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Multinational companies to invest in China's strategic adjustment and Countermeasures

Author: SunWenJun From: www.yourpaper.net Posted: 2009-11-04 21:52:10 Read:
Abstract: With the deepening of reform and opening up, especially after China's accession to the WTO, more multinational companies adopt a variety of ways to enter the Chinese market. At the same time, the investment strategy of multinational corporations in China, there have been some adjustments and changes. Analysis can be found, the strategic adjustment of multinational companies has a very significant impact on the development of the Chinese economy. How to deal with the strategic adjustment of investments by multinational companies in China, has become a the urgent major task of the one in front of the Chinese government and enterprises.
Keywords: multinational companies; investment in China; strategic adjustment

Multinational investment in China is still in its infancy, in the beginning of reform and opening up, foreign China's domestic policies, legal and market environment, consumer habits are all very familiar with, the lack of operational experience in the Chinese market, supporting infrastructure construction the stability of the legal environment, policy, government administrative intervention there are concerns take a wait-and-see, tentative, cautious, mainly the formation of a joint venture and cooperation based pattern, and thus investment, in order to fully utilize the resources of China's talent familiar with and understand the local market.
With China's integration into the process of economic globalization accelerating, the improvement of the policy environment, and wholly-owned limited reduction multinational companies have accumulated experience in the Chinese market, multinationals have China as one of its global strategy system link. At the same time, however, the investment strategy of multinational corporations in China also appears certain adjustments and changes.

First, multinational investment in China's strategic adjustment

Investment strategy in China is a very important part in the globalization strategies of multinational corporations. This side note, with the growing strength of the overall economic status of Chinese multinationals globalized business strategy to keep improving; hand also shows, multinational companies by changing its business strategy to actively confront and adapt to the ever-strengthening trend of economic globalization. Overall, this adjustment is reflected in the following aspects:
Adjustment of investment structure in China
At present, the global industrial structure and restructuring, the developed countries, the economic focus from manufacturing to services, the center of gravity of global industrialization gradually transferred to developing countries. In this context, China's political stability and favorable investment environment for multinational companies to attract intensified, so that multinational companies to invest in China more active. Many multinational companies began to transfer the manufacturing center in China, there are a number of multinational companies by providing funding, design standards, technology and management, parts manufacturing investment in China, and at the same time to increase procurement in China, China's integration into the global business network.
Overall, the the multinational investment structure in the past 20 years evolving. Mainly concentrated in labor-intensive industries in the 1980s; turned to capital-intensive industries in the early 1990s; recent years, multinational companies investing in China to optimize the structure gradually from the traditional resource-oriented, capital-oriented, into the knowledge innovation oriented become an investment focus on technology-intensive industries, the investment presents high-end trend.
2 China into its global business network and the increase in the value chain into
Multinational companies new investment the main flow of knowledge and technology-intensive industries, such as information technology, electronics, telecommunications equipment, pharmaceutical, petrochemical and power generation equipment and so on. Multinational companies focused on strategic investments in the Chinese market as a whole, the various stages of the industry chain the longitudinal investments and strengthen sales, after-sales service network as well as the training center building. The dispersed single investment project in China is integrated into a unified system to maximize the rational flow of factors of production and to optimize the combination of funds, personnel and technology to produce the overall effectiveness.
3. Adjustment of multinational companies on the the equity arrangement and mode of entry
Since the late 1990s, the proportion of the Sino-foreign joint venture enterprise gradually decreased, increasing the proportion of the foreign-owned enterprises, and replaced by a Sino-foreign joint enterprises have become the main mode of multinational companies into China. This new option arrangements is a choice made by multinational companies a comprehensive measure various aspects. Many multinational investment in China has been seen as an important part of its globalization strategy, the most suitable for the long-term corporate strategy and global strategic importance of sole proprietors have appeared increasingly.
In addition, multinational companies through joint ventures and equity participation in the form of penetration to the core enterprise in China, and the controlling stake or actual control over as much as possible, to enable them to obtain an absolute in the Chinese market by virtue of the advantages in capital, technology, management and talent leader. Overall, the foreign occupies a controlling position; 48 in the in Tianjin of 120 Fortune 500 companies, foreign-owned enterprises, accounting for 40%, 31 foreign holding companies, accounting for 42.5%;% share in quite 12 l0%; nine controlled by Chinese enterprises, accounting for only 7.5%.
Accelerate the implementation of the localization strategy
Accelerate the implementation of a localization strategy, investment increasingly systematic radiation control enhancements. "Thinking the globalization, operating localization" is the main mode current multinational foreign investment and business management. Multinational corporations in order to obtain greater gains in investment management, positive localization strategy - product brand localization, localization of manufacturing, marketing localization Localization of research and development, purchasing locally, as well as human resource localization.
Localization strategy from the beginning of the localization of human resources. Localization of human resources, including: the localization of the localization of the senior management and general management. At the senior management level, a very important strategy for multinational companies is to reuse the Chinese elite, especially the overseas students of Chinese background. Reuse of Chinese elites and many multinational companies significantly increased performance in the Chinese market. Manufacturers have physical attributes of the product, consumers purchased emotional comfort. Outdated products, imitated by competitors, and the brand is unique. The real and lasting competitive advantage often comes from a strong brand, brand management has enormous strategic implication. Many multinational companies also realize that can not simply be transplanted in the home market has been proven effective brand management model in China, the need to implement a brand localization strategy. Second, the response to the strategy for multinational investment in China's countermeasures

Strategic investment in China by multinational corporations, investment by multinationals can have a positive impact on China's economy, may also have a certain degree of negative effects can be seen. How to take advantage of its positive aspects of services for the Chinese economy, and at the same time overcome the negative impact, I think the following aspects:
1. Continue to build a good investment bad environment
After joining the WTO, China has made in improving the investment climate positive results, in particular, has achieved significant success in reducing approval procedures, simplify administrative procedures, improve efficiency. However, China's investment environment, especially the soft environment can not fully adapt to the new situation of the investment by transnational corporations. With the accelerating process of economic globalization, multinational corporations pay more attention-owned country's legal environment, market environment and personnel, logistics, infrastructure and other supporting environment, which put forward higher requirements for the construction of China's investment environment. To this end, we should continue to reform and optimize the investment environment, efforts to establish a stable, transparent and predictable legal environment; integrity, standardization, and uniform market; logistics smooth, intermediary service system is sound, easy to supporting the production of enterprise development environment; conducive the talent gathered and sustainable development of the humanities and the natural environment, to expedite the settlement of the outstanding contradictions encountered in the foreign-funded development to attract multinational companies to invest further enhance the comprehensive competitiveness.
2. Use of the anti-monopoly law monopoly of foreign-owned enterprises may be caused by regulatory
Multinational companies an advantage in terms of technology, capital, brand and marketing network, certain industries may be the monopoly of multinational companies, by virtue of its ownership advantages, which form a devastating impact on the development of national industry. The development of some of the people's livelihood, the industry will face a lot of difficulties, domestic enterprises will lose space for development. The government should make use of the relevant laws to limit the collusion between the monopoly of transnational corporations and multinational companies. The government also through the introduction of multi diversification on the introduction of foreign capital sources, to the introduction of competition mechanism, so that foreign Expand reasonable competition between the existing investment policy to limit the market share of foreign capital.
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