Multinational business Week 9 tutorial Multinational business in China

Agenda Case study: China’s business environment Past question discussion

Question 1 What has China’s government done to make China attractive to foreign investors? Has its policy on inward foreign direct investment been vindicated? The answer should begin with a general outline of China’s 2 systems, 1 country reform strategy; then go on to describe the importance of the Special Economic Zones in attracting inward FDI. Key measures associated with the SEZs are Liberalisation re profit repatriation; tax policy (tax holidays, tax exemptions etc) Labour Policy (relaxation of labour standards); credit allocation; In discussing the second part of the question certain data should be referenced, in particular the growth of China’s export-led industry post 1992 i.e after the formation of the SEZs in practice (i.e the granting of to these regions of genuine autonomy from Beijing); Foreign Invested Enterprises (FIEs) now account for 60% of China’s exports – so FDI has been an important driver of China’s growth. However, some costs should be mentioned – profit repatriation; limitations to technological transfers inside China etc.

Question 2 Describe the major changes in China’s economy over the past two decades, and discuss the claim that its impressive growth record is a reflection more of the characteristics unique to China than of any conscious desire to emulate the Asian ‘economic paradigm’. Guideline Answer: Answers to this question should first outline the ‘one country, two systems’ reform strategy, and the explain how this represents China’s distinctive version of Asian Capitalism i.e A Communist Country that plays ‘Host’ to other Asian (and, to a lesser degree, other non-Asian) Capitalist Countries: Re Communism: Political and Administrative Centralisation Control: Monitoring: Policing Re Capitalism: Assembly and Processing Export Platform Abundant cheap labour.