Firms with ISO 9000, 9002, and 14000 Certification

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BETWEEN
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THE
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BORDER
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ASIAN TRADE AND INVESTMENT
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Market Information Through Ethnic Networks and Migration
Ethnic Networks
Worldwide, increasing attention is being paid to the role of ethnic networks in overcoming inadequate information about international trade and investment opportunities, and there is evidence that ethnic networks promote bilateral trade by providing market information and supplying matching and referral services to their members.
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To be sure, as discussed in chapter 4, ethnic networks in Africa can cause market segmentation and reduced competition by deterring market entry by parties outside a group.
But it is also the case that such networks have a catalytic role in cross- border exchanges of market information. Ina foreign market, ethnic networks facilitate a range of business-to-business contact, including between producers of consumer products and their distributors, assemblers, and component suppliers, as well as foreign investors and their local joint venture partners.
Migrants usually maintain personal connections with their families and with other personal contacts in their home countries. These groups form what are called diasporas. Chinese and Indian diasporas are serving as vehicles for diffusion of information about investments and trade opportunities between the countries where they reside and the countries of their ethnic ancestries. Benefits from ethnic networks are particularly large in an environment in which formal networking opportunities are limited.
Contacts among expatriate communities across international boundaries play a crucial role in exchanging market information for international trade. Chinese entrepreneurs use their diaspora to overcome the constraints they face from the lack of formal channels available to them.
Speaking a common language or sharing similar cultural backgrounds eases communication and allows better understanding of documentation,
procedures, and regulations related to cross-border trade. Chinese expatriates are widely used by outsiders to facilitate their business relations in
China (see box Ethnic networks bring a valuable reservoir of knowledge and information on trade and investment opportunities. India is one notable example of a country that is using its diaspora to enhance bilateral trade and investment expansion.
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China also benefits from its diaspora. In one estimate, as much as 45 percent of its total $41 billion in FDI came from the Chinese diaspora in 2000.
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AFRICA
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CHINA AND INDIA
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S NEW ECONOMIC FRONTIER
In Africa, there is a striking difference in the reliance on ethnic networks between Indian and Chinese firms operating on the continent see table 5.1. About one-half of the owners of surveyed firms in Africa that are of Indian ethnic origin are in fact African by nationality. (A similar proportion exists for European owners of the surveyed African firms) These figures suggest that Indian (and European) migrants are substantially integrated into the business community in Africa.
BOX 5.5

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