Competition Promotion in China

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Table of Contents

Introduction
China and the world market
Auto industry
Aerospace industry
Textile and apparel industry
Electricity industry
Conclusion
Works Cited

Introduction

All over the globe, different firms or companies experience challenges of competition from enterprises owned by the state. In a country like China, the companies that are owned by the state usually get some benefits in certain areas. These beneficial areas include taxation, and subsidies.

With respect to this, the state owned enterprises are able to compete with the privately owned enterprises in the sense that they are able to get a lot of profit thus placing them in a good position to compete in the international market. Furthermore, enforcement of regulations is also included.

Regulations enable the control of imports and exports in a country. These business regulations have created greater opportunities for China in the international market (Robinson, 1).

China and the world market

Development in China started in 2001. This is after China became a member of the World Trade Organization. During this time, China started to appear in the records of the FDI. The World Trade Organization (WTO) enabled it to do away with the non-tariff barriers.

This has enabled China to expand its market territories internationally. WTO also offered rights to foreign companies to transact businesses. In addition, conditions of foreign investment were changed enabling foreign investors to invest in China (Rugman & Collinson 618).

The ability for China to access the WTO is of very little significance to the US. China entering the WTO had a symbolic and a tangible end regarding any option to the global adoption of capitalism.

Since its membership in the WTO, the Chinese participation has portrayed some kind of socialism. This has been an expectation by many. The growing economy and the access to the markets in America has been part of socialism (Beeson 731).

In the past quarter of a century, the economy of China has been increasing by almost 10% every year. This has been as a result of several factors. These factors include; the strength and the practices of the Chinese businesses. This has culminated to domestic changes in China.

Besides that, it has some implications internationally. In the recent years, the market had been flooded with products bearing the made in china label. Also, the overseas Chinese firms have expanded greatly (Pan 8).

The increased exports have resulted to higher incomes. On the other hand, this ways for other countries enabling them to export their products to the growing Chinese market.

Production in China depends on the increasing importation of inputs. There has been high demand for importation of the consumer goods and food. Also, importation of metal-based products has also increased (Kiely 356).

Global financial crisis in 2008 which is as a result of mortgage crisis in the US, contributed a lot in the present China. The crisis led to decrease in the overseas demands. It also led to Chinese enterprises receiving fewer orders from outside the country.

The increase of the raw materials cost saw production cost escalate. Also, the high cost of labor and inventory had an effect on the cost of production. This resulted to poor working environment for many enterprises (Pan 6).

China has been able to have high accumulation of capital. This is from the foreign money it earns from the export of the products manufactured in the country. This has enabled it to have a rise in its shares of the world GDP. China has been able to manufacture worlds export for more than 25 years. The amount of exports in China has always on the increase every other year.

China accounts for the largest fraction of imports in Europe and North America. The shares on the office equipments are also on increase. China has the capability to produce more sophisticated goods. This development has increased rapidly within the recent years (Glyn 92).

Through advanced technology and industrialization, China has been able to compete very well in the international market. Chinese build their industries and equip them at very high speed. This has geared to the increased manufacturing rate.

The industrial revolution in China is at high speed compared to that which occurred in the west. Majority of the products are manufactured for companies in other countries. This is from the designs and patents offered by these companies.

The foreigners make a lot of profit from this (Hay para.4). In China, long supply chains are common. Multiple contractors are used and its only trust that holds these parties together. In case the process breaks down, it becomes hard to know who is on the wrong (Hay para.5).

China has the largest production of coal and aluminum. With this high production, the aluminum industry has far much advanced. Due to the advanced technology, production is on large scale.

This accords China a competitive advantage leaving a wide gap between it and other competitors in the world. Many countries with low technology import their utensils from China thus adding to the economy of the country (Rugman & Collinson 617).

Auto industry

The motor vehicle industry in China is one of the major players in the globe. This is after Japan and Germany. The exports of autos in china are growing at very high rates. According to the minister of commerce, China targets at lifting its export of the motors sold globally to 10% yearly. Also, countrys manufacturers focus Chinas domestic market (Teslik, para.4).

The rapid growth of the motor industry has given other well established manufacturers a surprise. These manufacturers include Asia and Japan. South Korea is also included. Chinas auto industry development has challenged the regional competitors due to the advanced technology and cheap vehicles.

Also, it has shown a tendency of bring problems to the multinational firms like the US carmakers. U.S has been well known for its advanced technology but it has been unable to compete with China in the motor industry. There is a likely hood of China focusing its export to countries within its closest range of economy. This focus is to enable it have a wider market for its products (Rugman & Collins 34).

Comparing with the auto industry, the aero industry is a bit hard to sail through due to the challenges China goes through. Since 1960, Brazil has been the only known manufacturer. It could make more than one aerospace in one month. Since the aerospace industry in China is growing at a higher rate, goals have been set to increase its competitiveness.

