Doing business in China : how Australian companies make their decisions when entering the Chinese market

This report describes and analyses the experiences of Australian businesses which have established operations or conduct business in China, both successfully and unsuccessfully. The information was collected over the period from August to November in 2007. It involved interviews with 43 respondents from 40 different Australian businesses across both manufacturing and service industries. The project was motivated by the increasing significance of China to Australia’s economy (such as the demand for Australian iron and coal exports and the transfer of much of Australia’s manufacturing operations there) and its extraordinary growth and development over the past 10 years. Using the contemporary modes of international expansion as a framework, the research considered companies which had entered China through Wholly Owned Foreign Enterprises (WOFEs), Joint Ventures, exporting and other forms such as licensing and agents. Most of the participants had located their operations in China in the eastern region, including Shanghai, Beijing, Guanzhou, Shenzhen and Tianjin.

Dispersion of information or market behaviour : general public trading in S & P 500 index futures

This paper considers 15 minute records of trading volume and traded prices coinciding with the reporting intervals required by the Commodity Futures Trading Commission. Records are extracted from trade records for two way trade between market makers (CTI1) and the general public (CTI4) from January 1994 to June 2004. Futures price records are matched with S&P500 cash index price records. Simultaneous volatility models are specified and estimated to test trading volume to futures volatility lead/lag effects and also futures volatility to cash index volatility lead/lag effects. There is evidence that existing theoretical models of the general public trading behaviour do not explain such behaviour in these very actively traded markets. These effects can depend more on market conditions than what is suggested in theoretical models.

Cultural impact on entry mode strategies into Chinese market by Australian companies

This Paper examines the cultural impact on the choice of entry mode strategies of Australian companies entering the Chinese Market. The Paper stresses the view that cultural differences must be considered when making entry mode  decisions. The evidence gained from an analysis of case studies undertaken of two Australian companies is presented in this paper. In both cases cultural differences have major affects on the decision-making process of China operations at a strategic level. It also indicates that a uniform process of entry mode stages, as suggested in the literature on entry options, may not be  suitable. Entry mode strategy should be determined on a case-by-case base and evaluated with culture considered prior to other criteria.

The trading dynamics of close-substitute futures markets : evidence of margin policy spillover effects

Volatility spillover is well documented among closely related securities. I investigate the relationship between margin policy and trading dynamics of the Nikkei 225 index futures markets of Osaka Securities Exchange (OSE) and Singapore Exchange (SGX). I find that OSE’s margin policy influences trading dynamics across both markets, although it is the less liquid SGX market that performs price discovery. This suggests that policy markers of close substitute markets should coordinate, or at least communicate policy intentions due to policy spillover. SGX’s market design facilitates price discovery, suggesting that a microstructure framework capable of overcoming the liquidity entry barrier is of interest to any futures exchange contemplating contract proliferation.

Floor trading and screen trading : distinctions for practitioners

The creation of an electronic limit order book is discussed as the basis for distinguishing between the floor trading and screen trading of derivative instruments. Distinguishing between FTP and ETP in terms of market transparency allows investors to contemplate the trade-off between the 2 platforms. Distinguishing between FTP and ETP in terms of memory preservation allows practitioners to contemplate the different experiences when analyzing floor data and screen data. A comparable set of floor and screen data is used to examine the impact on the trading dynamics and price discovery of LIFFE's FTSE 100 index futures market when trading is automated on LIFFE CONNECT. The dynamics in the quote change equation is shortened when moving from the floor to screen sample. Using the model's measure of trade informativeness, it is found that in 4 out of 5 daily sub-samples, screen trades are more than twice as informative as floor trades. Variability within a system of equations is explained more by order size history than trade size history.

From ivory towers to international business : are universities export ready in their recruitment of international students?

The main hypothesis examined in this study is that the success of export recruitment strategies of universities is partly determined by their export readiness, defined as a function of market orientation. This article seeks to fulfil both a research and a practitioner gap in the export of education field. There currently exists a lack of research and discussion concerning the business aspects of export education. Suspicion of the commercial aspects of what is essentially a public good is suggested as a possible reason for this absence of research. With the commercialisation of education growing at the phenomenal rate that it currently is, it is largely time that this research gap be addressed. This study provides an important contribution by examining the export readiness of universities, in particular pre-export market orientation, and its impact on subsequent export recruitment performance.

The impact of globalisation on building surveying in Europe

This research examined the impact of globalisation on building surveying in Europe. Globalisation has resulted in the emergence of three large trading blocs or a global economy depending on the view one takes. This has impacted on property in two ways, by creating transnational companies who operate in many countries but require branding of their property, and companies who wish to invest in property markets other than their country of origin.

