http://english.peopledaily.com.cn/200503/24/eng20050324_178093.html
UPDATED: 16:08, March 24, 2005
New changes of multinationals in China
China, through over 20 years of reform and opening to the outside world has not
only become a processing workshop for world manufacturing industry endowed with
quite some competitiveness but also an arresting world market.
Say, if China's opening to the outside was under the guidance of policies
before its entry into the World Trade Organization, but now after 3 years of
its entry into the WTO it has turned out a country opened to the outside that
can be predicted under the framework of the law. Over the past 3 years, many
famous multinationals in China have adjusted their development strategies in
China in view of the new situations here.
Change 1, expansion of investment
Multinationals have taken China one after another into their strategies for
global development and expanded their business operation goals in China. The
expansion of investment constitutes the necessary measures for the realization
of their new strategic goals in China. The actions taken by many multinationals
have turned out a new round of heated investment here in the country.
As investigation indicates, many famous multinationals have vying with one
another extended their investment scales in China since its entry into the WTO.
Among them the Japanese enterprises stand out relatively prominent. During the
past quite a few Japanese enterprises took China only as its processing
workshop for export but now they've taken China for a market which can be
actively developed.
Change II, Extending their industry chains
In 1990s, the invested projects by multinationals in China were mostly focused
on manufacturing industry. Among them a considerable foreign invested
enterprises took China only as their processing bases instead of their markets.
During this period the investment by multinationals in China was mainly
centered on shifting their assembling and processing links into China as the
labor-cost was low in China, namely shifting the links of the lowest added
value to China. They put up a great number of modernized factories in China.
However, after entering into the 21st century more and more multinationals have
not only taken China as their processing bases but also as their newly-boomed
markets of the greatest potentials. Under the circumstances multinationals
began to adjust their ideas for business operations in China.
In view of their experiences both positive and negative the multinationals came
to realize if they engaged only in production and manufacturing industry
without a complete network for goods distribution and circulation in China it's
quite difficult for them to expand their market here, nor is it easy for them
to get over others only by introducing in some new products from alien lands
without engaging themselves in researches for development. To carry on research
work in China is not only near the bases but also apt to the development of
products for the Chinese market. This can not only help themselves reduce the
cost for research work but is also good for raising the competitiveness in the
Chinese market.
On entering into the new era, the production competition carried out by
multinationals in China has been further intensified, being raised from only
one industrial link to the whole production links. Confronted with the
competition of other multinationals and of local Chinese enterprises that are
on the boom the multinationals began to carry out the competition along the
whole industrial links while increasing their investment. They've begun to
extend their industrial links, namely on the one hand to proceed to the upper
reaches for doing researches and development and the core accessories of the
manufacturing industries and on the other for developing goods distribution and
circulation along the lower reaches of the industrial links.
Change III, Integrated adjustment of enterprise groups
In recent years, many multinationals, while adjusting their strategies
operations here have been making adjustments in their management structures in
China. They aim at an integrated adjustment and harmonization of all their
resources in China, for instance, setting up headquarters for coordinating and
harmonizing all the operational bodies into an integrated entity for taking
part in the competition, namely to make the several independent and
decentralized enterprises of the past into enterprise groups with a unified
goal, uniformed strategy and unified brands, in a word a harmonized one in
action.
By People's Daily Online
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