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Economic impact of multinational corporations in China

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					Economic impact of multinational corporations in China
The impact of transnational corporations on the Chinese economy |
Positive effects:
(1) to some extent, is a multinational investment capital, technology, management,
marketing, equal to one of the complex. Foreign investment has become an important
part of the economy and the new growth point in the national economy plays a
decisive role.
(2) Large multinational companies invest in China for China's economic
participation in the globalization process and to further promote economic and
technical cooperation with multinational companies and provide favorable conditions
for the exchange.
(3) multinational corporations are also popular, a new production strategy, large-scale
implementation of product outsourcing. Multinational companies to maintain product
key components of production, while a large number of sub-parts manufacturing and
logistics cost advantages to have the advantage of upstream and downstream
processing enterprises. This has the industry "cluster effect"
modes of production, so that a large number of multinational products meet the needs
of small and medium-chain gained a lot of processing orders. So that the appropriate
scale of production, and the higher level of management, can provide complementary
products for large private enterprises in China will be an unprecedented development
opportunity.
Negative effects:
(1) foreign investment, bringing economic prosperity, but China's GNP and
GDP did not get the same rapid development, GDP and GNP are two different
statistical indicators. The various indicators show that China's domestic
part of the value created (about 100 billion yuan per year) does not become
China's national income, but foreign nationals into the flow of foreign
wealth.
(2) multinational corporations to transfer to China mostly second-rate technology, the
implementation of the core technology lock-in, and by the home country government
policy restrictions. China's technological absorptive capacity is weak,
imperfect market competition, low level of technology, research, policy environment
is not ideal. Associated with domestic enterprises, absorptive capacity constraints of
technology spillover effects of TNCs.
(3) From the perspective of attracting foreign investment, China's
policy-off (such as taxes), demand advantages of cheap labor factor as the primary
means of attracting foreign investment, after the space to attract foreign investment in
these areas will be shrinking, and long-term elements of cheap labor Price and tax
preferential policies to attract foreign investment will be detrimental to national
income and welfare of the overall improvement is not conducive to the growth of
Chinese national enterprises, is not conducive to raising the domestic effective
demand.
Localization of China from the multinational companies good side effect, many
experts do the analysis, then the Pepsi introduced Pepsi in the morning in the Chinese
localization process, we feel it can bring many benefits to China . For example, an
increase of employment in China, direct employment has more than one million
people, bring indirect employment effects have been more than 15 million people,
China's tax revenue, to change people's consumption concept
and foster the carbonated drinks market This also contributed to economic growth. In
addition, localization strategy in the marketing process, have also implemented a
localization of raw materials. Then, in the localization process of raw materials, there
is a very prominent example is the production base was established potato, potato
production base was supposed to Yuan Cailiao localization services, but then again the
export and that is not entirely Juxian Yu local of. Well, this in turn has increased
export earnings, so from employment, taxation, economic growth, export and other
multinational point of view can be seen localized on China's economic
development, macro-economic benefits for a direct good affected. Well, I would like
to add that which is good about the time of external influence, transnational
corporations and the Chinese localization has specific conditions of economic
development are related. It is not just in the macro-economic indicators to promote
China's economic progress, in fact, the process of development in China, it
faced many contradictions. One of the most prominent one is the system's
contradictions, we usually called it a structural contradiction, the other is the structural
problems, China must overcome institutional and structural contradictions in the dual,
the Chinese economy can achieve sustained development of high efficiency. However,
multinational companies in promoting the localization of the time, it is the role of
institutional change is denied.
For instance, we talked a lot, multinational companies enter the Chinese market,
promoting the localization process, and now meet some of the domestic laws and
regulations may be some conflict. So, forcing our government to think, how to adapt
to the requirements of multinational localization, to amend the previous regulations,
but also to promote change in our policy, improve the law. In addition, multinational
companies entering the China market, promote the localization of the time, it often
appears with the full competition of domestic enterprises. Take carbonated beverage
industry, Beverage Industry Association of China AM General has talked about a lot
of information, from the information that we can clearly determine, carbonated
beverage industry in China, which has become a kind of oligopolistic competition
pattern, took possession of several large companies Most of the share market,
oligopolistic competition itself is effective chlorine than perfect competition. Well,
then forward the development of oligopolistic competition, will create a market
monopoly, which is people's attention, so it forced our government must
create an environment of fair competition, antitrust. Of course, I am here not to say
that PepsiCo has a monopoly in the Chinese market behavior, or the formation of a
market monopoly. In addition, to promote the localization of multinational companies,
the Government must change its functions, in particular to strengthen the supervision
and services, which may be twenty years ago the Chinese government does not go
without careful consideration, but today we can clearly see that the Chinese
Government functions, is also undergoing some changes. In addition, the localization
process, and competition from domestic enterprises, through a number of mergers and
acquisitions, joint ventures, etc., to expand the investment behavior, but also promotes
the development of domestic enterprises, and promote the reform of state-owned
enterprises. Therefore, from this perspective, the localization of multinational
companies, which promote the full range of China's policies, regulations,
institutional change, institutional change effect is very obvious. Another is that
China's economic structure is irrational, we pass on the Chinese economic
and technological structure is irrational, product structure, industrial structure,
regional economic structure is deficient, not speed up China's economic
structural adjustment, even if our economic system into a mature socialist market
economy, then China's economic development also will encounter many
obstacles. Therefore, we must accelerate economic restructuring. However, economic
restructuring, we first faced the problem of funds, personnel issues, technical
problems, etc., promoting the localization of multinational companies, I personally
think that the effective promotion of the Chinese capital accumulation. Well, since
when the increased localization in promoting market competition in China, many
domestic enterprises at a disadvantage in the competitive process, so it does not lead
to stable employment, many employees, so they expect the risk is rising.
