Written contracts are an important part of doing business at North America, Europe and many many countries around the world. It is a binding agreement that outlines the responsibilities of each party involved in the agreement as well as specifies the length of time that the contract will be in force.

Written contracts are common around the world, but the history and traditions related to contracts vary. It can be very helpful to understand the philosophy regarding contracts in the culture when doing business in another country, including when and how they?re used and whether traditional beliefs affect current practices. Let?s have a look on traditions at China, Korea and Japan.

China.
The primary purpose of a contract in China is to establish a positive relationship between the companies involved. Businesspeople tend to write contracts that cover broad principles rather than specific issues and details are often dealt with verbally. By this way the details of a contract can change as the interests of the companies involved change.

Korea.
Building relationships is an important part of doing business in South Korea as in other parts of Asia. South Korean proverb says, ?Make a friend first and a client second?. Although written contracts are common in business dealings, Korean businesspeople tend to believe that written contacts merely summarize an agreement between parties and can be adjusted as circumstances change. They are willing to re-negotiate a contract that is in everyone?s best interest.

Japan.
Multinational corporations in Japan are familiar with European and American business practices, and they are accustomed to dealing with written contracts. However traditionally, Japanese businesspeople have felt that a verbal agreement is sufficient and that trust is the key to determining the success of a business relationship. So there is a chance of offending a Japanese businessperson by focusing on written contract too early in the process of working together. Even if a contract is the agreed-upon goal of both parties, building trust and respect in the relationship first can help the negotiations proceed more smoothly.

Mergers and Acquisitions.

Mergers and Acquisitions have been increasing worldwide throughout the 1990s. In each of the last three years the total value of transactions in the United States was more than US $500 billion. In emerging markets in 1997, there were 119 transactions that were valued at US $50 million, representing a 50% increase over 1996 in the number of deals. Europe wasn?t an exception and also experienced a dramatic rise in mergers and acquisitions as a result of the formation of the European Monetary Union in 1999. In 1997, one-third of all mergers and acquisitions worldwide were international in nature, with companies from developed countries accounting for the majority of acquirers (86%).

Rising stock markets, industry deregulation and globalization are the three key forces that have been linked to the increased pace of mergers and acquisitions.

Rising Stock Markets.
Dramatic increases in share prices fuel mergers and acquisitions. The steep rise in the value of European and U.S. stock markets has made it attractive for companies to use their stock as payment when entering into a merger or purchasing another company.

Deregulation.
Many governments in emerging markets have relaxed their ownership restrictions in certain industries such as airlines, healthcare, telecommunications, energy, utilities and banks. As a result, companies are able to sell off strategic assets to the highest bidder, even if it is a foreigner. The level of competition has increased because of deregulation in developed countries in many of those same industries. Many companies are realigning their businesses through mergers and acquisition in order to improve their competitive position, with many of those transactions occurring on a worldwide basis.

Globalization.
Companies are now seeking to form strategic alliances, where similar businesses combine to strengthen their global presence. The examples are coming from telecommunications, pharmaceuticals, and financial services. . Business is now truly global in nature, and companies must expand to meet the demands of their customers around the world.