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 country markets because it has a communist government. Despite these risks, Volkswagen, Isuzu, and Boeing are just a few of the hundreds of companies that have established manufacturing operations in China. This is due in large part to the Chinese government making sales in China contingent on a company’s willingness to locate production there. The government wants Chinese companies to learn modern management skills from non-Chinese 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 sales today. Should Boeing and other companies go along with China’s terms, or should they risk losing sales by refusing to transfer technology?
A good tough question, without an obvious or correct answer. I see several critial issues. 1) can information and technology be contained? If Boeing doesnt sell its technology, will China just as easily obtain it from someone else (e.g., Airbus)? 2) Are the CEOS of companies like Boeing being short-sighted; going for the short-term gains at the expense of problems down the road? 3) In general, the U.S. as done well for itself by expanding overseas markets. When China developes things other countries want to buy, trade will occur, and both countries will be better off.
Lotsa luck.
I'm having trouble with this question and would like some help....
can information and technology be contained?
1 answer
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 country markets because it has a communist government. Despite these risks, Volkswagen, Isuzu, and Boeing are just a few of the hundreds of companies that have established manufacturing operations in China. This is due in large part to the Chinese government making sales in China contingent on a company’s willingness to locate production there. The government wants Chinese companies to learn modern management skills from non-Chinese 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 sales today. Should Boeing and other companies go along with China’s terms, or should they risk losing sales by refusing to transfer technology?
1 answer