Expected to rise when the risk to prevent the risk of saving behavior has become very
important. Thus, the savings rate living in the world, and also the Chinese market,
competition, and transnational corporations in the process of promoting the
localization of some acts have a certain relationship. In addition, the multinational
companies promoting the localization process, produces products for the Chinese
market, it replaces the large amount of imports, but also save our foreign exchange,
which in turn has also increased China's foreign exchange reserves. Thus,
our foreign exchange savings in the process of growth, to a certain extent, the
formation of the source of capital accumulation, so to ease the shortage of capital in
China is an important contribution. In addition, multinational corporations, including
Pepsi, since they are in the process of promoting the localization of an important
element, that is, the localization of personnel, including officers, employees, full
range of localization. Then, the process, they spent a lot of funds management and
workforce training, qualified labor force for the formation of China, human resources
training is there to help. In addition, multinational companies in promoting the
localization of time, will produce more or less technical, management of the external
effects. These are to promote China's economic restructuring, mitigation of
some structural adjustment problems, and played a corresponding role. Therefore, I
would like to add that the Chinese economy from multinational corporations good for
the impact of localization, in addition to some of our well-known content, should also
consider a specific transition period and the economic restructuring, increased conflict,
such a specific economic environment, its impact. Of course, localization is a
multinational double-edged sword, when we talk about it more good, in fact, it has a
lot of bad behavior, or called the restrained effect.
Some here would like to say that for just a good side, it actually produced a
corresponding effect of some other introverted. For example, multinational companies
how these spillover effects in the end, we are now very difficult to carry out accurate
quantitative analysis. Because multinational spillover effects generated by localized
not only by the impact of our policies and regulations, but also by the level of Chinese
enterprises. If the level of Chinese enterprises and transnational corporations
localization requirements can not be matched, then the localization of raw materials
even if it is implemented, the implementation of the localization of raw materials, we
have it difficult to attract to its technology, knowledge and management spillovers. In
addition, there are strategies and foreign-related, and the characteristics of R
& D now has a relationship. Such as today's technology research
and development process, a very clear trend is the core competitiveness of enterprises
in the core factor, with integrity, indivisibility, can not be separated, can not be
transferred, it is difficult to learn by a simple and comprehensive grasp. So, even if
you know the Pepsi-Cola formula, you can not apply the model of Pepsi, a similar
reconstruction of PepsiCo such a domestic-funded enterprise. All these affect the
localization process of multinational technology spillover effect. In addition, it will
also have talent introverted effects, such as multinational companies to promote local
talent in the process, it relies on advanced distribution system, relying on a solid
financial strength, coupled with good training system, more opportunities to attract a
large number of talented employees, it also makes a lot of good labor-funded
enterprises, multinational talents have switched to such domestic enterprises for the
position in the competition will also have a corresponding effect. Another effect is the
knowledge of the introverted, multinational companies in promoting the localization
of the time do not forget the internal strategy, including as the franchise this way, it is
actually a reflection of an internal strategy. Strategy in achieving internal process,
attaches great importance to the protection of intellectual property, also pay attention
to the spread of knowledge and management issues.
Protection of intellectual property is a double-edged sword, conducive to the creation
of intellectual property business, to enhance its enthusiasm, There is also hindered the
spread of technology. Of course, this problem can not be simply attributed to the
enterprises themselves, which is a competitive strategy. In addition, more and more
multinational companies are now more popular in the building owned enterprises,
rather than build a joint venture in China, it also makes China through joint ventures
as a means of attracting multinational management experience, technical support, the
pathway affected . In short, multinational companies entering the localization of the
time, it's restrained effect, or called the crowding-out effect, in fact, exist.
So, faced with the dual effect, I think we block the localization process, all the way
multinational corporations, naturally can not make effective use of multinational
corporations in China brought about by the localization of spillovers. So, in turn, rely
entirely on the localization of multinational companies to complete the creation of
China's independent intellectual property rights is unrealistic. So, the best
way is to hand from the Government's point of view, multinational
corporations actively promote localization, while nurturing intellectual property rights
should create the necessary institutional environment conditions. On the other hand,
from a business point of view, the process should be localized in the multinational
companies, to multinational corporations a full range of industry chain, so as to get
the most out of this process proceeds.
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