Vous êtes sur la page 1sur 4

Name: Sumeet Patnaik

Roll number: uemf15029


CAN CHINAS COMPANIES CONQUER THE WORLD?
Brief Summary
Chinas GDP is likely to surpass that of the United Statesby 2028,
which is five to ten years later than most analysts were predicting
before Chinas current slowdown began in 2014.
After all, China is already the worlds largest market for hundreds
of products, from cars to power stations to diapers.
The Chinese government has over $3 trillion in foreign exchange
reserves, which is easily the worlds largest such holding.
And China dominates the United States in trade volume: of the
180 nations with which the two countries both trade, China is the larger
trading partner with 124, including some important U.S. political and
military allies.
Finally, China has made steady progress toward its goal of becoming the
investor, infrastructure builder, equipment supplier, and banker of
choice in the developing world. Much of Asia, Africa, and Latin America
now depends on China economically and politically.
The key towards China becoming the worlds most powerful
economy resides in the fact that businesses need to learn to excel in
the much more competitive capital-goods and high-tech sectors,
creating and marketing sophisticated products such as semiconductors,
medical imaging equipment, and jet aircraft.
Although China has strong economic numbers it does not have the
corporations and industries that will allow the US to retain a stronger
economic power in the world.
In order to succeed in capital goods (goods that are used to produce
other goods) and high technology,
Companies need to develop unique capabilities suited to a small
number of clients,
Master a broad range of technologies,
Acquire deep customer knowledge,
And manage a global supply chain.
And unlike in the low-cost manufacturing sector, where Chinese
firms have strived primarily with companies in developing countries, the
capital-goods and high-tech industries are dominated by large, deeppocketed multinational corporations based in Japan, South Korea, the
United States, and Europe.
China has excelled during the last three decades adopting a strategy of

producing low cost low skill products.


Their Down Stream capabilities allow them
To take technology developed by other countries,
Streamline the production,
And produce it cheaper than the original maker.
And to make it a success, the Chinese government funded infrastructure
to support its businesses, directly solicited foreign investment, and
controlled its currency valuation to make its products affordable. In
order to protect its companies, China government made a restriction by
limiting reign imports and requiring that companies coming into China
share their technology with Chinese companies.
So to compete against the US, China has to move into the
development of more complex high-tech products and the capital goods
that are used to produce other goods as opposed to assembling the
capital goods that are designed and produced in other countries.
China must move from the mass production of generic goods to goods
that are customized to segments of their customer base and develop
global supply chain procedures to meet those needs. China can produce
products cheaply they fail to dominate against companies that feature
research and design or marketing as a significant part of their business.
Most of the MNCs utilize supply lines and innovation not vast numbers
of low-wage workers, such as what China possesses which allows these
corporations to thrive in the world market of complex products.
CHINA IN 2025
China has planned to develop 40 innovation centers in ten sectors by
2025 but before that it is most important they have the innovators
available as well and this requires a crackdown on corrupt research that
mars their peer reviewed journals and mis-allocated research spending
as well as developing high quality universities and protecting the
products and ideas produced by Chinese innovators by improving
protections for intellectual property.
Foreign Investment
China has started investing significant amounts into foreign investment.
They have moved into markets that have scare off Western investors
such as Afghanistan, Angola, and Ecuador or buying at risk corporations
and turning them around. The result of this strategy is that although
Chinas bold investments attract considerable attention, Western and
Japanese capital-goods and high-tech multinationals continue, with less
fanfare, to expand their larger and more powerful global positions.
China being a late follower, invests in riskier assets and buying up
second-tier Western technology companies which might be a good way
to play catch-up, but it is not a path to dominance.
It is a risky investment strategy that might eventually pay-off but in the
meantime Western corporations are expanding their global reach and
power investing in safe or quality companies and countries.

So Finally the question here is Can Chinas companies conquer

the World?
With their ability to produce more cheaply, China might catch up if
America stops investing in federal science research or short-term
investments driven by stock market profits override building up longterm investment but at the current time, despite impressive GDP
numbers, China does not yet have the freedom of information sharing, a
large base of technology innovators, experienced supply line managers
or competitive freedom to challenge existing dominate world market
powers.
Chinas large corporations are continuing their multi-year ascent in the
global economy.
According to 2014, list of Fortune Global 500 Companies, 95 Chinese
corporations made the list, up from 89 last years, 73 two years ago, and
34 in 2008. Three companies made it to the top ten, beating the US and
JapanSinopec Group (NYSE:SHI), China National Petroleum, and State
Grid.
Getting bigger doesnt necessarily mean getting betteror
more competitive. Chinese companies have yet to develop matching
clout in the world economy, by gaining a competitive edge against their
American, European, and Japanese counterparts.
It was a period when Chinas internet related industry was yet to see
explosive growth. But it was a boom time for US internet firms. Unlike
investors in China their overseas counter parts understood the value
and potential in technology firms.
So, forward looking but cash strapped Chinese startups tapped the
friendlier US bourses.
Foreign markets were more attractive because dollar-denominator
venture capital funds and private equity players were willing to back
promising Chinese technology startups without fuss. After a few years,
China with its newfound emphasis on entrepreneurship and innovation,
realized it needs those companies back. The govt. began easing
regulations to lure them back. For instance, profitability stipulation may
no longer apply to internet related companies. The Chinese govt. is
encouraging entrepreneurship. China stock markets now offer more
opportunities making them more attractive than US bourses, especially
in terms of valuation. Obviously, Chinese corporations are lagging
behind their American and European counterparts in all of these
attributes i.e. strong management, sound business strategy, ethical
business practices, competitive edge, and revenue and profit growth.
BOTTOM LINE: Chinese companies have a long way to go before they
can compete effectively in world markets, gain the respect of investors,
and conquer the world.

References

https://www.foreignaffairs.com/articles/united-states/can-chinascompanies-conquer-world
www.pressreader.com/china/chinadaily/20160427/282265254618459
http://www.forbes.com/sites/panosmourdoukoutas/2014/07/10/can
-chinas-large-corporations-take-the-world/#2363de6e34ba