China 's Domestic Market Development

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The China market provides many opportunities for foreign firms to take part in its economy; this is different from transferring parts of an industry to China – taking advantage of high quality labor at low costs - for the purpose of re-exporting. China is revolutionizing its economic standards to be able to compete head to head with the advanced industrial countries in the world. China’s domestic market growth potential is a topic of concern for many people in business and government all over the world. The rising friction between China and its major trading partners, the United States and the European Union, over China’s currency policy and the safety of China’s exports have caused China to do some intense house cleaning. It is…show more content…
He says the proposal for “Government Withdrawal from the Market” in Guangdong would stimulate the market and be the fundamental starting point to boost the economy. Today, Guangdong is a SEZ, which has attracted many foreign firms to come and build their factories in this part of China. According to Mary Amiti and Beata Smarzynska Javorcki, in their research paper Trade Costs and Location of Foreign Firms in China, in 2001 there were 2,945 foreign firms in all of China and there were over 600 foreign investment enterprises (FIEs) located in Guangdong alone; the most number of firms than any other province in China. (See Adapted Figures on the next page: A.1-A.3 ) When China entered the WTO, the number of foreign firms in China increased dramatically; the number of foreign firms reached 468,200 early that year. Between 1999 and 2001 there were many different forms of FIEs entering China’s market. As shown on the following page in Table A.1., adapted from a research study conducted by Amiti, Mary and Beata Smarzynska Javorcki, foreign manufacturing industries were the majority of entrants into the market. All of these companies had to enter as a joint venture with a local because it was the only way to enter the market as a foreigner before China entered the WTO, which is discussed later in this paper. The western industries came in
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