14 Aug For many global companies, China represents a very attractive market in terms of
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?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?
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