Building Surveyors have professional expertise and knowledge valued in the UK since the 1960 and 1970s but until recently not recognised in Europe, partly due to poor awareness of Building Surveying (BS) expertise, legal constraints, and practises relating to the employment of professionals. This is changing with the establishment of European Surveying associations and the globalisation of the RICS.

The results showed four factors provided the reasons for the globalisation of BS skills. These were that Building Surveyors provided a consistent level of service for their clients. Secondly that English is the language of business. Thirdly, clients perceive Europe as a single trading bloc with a need for technical representation in each investment centre, providing them with a fast, knowledgeable service. Fourthly, clients perceive that UK Building Surveyors know what international, or transnational, investors want.

The finding on the current demand for the BS services in Europe is that though demand is large, few Building Surveyors are located in Europe. Secondly, both investors and occupiers require the services of Building Surveyors, and local companies / individuals are beginning to use their professional services. Finally, there is a diverse range of demand for the many BS skills.

Five key barriers to the practice of BS skills in Europe emerged from the research. Firstly, there was the problem of limited local legal and technical knowledge possessed by outsiders. Secondly, there are legal barriers to practice in some cases. Thirdly, other professionals can, and do, offer the services of the Building Surveyor. Fourthly, there can be cultural differences between ‘values’ and ‘norms’ required in business that constitute barriers. Finally there can be ‘communication’ problems when the Building Surveyor is not located in the country where the service is required.

Board structure and firm performance : evidence from India's top companies

Manuscript Type: Empirical

Research Question/Issue: This paper investigates the relationship between internal governance structures and financial performance of Indian companies. The effectiveness of boards of directors, including board composition, board size, and aspects of board leadership including duality and board busyness are addressed in the Indian context using two theories of corporate governance: agency theory and resource dependency theory.

Research Findings/Insights: The study used a sample of top Indian companies taking into account the endogeneity of the relationships among corporate governance, corporate performance, and corporate capital structure. The study provides some support for aspects of agency theory as a greater proportion of outside directors on boards were associated with improved firm performance. The notion of separating leadership roles in a manner consistent with agency theory was not supported. For instance, the notion that powerful CEOs (duality role, CEO being the promoter, and CEO being the only board manager) have a detrimental effect on performance was not supported. There was some support for resource dependency theory. The findings suggest that larger board size has a positive impact on performance thus supporting the view that greater exposure to the external environment improves access to various resources and thus positively impacts on performance. The study however failed to support the resource dependency theory in terms of the association between frequency of board meetings and performance. Similarly the results showed that outside directors with multiple appointments appeared to have a negative effect on performance, suggesting that "busyness" did not add value in terms of networks and enhancement of resource accessibility.

Theoretical/Academic Implications: The two theories of corporate governance, namely agency and resource dependence theory, were each only partially supported, by the findings of this study. The findings add further to the view that no single theory explains the nexus between corporate governance and performance.

Practitioner/Policy Implications: This study demonstrates that corporate governance measures utilized in developed economies related to boards of directors have some synergies and relevance to emerging economies, such as India. However, the nature of business structures in India, for example the large number of family businesses, may limit the generalizability of the findings and signals the need for further investigation of these businesses. The evidence related to multiple appointments of directors suggests that there may be support for restricting the number of directorships held by any one individual in emerging economies, given that the "busyness" of directors was negatively associated with firm performance.

There is something about pairs trading

The process of pairs trading involves exhaustively matching and ranking pairwise stocks based on some prespecified measure of closeness; e.g., correlation, cointegration, sum-of-squared price difference. Pairs trading is popular for various reasons. It is simple to follow and execute. The pairwise portfolio can be nearly market-neutral, such that it does not require the comprehensive analysis of macroeconomic news. Since it is based on relative valuation, the actual worth of individual firms is not a pertinent consideration. The strategy is sufficiently flexible to accommodate various investment styles. Lastly, it does not evoke frequent intraday rebalancing, such that pairs trading can be automated to a certain extent and be cost-feasibly profitable. Despite its long history on Wall Street, pairs trading remains elusive in nature. The academic attention it attracts is modest compared to contrarian and momentum trading.

