The Pros and Cons of Mncs in Chinese Market
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 company. The terms and conditions of this shared ownership are set out in the joint venture contract and relevant law. Each investor contributes assets to the JV and shares in its control, operation, risk and profit.
c. The reasons need to establish the form joint venture in China:
− Large capital costs - costs are too large for a single company.
− Protection - LDC governments close their borders to foreign companies. JV by passes protectionism.
− Control is divided: The venture serves "two masters"
d. The benefits that MNCs received from the form joint venture:
− The new venture increases production, lowers price to consumers.
− The new business is able to enter the market that neither parent could have entered singly.
− Cost reductions (otherwise, no joint ventures will be formed)
− Increasing market power
2 Overviews of social and economic situations in China:
• The meaning of China’s geographic location, the Per capita GDP and the population:
China’s economy is similar in size to that of the Eurozone, on a USD purchasing power parity basis, but with four times the population. Beijing, which China’s captital, is not only the country’s political capital
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 company. The terms and conditions of this shared ownership are set out in the joint venture contract and relevant law. Each investor contributes assets to the JV and shares in its control, operation, risk and profit.
c. The reasons need to establish the form joint venture in China:
− Large capital costs - costs are too large for a single company.
− Protection - LDC governments close their borders to foreign companies. JV by passes protectionism.
− Control is divided: The venture serves "two masters"
d. The benefits that MNCs received from the form joint venture:
− The new venture increases production, lowers price to consumers.
− The new business is able to enter the market that neither parent could have entered singly.
− Cost reductions (otherwise, no joint ventures will be formed)
− Increasing market power
2 Overviews of social and economic situations in China:
• The meaning of China’s geographic location, the Per capita GDP and the population:
China’s economy is similar in size to that of the Eurozone, on a USD purchasing power parity basis, but with four times the population. Beijing, which China’s captital, is not only the country’s political capital