SUBJECT INTERNATIONAL BUSINESS

International property right index IPRI in 2019...15 List of Contents I/ POLITICAL SYSTEMS...4 ECONOMIC SYSTEM...8 II/ LEGAL SYSTEMS...12 CONTRACT ENFORCEMENT...13 LEVEL OF PROPERTY PROT

DA NANG UNIVERSITY OF ECONOMICS



SUBJECT: INTERNATIONAL BUSINESS

Class: 44K02.1 Members: Tran Thi Phuong Anh

Luong Thi Khanh Ly Nguyen Tran Thao My Nguyen Thi Thu Tham Hoang Nhu Khanh Linh

Vu Thi Thuy Duyen

Da Nang, November 20t, 2019

List of Diagrams

Diagram 1 Democracy Index 5

Diagram 2 Freedom Trend 9

Diagram 3 Open Markets 9

Diagram 4 Rankings on Doing Bussiness topics 13

Diagram 5 Ease of Doing Bussiness Score on Doing Bussiness topics 13

Diagram 6 Intellectual property 15

Diagram 7 International property right index (IPRI) in 2019 15

List of Contents I/ POLITICAL SYSTEMS 4

ECONOMIC SYSTEM 8

II/ LEGAL SYSTEMS 12

CONTRACT ENFORCEMENT 13

LEVEL OF PROPERTY PROTECTION 14

THE PROTECTION OF INTELLECTUAL PROPERTY 14

III/ CUTURE 16

POWER DISTANCE 17

INDIVIDUALISM VERSUS COLLECTIVISM: 17

MASCULINITY VERSUS FEMININTY: 18

UNCERTANINTY AVOIDANCE: 18

LONG-TERM ORIENTATION: 18

IV/ EVALUATE BENEFITS, COSTS AND RISKS 19

BENEFITS 19

COSTS 19

POLITICAL FACTORS 19

ECONOMIC FACTORS 19

LEGAL FACTORS 20

RISKS 20

POLITICAL RISK 20

ECONOMIC RISK 20

LEGAL RISK 20

I/ POLITICAL SYSTEMS

The political system is the system of government of a country and it is assessed on two

criteria: the degree which the government attaches importance to individuals or

collectives and the degree of democracy and totalitarianism

( From International Business- Competing in the Global Marketplace, Charles W.L.Hill )

Individualism emphasizes personal goals and individual rights An individualist is

motivated by personal rewards and interests Individualists set personal goals and goals

based on themselves

Collectiveism focuses on group goals, what is the best for collectives and personal

relationships The collective is motivated by team goals A long- term relationship is very

important Team members easily sacrifice their personal interests or praise to recognize

and celebrate the success of the group

Democracy is a form of government where the citizens of the nation have the power to

vote in which the citizens exercise power directly or elect representatives from among

themselfs to form a governing body such as a parliament

Totalitarian countries are nations in which the government does not permit its people to

partake in political decision making Instead of giving the people a voice, a totalitarian

country is ruled either by a single dictator or a group that has not been collectively

elected by the people

Commonwealth of Australia has always maintained a stable liberal democratic political

system which is clearly shown in the following index table:

Diagram 1 Democracy Index

ự ủ

Ho

t đ

ng c

a chín

quyềần

ạ ộ

Based on the chart of Australia's democracy index 2018, it can be seen that the two

elements of fair, free elections and citizen's freedoms reach absolutely 10 points A

democratic rating of 9.09 / 10 is a high number indicating that Australia is a full

democracy In addition, Australia remains the 9th most democratic country in the world

with indicators of election, government or majority Therefore, Australian citizens also

enjoy many interests such as:

 Freedom of election and being elected

 To stand for parliament.

 To have the right to apply for Australian passport, free entry to Australia as well as

visa-free countries for Australian citizens

 To have opportunity to work in all positions of the Australian Defense Force and

Moreover, the Australian government system is based on a tradition of liberal democracy

including religious tolerance, freedom of speech and association

 According to Reporters Without Borders, Australia is the 19th country in the world

for the freedom of the press (2018) with a score of 15.46 Australia has good

public media

(https://rsf.org/en/ranking/2018)