Economic linkages across commodity futures : hedging and trading implications

We investigate cross-market trading dynamics in futures contracts written on seemingly unrelated commodities that are consumed by a common industry. On the Tokyo Commodity Exchange, we find such evidence in natural rubber (NR), palladium (PA) and gasoline (GA) futures markets. The automobile industry is responsible for more than 50% of global demand for each of these commodities. VAR estimation reveals short-run cross-market interaction between NR and GA, and from NR to PA. Cross-market influence exerted by PA is felt in longer dynamics, with PA volatility (volume) affecting NR (GA) volume (volatility). Our findings are robust to lag-specification, volatility measure, and consistent with full BEKK-GARCH estimation results. Further analysis, which benchmarks against silver futures market, TOCOM index and TOPIX transportation index, confirms that our results are driven by a common industry exposure, and not a commodity market factor. A simple trading rule that incorporates short-run GA and long-run PA dynamics to predict NR return yields positive economic profit. Our study offers new insights into how commodity and equity markets relate at an industry level, and implications for multi-commodity hedging.

The emergence of battery electric vehicles : A NZ manufacturing opportunity?

Personal passenger transport faces several challenges in the coming decades: depletion of cheap oil reserves, increasing congestion, localised pollution, the need for reduced carbon emissions and the long term goal of sustainability. One way of solving some of these problems could be to introduce comfortable, energy efficient, battery electric vehicles.

Currently, hybrid vehicles have been presented as a means to reducing the transportation related oil demand. New developments in materials and technologies have made them, cleaner and safer as well as more fuel efficient. However, hybrids will only prolong the use of oil until alternatively fuelled vehicles are developed.

One long term alternative is the battery electric vehicle (BEV). A BEV designed to be light, aerodynamic with high efficiency drive train and latest battery technology would have a performance comparable to a typical internal combustion engine vehicle (ICEV). Recent developments in virtual engineering, rapid prototyping and advanced manufacturing might enable low-cost development of niche market BEV’s designed and built in New Zealand for export markets.

This work examines the collaborative development of a twin seat BEV using new materials and latest technologies by the University of Waikato’s Engineering Department and a group of NZ and foreign companies. The car will be used to research the potential of BEVs and will also compete in the Commuter Class of the World Solar Challenge in 2007.

Firms as adaptive organizations : the case of Australian trading banks

The conventional accounting notion of ‘going concern’ — that a firm will continue its business operations in the same manner indefinitely — has underpinned accounting practice for over one hundred years. This idea has provided a rationale for spreading costs over accounting periods and for deferring costs as assets in balance sheets. An alternative idea that is widely regarded as reliable in the literatures of economics and deliberate action is that firms continually adapt to changes in market and economic conditions. That is economic behaviour. The implications of that view of a firm for accounting have been systematically explored by Chambers (1966). While not examining those particular implications, many other accounting theorists have been critical of the conventional accounting idea of 'going concern' and of its impact on accounting practice. The two notions of ‘going concern’ - as static or adaptive enterprises - are examined by referring to the business operations of the four major Australian trading banks over the period 1983-1991. Banks were selected because they are commonly thought to be particularly ‘conservative’ organizations. The period 1983—1991 was chosen because it covers the era of deregulation of the Australian financial system. The evidence adduced by this study indicates that the Australian trading banks have continually adapted their organizational structures and business operations in the light of changes in technology, markets for financial services, government policies and domestic and global economic conditions. Illustrations of adaptive behaviour by banks ate drawn from their normal operating procedures such as the provision of products and services, loan services, acquisitions, sale of property, non-core banking operations and international banking. It is argued on analytical grounds that the cost basis of accounting does not yield financial statements that provide factual and up-to-date information about the financial capacity of firms to pay their debts and to continue trading generally; that is, to be going concerns. At any time, those financial capacities are determined by the amount of money commanded by a firm, including the money's worth of its assets, and by its level of debt. It is concluded on empirical grounds that the Australian trading banks, at least, are adaptive entities.

Using competencies in human resource management : case studies in Australian companies

This study investigated the use of competencies for human resource management in seven Australian companies. Despite advocacy for the use of competencies by Government Committees and Task Forces (For example Carmichael (1992), Mayer, (1992) and Karpin, 1995), and the existence of competency standards for eighty per cent of the Australian workforce, the competency approach has not been widely adopted. A review of the literature indicated that the term competency had several meanings with different implications for its use depending on the meaning. The study looked at how individuals have defined the term and applied the approach to human resource management practices. Interviews were conducted with Human Resource and Training managers, and operative staff in companies using competencies. How they defined the term, described the rationale for using competencies, and applied competencies to selection, training, performance appraisal and remuneration were determined. Case studies were written for each company to describe their particular application of competencies. Competencies were found to be defined in several ways by those interviewed. Some advantages of using competencies in human resource management applications were found. The amount of work involved in introducing the competency approach was described as a reason why competencies have not been more widely adopted.