Up to date, China has only managed to manufacture small planes due to the lack of adequate technology. In addition, China manufactures helicopters and transport planes which do very well in the local and the international market. Furthermore, sophisticated warplanes are also manufactured in China. In the year 2007, China announced that they had plans of making planes with large and wide bodies.

This was to bring competition in the manufacturing industry. China is not aiming at competing with Boeing and Airbus in the high capacity plane market. Currently the country lacks the technology required to build wide-bodied planes (Teslik, para.5).

As for now, China targets on making parts of the autos and the aerospace since little cost is incurred in the process of transportation. The country targets on exporting the parts and not the assembled autos. The rate of export of the parts in China is growing on daily basis due to the high demand.

The argument is on when it comes to the transportation of the products. Transportation of parts is considered to be easier since many of them can be stacked in a container consequently, leading to reduced cost of transport (Teslik, para.6).

Aerospace industry

China is also a major player in the manufacturing of aircraft-parts. All of the aircrafts manufactured by Boeing has parts from China. The director of one of the consulting firm aims at airline competition. He also focuses on air port competitiveness. He argues that production of parts shows some sense for Boeing. This is due to the fact that Chinese manufacturers consider the risk of production (Teslik, para.8).

Textile and apparel industry

The textile industry in China is considered as the biggest globally. This is in terms of textile and garment exportation. China has the capacity to export millions of tones yearly of the textile products. Most of the products are marketed in the UK high street shops. There has been an indication that in a few years time, the market share will increase. The highest number of industries in China is privately owned.

Also, foreign investment is common (Chan & Xiaoyang, 11). A Shift to a socialist market economy has transformed the ownership of textile industries. The ownership has been changed from state ownership to privately owned firms. The textile industry in China has more than 4 million employees. The textile exports are mainly designed by foreigners. The garments are mainly made of imported materials.

The industry manufactures clothes targeting the mass markets. The clothing for the mass market is of moderate and low prices. In china, only few industries manufacture clothes of high quality since they target individuals within different classes.

According to statistics, the apparel industry in China was ranked second in terms of export in the year 1995. The market of textiles has increased in China which is as a result of developed economy. The economy improvement is due to the economic reforms which China has undergone. A lot of money has been spent on the consumer goods and this is a result of growth in income (Rugman &Collins 23).

Electricity industry

The electricity industry in China has undergone a lot of transformations since 1985. The first reform concentrated on bringing competition due to liberalization of the industry in the developed countries. A state power corporation was formed in 1997. The functions of the administration were separate from those of the business. To enhance competition in the industry, the corporation was divided into two sectors.

These sectors are the power generation and distribution sectors. This was part of the reforms that were done in 2002. The reforms aimed at liberating the power market. After the reforms pilot program was set, the program was conducted and it aimed at selling the electrical power on wholesale. In the North and East China, the respective regional power companies buy power individually (Robinson 45).

By 2003, the East Chinas GDP contributed 31.8% of the whole country. This had a lot of impact on the countrys economy. Two types of power produced in this region are thermal and hydropower. Thermal power accounts for the highest percentage of the total supply. Monthly transactions were conducted for power export. This was done according to peak and off peak period.

For the future of the power industry in china, the government has emphasized on construction of power generation centers. For the development of the industry, a power generation scheme has been put into use. This scheme has resulted to different production costs among the producers. In 1996, foreign investors were able to sell almost four times that of the local producers.

With this regard, there is no competition when bidding for the wholesale prices. In china, increases in prices are only allowed for the retailers. This is done only when there is an effect due to increase on fuel prices. Rational electricity billing methods should be put into practice to deal with the current problem in the power industry. In addition, standards and rules should be set as a way of dealing with the crisis (Nolan 34).

Conclusion

To promote competition in the industries, china has developed labor laws. These were developed in 2008. These laws have been made based on the European style labor codes. This law protects the workers since the employer can not dismiss an employee without any legal reason. Also, the law ensures that the employees have contracts as per the law (Global labor strategies 37).

Works Cited

Beeson, Mark. Comment: Trading places? China, the United States and the evolution of the international political economy: Review of international political economy, (16) 4.Octomber 2009, pp. 729-741.

Chan, Anita. & Xiaoyang, Zhu. Disciplinary labor regimes in Chinese factories. 2003. Web.

Glyn, Andrew. Finance globalization and welfare. London: Oxford university press. 2005.

Global labor strategies. Why china matters: Labor rights in the era of globalization. 2008.

Kiely, Ray. Povertys fall/Chinas rise: Global convergence or new forms of uneven development? A journal of contemporary Asia. (38) 2008, pp.353-372.

Nolan, Peter. China and the global business revolution: Cambridge journal of economics. (26).2002, pp.119-137.

Pan, Chengxin. What is Chinese about Chinese businesses? Locating the rise of china in global production networks: journal of contemporary China.18 (58), 2009, pp. 7-25.

Robinson, Peter. International business: Winter, (xxxii) 2011.

Rugman, Alan. Collins, Simon. International businesses. London: Pearson education (nd). Print.

Teslik, Lee. , Chinas motor vehicle and aerospace industries. Web.

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