In fact, Australians must obey many laws that restrict free speech including libel laws,

hate speech laws, sexual harassment laws, and laws against intimidation As a result, the

space left to demand investigative journalism has also been reduced by the fact that

independent investigative reporters and denunciators face harsh laws

 The Government of Australia allows people to be free of belief and the

Government generally still respects this in reality The relationship between

religions has contributed to the freedom of this belief

Australia is a country that focuses on collective socialism, which means that Australia

focuses on the advantages of common goals rather than personal goals According to a

report by the OECD 2015, Australia ranked 5th in the top 10 highest tax payers in the

world Australia's tax system is organized in a stratistructured structure, which

means the higher the income, the greater the tax Example, Your earnings are less than

600 AUD, you do not have to pay taxes The highest tax rate is 47% applied to

individuals earning over 62,500 AUD This level does not include an income deduction of

Medicare of 1.5% This collection is mandatory and must be closed at the same time as

the income tax In Australia, the overall demand of society is generally seen to be more

important than freedom of each individual Therefore, citizens in Australia will benefit

from access to good health systems, quality education and a wide range of community

facilities (such as parks and playgrounds) are supported through this tax revenue

(http://vinaservicesgroup.com/tin-tuc/thong-thue-cua-uc.html/)

CONCLUSION: Australia is considered a relatively good country for foreign investment

enterprises to invest in because Australia has a democratic political system, With the

power of the east, most of the benefits of the population are secured The Australian

political system focuses on collective socialism, the benefits of a collective group will be

more advanced than the benefits of individual individuals However, the democratic

political system of Australia still has rules that require businesses when choosing

Australia as a market for development, which needs careful consideration before

investing in

II/ECONOMIC SYSTEM

The economic system is the way in which resources are allocated and controlled in a

country's market The economic system refers to the role of government in regulating and

controlling economic activities For countries that value individual interests over

collective interests, it is easy to see free market economic systems In contrast, when

countries think that collective interest is more important, governments tend to have more

control and tighter control than the others Understanding the economic system is

necessary to assess the business in each country

Australia's economic system is a mixed economy, with very high levels of market

freedom Australia's efforts to harmonize the elements of the two forms of economy, the

market economy and the command economy, help the government control the profits

from business and provide the necessary policies to stabilize growth and distribute

income evenly But Australia also tends to be a market economy to help the economy

achieve high efficiency

According to heritage.org, Australia’s economic freedom score is 80.9, making its

economy the 5th freest in the 2019 Index Its overall score is unchanged from 2018, with

higher scores for labor freedom, government integrity, fiscal health, and trade freedom

offsetting a steep drop in judicial effectiveness Australia is ranked 4th among 43

countries in the Asia–Pacific region, and its overall score is well above the regional and

world averages

Diagram 2 Freedom Trend

In particular, the overall index of economic freedom has twelve components grouped into

four broad categories: Rule of Law; Government Size; Regulatory Efficiency and Open

Markets In the economic system section, we focus on analyzing three components

proving that Australia is a country with high economic freedom score Three components

are shown in the following chart:

Diagram 3 Open Markets

Chart analysis:

 The Trade Freedom index measures the absence of tariffs and other barriers that

affect the international trade of goods and services Australia's score is quite high,

reaching 87.6 points, an increase of 1.4 points compared to 2018 Australia ranks

8th in the world for free trade

The average applied tariff rate is 1.2 percent, which is quite low compared to other

countries Australia has entered into 11 FTAs (Free Trade Agreements) with both

individual countries and groups of countries such as China, Korea, Thailand,

ASEAN, New Zealand and so on A number of other agreements are currently

under negotiation Australia negotiates FTAs to benefit exporters, importers,

producers and investors by reducing and eliminating certain barriers to

international trade and investment

Australia's trade and tax policies are quite transparent, but non-tariff barriers

(regulations on quality, food safety, etc.) are quite strict All imported food items

must comply with the food hygiene and safety regulations set by the Department

of agriculture Industrial products should comply with technical barriers In

general, imported products must comply with the regulations on packaging and

labeling

 The Investment Freedom index for Australia from The Heritage Foundation

measures the restrictions to investment activity both within the country and across

borders A higher score means fewer restrictions Australia's score were unchanged

from the previous year, 80 points, which is the lowest among the three

components At this score, Australia is on par with Canada and Germany in terms

of investment freedom Government policies do not significantly interfere with

foreign investment

Australia is one of the countries with significant tax incentives such as:

 Tax incentives for scientific and technological projects

 Reduce capital costs for petroleum and mineral exploitation industries.

