Integrating China into the Global Economy

By: Aaron Schwartz
Submitted: 2007-01-17 16:25:23
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China’s politics in the world market has always been rather “open”. “Open” in a way that China always tries to be the pioneer in the technological battle between global western companies and at the same time its communist government tries not to hold up this process by giving all the required conditions for companies that tried to work with China. They have to conquer the world’s market and whether or not to deal with China depends in the first place on the kind of product the company produces and is very individual. Though China has a very potential market owing to its size and quantity of consumers it is connected with several risks. This risks deal in the first place with the position of China in the world’s political relations and the functioning risks of its market. Still its popularity among western companies is quite high and many of them seek for establishing manufacturing operations in China. The reason of this level of popularity is very simple – if the company stars producing something in China it automatically gets high demand on its products. The rate of the return of their investments is very high and everybody seems to be in gain. But… The main point is that China gets way more. Chinese companies get western technologies and this becomes the leading power of their economics for the moment.

Let us suppose that there is one very well known company that decides to start manufacturing in China. China provides all the conditions and the company’s sales rise to the sky. At the same time China gets to know the technology of creation of the company’s product. Another Chinese company starts producing the same product. Does this mean that the original company looses? In a way – yes, but on the other hand it is a healthy economical competition. Western people will not start buying the Chinese equivalent of the products they trust and have been purchasing for years. And in addition to that technologies do not stand on one place. Constantly adding something technologically new will make it safer to work with other companies. Modern progress makes its input in their quick irrepressible development. Companies that want to co-operate with China should restrict their company’s politics on technological divulgence and get the major advantages from their joint work. It is absolutely obviously that each market has its own particularities and for a successful work it is necessary at least to know these particularities and take them into account. And by these means form favorable circumstances for business. The realization joint projects with China can allow different, especially young enterprises to realize their research potential, get the real return of investments, earlier embedded in creation of their product and use China’s market experience. Greater companies, such a Boeing should go at the minimum risks and not exchange industry knowledge for sales. China is a place for young companies that need support and experience. Such companies as Boeing already have a wide world known name and are trusted by thousands of consumers. If they ever take this risk this is to happen only in a critical situation for the company.

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