Multinational enterprises from the Asia Pacific in the global economy - Essay Example

THE RISE AND GROWING ROLE OF MULTINATIONAL ENTERPRISES FROM ASIA PACIFIC IN GLOBAL ECONOMY Introduction Simply put, multinational corporations are enterprises that a base in a particular country, but with a number of subsidiaries abroad. Most of these multinational enterprises are state owned organizations and receive numerous supports from the government. In the recent past, there has been a rise and growing role of multinational enterprises, particularly in the Asia Pacific region in the global economy. In the past few decades, multinational enterprises from the Asia Pacific were not as dominant and buoyant in the global economy as those in Europe and America. Today, the dynamics have changed and the focus has been shifted to the Multinational enterprises in the Asia Pacific. Research has shown that 29% of multinational enterprises from the globe come from the Pacific Asia. This is out of the over five hundred listed multinationals. In essence, it means that of the 500 listed companies, 145 are from the Pacific Asia region (Athukorala 2007, p. 12). In the recent past, China alone has added close to about 9 multinationals. This to a large extent sensational in the sense that the global index of companies did not previously indicate a surge in the multinational enterprise. Countries like Japan, China, India and South Korea continue to dominate the markets in unprecedented rates. The growing influence of these multinationals and their role in the global economy is an interesting phenomenon that warrants some keen interest. While a number of multinational enterprises in other parts of the world continue to dwindle in terms of influence, the MNCs in the Asian pacific continue to rise and dominate the global economic space. It is projected that in the coming new decade, the MNCs from this region would grow in terms of influence and capacity (Athukorala 2007, p. 12). The rise and growing role of multinational enterprises from the Asia Pacific in the global economy forms the basis of analysis in this text. Multinational enterprise in the Asian pacific comes into being with a number of advantages that ordinarily make them rise and grow to the extent that they become a force in the global scene with ease. One of the reasons for the rise and growing role in the global is based in the fact that multinational enterprises in the Asia Pacific have big domestic markets. These markets are responsible for spurring growth to levels that are sufficient for a company to go global. In essence, companies in this region do not depend solely on the international trade. However, the domestic markets propel them to move into the global arena. Expansion from the domestic circle alone makes the multinational enterprise to become influential and grow into the roles they play in the global economic arena. While the rise and growing role of multinational enterprise from the Asia Pacific in the global economy continue to rise, this can only be attributed to the bigger domestic markets that make them influential. The economies in these areas are bigger and buoyant to the extent that any company operation business in these countries would find it relatively say to rise. When a product is produced, the domestic market consumes the higher percentage of the product. The economic status of the company is boosted from within the domestic hence making it possible for the companies to have more roles and grow in terms of influence in the global arena. Not many countries have this competitive advantage of the countries in the Asia Pacific. Government support to the multinational enterprise to some extent is not a new phenomenon. Some governments use the multinationals to achieve their ends. When the governments support the Multinational enterprise, they become stable and are able to make inroads into the global economy. Government support does not only mean support in terms of financial bailouts but also include negotiating trade deals for the companies. When the trade deals are effected, the Multinational enterprise become vibrant and active in the global trade. This brings about increased roles in the sense that the mandate is widened and so they are able to dictate the market numbers. When governments support the Multinational enterprise, it does so in order to sustain their relevance in the global space. Ordinarily, Multinational enterprises are more of government entities and as such, governments would love to utilize the resources to make statements in the global scene. The car brands such as Toyota, Hyundai and Honda are products associated with Japan and South Korea. These companies have had some dominance in the market and this will continue for the next decade. In almost every country in the world, these car products cannot be missed. The companies have become a global outfit through the brands of cars and to a large extent the support has always come from the government. The South Korea and Japanese companies have a bigger role in the market due to the number of products they control. These products translate into huge sums of money that make it possible for the companies to influence occurrences in the market. The rise and growing role of Multinational enterprise of the Asia Pacific in the global economy can be attributed to government support. The expansion strategies of the Multinational enterprise in the Asia Pacific are another area in which the Multinational enterprises have managed to rise and grow into roles in the global economy. Many companies in the Asia pacific always have expansion strategies to the extent that even a new company becomes enthusiastic about expansion just a few seasons in to business. The essence is to expand mandate in the global arena. This also increases customer base. For instance, Cherry automotive and Lenovo in China today have branches in almost all parts of the world. In so doing, they are able to meet the demands of the customers or better still they take customers close to the people (Dunning 2008, p. 34). The Tata steel from India has also been buoyant in the market expanding in every direction. This has made the companies to offer some economic standards in the market. When the Multinational enterprises are spread across on a planetary scale, they are able to become relevant to the respective economies where they set. The smaller economies that are found in the subsidiaries contribute to the larger global economy. Through the expansion strategies that Multinational enterprises in the Asia pacific adopt, they are able to determine how the products that related to the ones they deal in are handled in the market. This expansion strategy makes some companies to become dominant in some economies, hence