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Dynamics of Multinational Enterprises - Report Example

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The paper "Dynamics of Multinational Enterprises" presents that China as an economy has always welcomed Foreign Investments but through Joint Ventures. The report will discuss the rationale behind such a policy of China and how the country has benefited from this policy…
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Dynamics of Multinational Enterprises
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Download file to see previous pages The report will also analyze the benefits of using the FISC approach to market entry for China and Overseas.
China has favored FDI through the joint venture route because it wanted all the industries and strategies to be tightly regulated under government supervision. This can only be done if strategies are local in nature and are made by local people. These local companies have been strongly ruled and regulated by the Chinese Government. The Republic of China's government doesn’t want to lose this control and wants it to be tightly regulated (Berger & Udell, 2002).
This analysis suggests that exports level from China towards America have risen again. This is resulting in a huge balance of trade payment situation towards China. With this balance of payment situation, the Chinese renminbi should appreciate against US dollars. But china follows a fixed currency regime, this is done to keep Chinese export competitive. With the revaluation of the Chinese currency, the trade deficit will not narrow the US trade deficit against China. The levels would be similar but it would make Chinese exports less competitive and hence will have an indirect impact on the US trade deficit (Berger & Udell, 2002). The exports that Chinese make towards are funded indirectly by the Chinese government. This is done by investing in the Government of USA Securities by Chinese Govt. Hence indirectly the Chinese government is providing the American economy enough funds so that they can boost Chinese exports. This has created a huge balance of trade hung up the situation in America. As a result of this, the Chinese Government needs to set its currency free because that can only show the correct situation of the market (Batini & Nelson, 2005). For well over a decade China has presented itself as an attractive venue for market entry, with over 2.6 billion consumers in a progressively deregulated marketplace experiencing high rates of economic growth.  The accession of China into the WTO provided a still further stimulus to firms seeking market entry, as has the rapid diffusion of internet-related technologies (Economy of China, 2010).  ...Download file to see next pagesRead More
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