CITIC Operations In Australia And Africa

Institutional Differences

CITIC traces its origin in China. The company has experienced a good reception in the country as the level of demand for its products has been high. As such, the company’s rate of growth has been impressive all over the years. Due to the significant success at home, CITIC found it compelling to extend globally and tap into the African and Australian markets. The two markets present various opportunities as well as shortcomings that affect the overall performance of the company. Porter’s five competitive factors determine the level of performance of the company in the two markets. The African and the Australian companies face different issues and thus have different abilities to grow. Institutional differences are also presented between the two organizations.

Both Africa and Australia present various similarities in terms of institutional aspects. For instance, the two continents largely share the social, cultural, political as well as institutional structures. It is, therefore, factual that the two continents relate quite well in the informal aspects of conducting business. However, the two continents have major differences in the formal organization and the way that they are managed (Sun et al., 2013). Different formal management policies lead to different results in the end. This is because different procedures are applied to handle CITIC operations in various countries. For instance, the level of formal requirements for foreign organizations and developers differs across the world continents.

Africa readily accepts foreign investors who believe in bringing about development in their countries. This is totally different from the formal culture in Australia. CITC faces more regulations to be able to work and develop structures in Australia. However, the formal structures that African countries expect CITIC to meet are minimal. The approval rate for infrastructural development is faster in the African continent than it is in Australia.

There has also been fierce opposition to CITIC operations in Australia. This is not the case for the African market. The great resistance and hostility of CITIC in Australia can all be related to the level of competition in the continent. In Australia, there are so many companies that deal with the iron business. Therefore, they feel that CITIC brings about competition in the country at the expense of local companies (Sun et al., 2013). To protect the interests of local companies, strict rules are enforced for CITIC operations. On the other hand, the level of competition in Africa is quite low. There are limited iron companies in Africa. Also, the limited companies that exist in Africa cannot meet the demand for quantity and quality from time to time. Therefore, CITIC finds a better place to invest in Africa than in Australia.

Due to the high level of hostility in Australia, the level of performance for CITIC in the country has been quite low. This is because the operational costs are so high, and the requirements are quite hindering. The high level of competition from peer companies also limits the size of the market and, therefore, lowers the level of competition. On the other hand, the level of CITIC performance in Africa is quite commendable (Sun et al., 2013). China has been welcomed positively in the entire African market. Institutional leaders have fewer objections to the presence of Chinese companies in the country. The demand for CITIC services in Africa has, therefore, been quite high, and this translates to better performance.

References

Sun, S. L., Zhang, Y., & Chen, Z. (2013). The challenges of Chinese outward investment in developed countries: The case of CITIC Pacific’s Sino Iron Project in Australia. Thunderbird International Business Review, 55(3), 313-322.