 Tax incentives for small and medium businesses

Therefore, if investing in Australia, investors will have the opportunity to enjoy tax

incentives and service incentives In some states, when becoming a permanent resident,

the investor will be exempted from the tax on buying houses with small valuable real

estate, investors are no longer limited in the right to buy residential real estate In

addition, they will enjoy better credit, more incentives for personal loans, home loans, car

purchases

Australia has a foreign investment approval regime that regulates certain types of

acquisitions by 'foreign persons' of equity securities in Australian companies and trusts,

and of Australian businesses and Australian real property assets The Foreign Investment

Review Board (FIRB) is a non-statutory body that advises the The Government monitors

the foreign investment to ensure that the investment will benefit Australia In particular,

foreign investors are limited to investing in "new" properties so that their investment adds

to the existing housing stock in Australia This is to prevent speculation, which has little

benefit for the Australian economy, and that could result in escalating housing prices

The Financial Freedom index for Australia from The Heritage Foundation measures the

efficiency of the banking system and the interventions of the government into the

financial system A higher score means more efficient banking institutions and less

government intervention Australia's financial freedom index remains the same as in 2018

and is equal to 90 points In this score, Australia ranked first in the financial freedom

rankings

Financial regulation in Australia is split mainly between the Australian Securities and

Investments Commission (ASIC) and the Australian Prudential Regulatory Authority

(APRA) The Australian Securities Exchange has also played a role in regulating market

conduct

The Australian government's intervention in finance is very low, regulation of financial

institutions is minimal but may extend beyond enforcing contractual obligations and

preventing fraud

In conclusion, all three of Australia's scores are higher than the world average, which

proves that the Australian market is an open market With almost all industries open to

foreign competition, Australia is an attractive and dynamic destination for investment

III/ LEGAL SYSTEMS

According to International Business – Competing in the Global Marketplace, 8 Edition th

của Charles W L Hill, the legal system of a country refers to the rules, or laws, that

regulate behavior along with the processes by which the laws are enforced and through

which redress for grievances is obtained Each country has the different legal system so

considering and researching differences will reflect the attractiveness and specific

characteristics of each country to make a decision that “ In this countrym should we

invest or not?” Therefor, the legal system of each coutry is very important for

international business because it determines the business form, establishment of rights

and obligations of related parties In different countries, goverments will have different

ways to define the legal system, which specifies how companies can conduct business so

that it is important and necessary to find out the legal system of a country before deciding

to invest

There are three main types of legal systems-or legal tradition-in use around the world:

common law, civil law, and theocratic law The legal systems in Australia is common law,

which is based on traditon, precedent and custom Tradition refers to a country's legal

history,precedent to cases that have come before the courts in the past, and custom to the

waysin which laws are applied in specific situations Generally, common law is more

flexible than others In order to estimate the legal systems, investors need to identify and

evaluate legal issues such as contract enforcement, taxition, property protection,

intellectual property rights, product responsibilities and product safety

CONTRACT ENFORCEMENT

The bar chart illustrates contract enforcement in Australia rank among the top five on the

global, which showed quickness in solving legal issues

Diagram 4 Rankings on Doing Bussiness topics

Diagram 5 Ease of Doing Bussiness Score on Doing Bussiness topics

The assessment of the level of contract enforcement in Australia was rated 79 on a scale

of 100

This is an ideal number for investors entering the Australian market

LEVEL OF PROPERTY PROTECTION.

Property protection refers to the legal right to use under which an asset is exchanged in

exchange for any collection related to that property.Assets include: land, housing,

equipment, capital, mineral ownership, business and intellectual property (ideas protected

through patents, copyright tables, and trademarks )Accordingly, Australia's property laws

are a system of laws governing and prioritizing the rights, benefits and responsibilities of

the property laws of individuals relating to property, title, or ownership

wisdom.Australian law orders or prioritizes properties that are real and tangible (land) or

intangible (copyrights to literary works)

 Land law: Australia's property laws are allowing the creation of a system to prove,

recognize and transfer land ownership, and facilitate the use of land law

All Australian states and territories adopt the "Torrens Land Registration System" when

granting new land and land has been studied in accordance with the relevant law This

system aims to reduce the number of land-related frauds resulting from falsifying

property rights

Therefore, when you want to invest land in Australia, you must pay attention to the "land

law": Land ownership is only confirmed when registering the property This gives

investors "greater assurance, real certainty about ownership."

THE PROTECTION OF INTELLECTUAL PROPERTY

Intellectual property: is the product of intellectual activity Such as computer software, a

screenplay, a music score, or the chemical formula for a new drug Patens, copyrights,

and trademarks establish ownership rights over intellectual property