Although, it has heavy energy consumption, industry sector is holding one of the most important role in Chinese economy. There is a tendency that economy growth is equal with the energy consumption level, it is found by a research conducted by Ruth A Judson (1998). To overcome this energy supply problem, Chinese government was deciding to take some steps. For instance, the government gave the encouragement to state owned enterprises to do overseas investment, and also being the main actor in oil and gas industry all over the world. China needs for energy, especially oil and gas, is forcing the government to change their policies.
China realizes that in order to counter this negative perception, soft power is inevitably needed. As Chinese leaders focus on how to formulate soft power as part of its foreign policy, China has allocated a great deal of money to expand its soft power around the world. Not only to create the so-called "public image", China's soft power is also aimed at "engagement" with other regions. One important characteristic is that China is using "money" as one of its tools. Based on that explanation, the answer to "what is China's soft power?"
a) Economic Risk Economic risk referring to the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment, usually in a foreign country. As an example, let assume Aroma Nyonya wanted to build their own branches anywhere in China to expand their production. Aside from the business risk associated with making their production profitable, Aroma Nyonya is exposed to economic risk. Where political environment might shift quickly that may lead into the significant change laws from the government of China that affect Aroma Nyonya’s ability to continue to expand branches while maximizing their products in China.
This approach suits even more in countries with developing economy such as China. Since most MNEs are originated in the developed countries, usually they lack the necessary experience and knowledge about local market, political or economic challenges and uncertainties of host country. If MNE has some experience in the host countries through other projects, then it possible to handle local challenges. Whereas, if MNE entrants the host country for the first time, the conditions will not be very beneficial. Hypothesis 1: Joint venture with local automobile company can help to handle with different kind of Institutional pressures in China.
Free trade is extremely beneficial for economies as it has influenced China’s GDP and has made It closer to becoming one of the super economies in the world. By utilising the trade system, China being the main hub for trade can produce and sell products at a price that is lower than the developed
Low cost of resources and cheap labour causes increasing of attractiveness of China for German FDI. Germany disposes technology know-how and managerial skills which leads them to good partnership with emerging markets like China. To the Location advantages may include market potential which is huge as the Chinese consumers have significantly purchasing power. Disposable incomes can equal or exceed those of European and American consumers. Now, the number of potential customers is more than 1,4 billion (worldometers.info).
But some countries particularly developing countries will have a larger GDP than GNP as they will have many multinational enterprises investing into their economy. Lastly, gross national income (GNI), accounts for all GNP calculations as well as net cross country income, which is any flows of capital between countries for example dividends or interest payments. I will be measuring economic growth through real GDP per capita. This method is used most commonly in the existing literature I have studied and it provides a fairer comparison between countries. (Labes, 2015) supports by stating that “GDP and GDP per capita are most commonly used as a major determinant for FDI flows between two countries.” This is due to the fact that FDI is strongly influenced by the size of the markets of the partner countries because FDI flows tend to gravitate towards larger economies (Yuko Kinoshita,
Not only that through the process of internal migration, disparities should in theory be reduced. Yet, in China it seems like even though internal migration shrank the gaps of economic and social inequalities, the truth is, it opened up a greater economic and social disparities. Even though internal migration contributed a whole lot in the development of China, it expanded economic disparities within the country. Economic disparities comprise all the inequality in the distribution of economics which includes: income, employment, remittances, and labor. In China, the huge gap of economic disparities is caused by the household registration (hukou) system.
Also, the encouragement policy of China government at the time motivated the fast development of Foxconn in China. The policy such as tax reduction, and extra regional benefit greatly lower the cost of production of the firm. This set up a potential space for the firm to explicit the labor without the supervising of the labor market. And China government at the time want to attract more foreign investors to settle their company in China, it has been turned a blind eye to many labor explicit case. And the local governments have lack of knowledge of
Modern China is an urbanized, consumerist, burgeoning world power that has created a crude oil bridge to the Middle East. The subtext to modern China is that there will invariably be conflict with the likes of the USA-due to conflicting interests-but the extent of this conflict remains to be seen. Another issue which arises from this newfound hyper-urbanization is that mass discrimination is pervasive in China. People are generally classified by their housing status, or ‘hukou’, which indicates the various mannerisms, speech and idiosyncrasies of an individual based on their geographical foundation7. The hukou status is carried with the individual and prejudice is borne out of it, with many people who are native to the urban areas exercising hostility toward said individuals.