of goods, services, assets or money from one person or organization to another (Fisher, Hughes, Griffin,﹠Pustay, 2006, p.30). The main reason for trade is in order to gain a benefit to both parties. Similarly, international trade is trade between individuals or organizations of two countries (Fisher et al, 2006, p.30). However, international investment is capital supplied by residents of one country to another (Mahoney, 2001, p.15).
Obviously, the major benefit of international trade and investment are indispensable for rapid growth of economy and technology in both two countries (Panagraiya, 2003, p.20). China is the best recent example of country that started with openness trade policy at the end of 1970s (Panagraiya, 2003, p.20), a vast of international trades and investments after openness policy not only developed Chinese economy and technology, but it also changed people’s life-style and thinking-style.
However, although the core of trade and investment are both sides of individual or organization in two countries, it is also a type of multidimensional interaction (Zhou, 2010, p.1619). Thus, international trade will be associated by many factors, such as economic, political, culture, geographic and global institutional factors (Zhou, 2010, p.1619). For example, many countries reduce tariff for promoting free international trade and investment.
After the policy of Reform and Opening, china has become the biggest communist economies (Mahoney, 2001, p. 62). There are many countries that have made business relationships with China, for example, Japan, which as the world’s second largest economy, is also one of the largest trade partner of China. Nevertheless, how do international trade and investment happen between china and Japan? Which factors can support the trade relationship, but which influences will hinder the development of business between these two countries.
This essay will describe the importance of globalization, what trade and investments are between the two countries, and how they influence on the political economy impact international trade and investment in Asia Pacific countries such as china and Japan.
Globalization can be defined broadly that the networks of connections spanning from multi-continental distances, and drawing their economy, society, cultural and information can be closed together (Das, 2010, p. 66). Thus, it can bring massive change to countries. From economic views, Globalization increases the integration of national economies through trade in goods and services, cross-border corporate investment, and the flows of capital, labor and technology (Das, 2010, p. 66). For instance, despite the financial crisis in 1997, Asia-pacific nations through sustaining the growth of globalization increased the foreign direct investment (Marcotullio, 2003, p.221). Not just of world’s economy, globalization affects the transactional and cultural relationships of people, companies, their workforce and consumers (Paliwoda,﹠Slater, 2009, p.374). For example, Chinese-manufactured products, especially the small commodities such as clothes have completely gone into the lives of people who live in