The Pros and Cons of Mncs in Chinese Market

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I. THE REALLY OPERATIONAL SITUATIONS OF THE MULTINATIONAL COMPANY’S SUBSIDIARY IN CHINA THROUGH JOINT VENTURE WITH CHINESE COMPANY. 1 The concept :

a. The multinational company:

A multinational company or Multinational corporation (MNC), multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation.

b. The joint venture based on the Chinese law:

A JV arises when a Chinese investor and a foreign investor own equity interest in the same Chinese limited liability
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Image 5: Sales by all foreign affiates of US MNCs

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Source: : US Bureau of Economic Analysis, U.S. Direct Investment Abroad: Financial and Operating Data for U.S. Multinational Companies in 2009.

• The minimum wages of the emplyee .

China’s ageing population makes labour cost increase . Additionally, wage inflation also cause more difficulty for companies, which are operating China. That is especially true for the consumer goods sector where China’s once cheap-labour offered a major cost advantage.

Image 6: The minimum wages in China, Bangladesh, Vietnam, Indonesia, in the period 2005 – 2011 (Unit: USD per month, base on 2011 exchange rate)

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Source: China’s National Bureau of Statistics; Indonesia’s Government Statistical Service; American Chamber of Commerce Vietnam; JETRO

• Export manufacture:

China exports manufacture almost as much as the rest of emerging Asia combined (USD1,900 billion versus USD2,000 billion annually) and twelve times that of North Africa. The advantageous point of China is some of China’s largest container ports also have vastly more capacity than entire countries, such as India or Vietnam.

Image 7: China’s exports versus the world in 2011

(Unit : USD bn)
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