Companies Complying with China Terms in the Market
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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 countries' markets because it has a communist government. Despite these risks, many popular and reputable companies have established manufacturing operations in China.
This is largely because the Chinese government makes sales in China contingent on a company's willingness to locate production there. The government wants Chinese companies to learn modern management skills from other international 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 short-term sales.
Answer the following questions based on the situation described:
Should companies comply with China's terms?
Should they risk losing sales by refusing to transfer technology?
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Solution Summary
The solution discusses if companies are to comply with China's terms.
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Global Companies:
China is known to have a communist government which has set terms that for international companies to make production in China, they have to be willing to allow the Chinese based companies to learn the modern management skills from them and also acquire technology (Tse 2007) despite the fact that these terms seemed to be 'harsh' as some western observers matched it to ...
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