For many global companies, China represents a very attractive market in terms of size and growth rate
For many global companies, China represents a very attractive market in terms of size and growth rate. Yet, it ranks lower in terms of economic freedom and higher in political risk than other countries’ markets because it has a communist government. Despite these risks, many popular and reputable companies have established manufacturing operations in China.
This is largely because the Chinese government makes sales in China contingent on a company’s willingness to locate production there. The government wants Chinese companies to learn modern management skills from other international companies and acquire technology. Some observers believe that when Western companies agree to such conditions, they are bargaining away important industry knowledge in exchange for short-term sales.
Answer the following questions based on the situation described:
Should companies comply with China’s terms?
Should they risk losing sales by refusing to transfer technology?
Post a new topic to the Discussion Board that contains your answers to the above two questions (150 words) Respond to two other students’ posts on the Discussion Board and critique their answers.
Your submitted assignment (60 points) should include the following:
40 Points Your Discussion Board topic containing your responses to the questions
20 Points Your responses to two other students’ Discussion Board posts
References to use and cite
http://www.forbes.com/fdc/welcome_mjx.shtml
http://www.freetheworld.com/release.html
Classmate 1 (respond in 100 words)
Nothing will ever be attempted, if all possible objections must be first overcome. #######, Rasselas, 1759
Quid pro quo is latin for something for something. If there is a chance to gain a competitive edge over the competition should one let it pass them by because it may be risky? The game can not be won on the sidelines. One must jump in and risk it all in order to win. China is asking for investor’s technology in exchange for cheap labor and low taxes.
China is developing more each year. Companies are investing in China because of the benefits the country has to offer (Staff, 2013). China has a 1.4 billion population that can fuel labor forces like no other (Staff, 2013). This is coupled with low labor costs that allow investors to make huge profits and save millions of dollars (Staff, 2013). China also gives sweetheart deals on imports. Accepting and exporting freight shipments from any country (Staff, 2013). China will even sweeten the deal with land to build a factory on for a low cost (Staff, 2013).
China is offering a lot to attract businesses to their shores, but there are signs that U.S. companies anticipate spending less in China (Rapoza, 2012). However, U.S. companies are moving to China because of the Chinese consumer (Rapoza, 2012). China is seeing a rise in wages and benefits which make for a stronger middle class (Rapoza, 2012). U.S. businesses are investing into China because they realize that a strong economy is more profitable than the latter ( Rapoza, 2012). Accordingly in the spirit of quid pro quo if a corporation desires to do business in Chain than they must offer something in exchange to have access to the economy.
If a company refuses to take the risk of doing business with China then, they risk losing a the chance to grow with a country that is moving in a new direction. China has a new plan as the world’s 2nd largest market (Schoen, 2013). China is transforming its relations with the world (Schoen, 2013). The Chinese leadership is attempting to place the country in a greater position in the world trade (Schoen, 2013).
Classmate 2: (respond in 100 words)
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BUSN408—10
Discussion Board
December 9, 2014
Chinese government is a place for the largest workforce in the world with level of skills. They required foreign companies to share their special skills to offer potential sales. The best tradeoff for Chinese is the bargaining chip to industrialize their country. They must be in compliant with all sales to be part of mainland production. To get the most companies lifted up from the bottom is building a group structures that will not be cost effective.
The training is not met due to lack of communication and cultural barriers with the possibility to for Chinese government to lift or lighten the demands. There is a possible for a risk investment in market of Chinese government that can be almost unimaginable (Folsom, Mianan, & Otto, 1992). This may cause companies to lose sales due to safe guard technology. Sometimes short term sales can give temporary relief during future sales with their production capacity. Lessons are being learned in Cuba when Castro nationalized the oil refineries. Companies in United States were owned by the Cuban government to the workforce with used of equipment. If the technology comes to China without cost, the cost basis of new products will be extremely low and the countries will never to be able to complete (Higgins, 2011).
Reference
Higgins, Andrew (2011). “Hu’s visit spotlights China’s two faces”. The Washington Post (The Washington Post Company).
Ralph H. Folsom, John H. Minan, Lee Ann Otto (1992), Law and Politics in the People’s Republic of China, West Publishing
……………….Answer preview……………………………
Classmate 1
It is true that China is asking for Investor’s technology in exchange for cheap labor and low taxes. But this does dot guarantee that the firms that wish to work in collaboration with China must do so. Yes, the country offer more benefits in the short term. This may not offset the future losses that might be as a consequence of the decision made by the firms to exchange technology for cheap labor. The effects in the long run………………….
APA
225
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