dictating those economies. To a large extent, the rise and growing role in the global economy comes as a result of expansion (Dunning 2008, p. 34). The story would be different if the companies maintained their bases in the indigenous countries. By spreading out to other parts, it becomes possible for the companies to widen their mandate and become influential in the global economic arena. The innovative nature of these companies makes it possible for them to have increased roles in the global economy hence the rise and growth in roles. In the mobile telecommunications, the Chinese and Indian markets are by far the most renowned. For instance the Chinese mobile and Unicom have subscribers that surpass the a hundred million mark. This is similar to what happens in the Indian market where Bharti Airtel has over a hundred subscribers. Mobile phone companies in China, Japan and, to some extent in North Korea have continued to dominate and contribute immensely to the global market. For instance, a number of mobile phones dominating the world today are produced in these countries. Research has shown that mobile phones are a major driving force in the global economy. Due to the fact that the Multinational enterprises have continued ensure innovation becomes the driving force of pushing their agenda, the companies have become more productive in the global scene. Today, mobile phones have been transformed from the button press keys to the Ipads and iPhones not to mention smart phones. All these can be attributed to the Multinational enterprise in the Asian Pacific. Through this, the companies have grown and have now an index role and growth in terms of their roles in the global economy. Samsung is a company based in Seoul with subsidiaries in a number of countries. Its innovative nature has made it grow in stature and influence in the global market. From mobile phones to fridges not mention gas cookers have been the major areas of innovation for the Samsung group. Innovation is one of the driving forces in ensuring rise and growing roles of the Multinational enterprise in the global economy. Another area where multinationals continue to rise and grow into roles in the international economy is the fact that they are able to form partnerships and acquire new ones. When they acquire new conglomerates and partner with other companies, they are able to expand to the extent that they become a force on the global scene. For instance, in the recent past Haier group of companies in China entered a partnership with a company in New Zealand called Fisher and Paykel. In this partnership program, the company acquired about 20% of the company’s stake. The company director of technology affairs noted that the aim of the Haier was to become a global leader in the provision of the services and goods as appropriate. As the companies get into acquisition process, they are able to expand their mandate and to some extent able to make a mark in the global economic circle (Eroglu 2008, p. 67). Acquisition and getting into partnerships has enabled the companies to make it possible for them to reach the expected heights in the global market. Through this acquisition and partnership strategy, the Multinational enterprise in the Asia Pacific has made ensured continued role in the global market by making other companies adopt some strategies previously not known to them. Acquisitions raise profiles of companies to a large extent and it is a relatively easy way to getting into a foreign market. Over the recent years, multinationals in Asia Pacific have acquired stakes in a number of companies all across the world. To some extent, this has been the major course of an increased role in the global economic space. Domestic saving rates for the multinationals in the Asia Pacific are very high. Case in point is that the companies save much of their earnings in the mother country to the extent that they are able to control how much they spend based on the market prospects. These savings are critical for investments in other areas. Some of the Multinationals through their domestic savings are able to fund big projects in the country and overseas. This in essence explains the rise and growing role in the global economic space. In China, most of the MNCs emphasize domestic savings to the extent that they become the biggest drivers of the economy in China. It, therefore, becomes relatively easier to get funds in the event that there is a project that is to be done. In this way, the role of the multinationals is to supplement the domestic and international economies in the event that there is financial crunch (Palacios 2008, 30). It also makes it possible to control the funds that go in and out for use. Domestic savings are critical to Multinational enterprise since they are able to maintain a stable financial base different from what their subsidiaries run on. This in essence help in funding the subsidiaries in the event that there is a financial crunch. When such initiatives are instituted, the subsidiaries are kept on the market. This to a large extent sustains the economy of the respective companies. To this extent, the rise and growing role of Multinational enterprises from Asia pacific can be understood from the point of view of being able to maintain a strong domestic saving capable of bailing the subsidiaries. International trade is made possible by the multinationals. Case in point is that through the subsidiaries, the companies are able to ensure that a number of goods and services are traded on. Trade is made simple in the sense that a company does not need to move goods from one place to another. It becomes possible for them to pass on the idea to the subsidiaries concerning the products that are to be brought into the market. In circumstances where the goods or services are not able to provide, operations are made simple. The multinationals have well laid structures that make it possible to use such platforms to trade in different goods. The multinationals in Asia Pacific have used the conglomerates to sustain international trade (Palacios 2008, p. 56). In a wider sense, the multinationals are the major drivers of global economies through the different operations they engage in. The rise and growing role of multinationals from Asia pacific can be understood from the point of view that through their subsidiaries, it becomes possible to further global economic agenda. The countries in the Asia Pacific are some of the worlds emerging economies. As a matter of fact the multinationals take of advantage of this fact and fully exploit their potential through these economies. China and India are some of the biggest economies in Asia pacific. The multinationals in Pacific Asia use the markets available to gain entry into other markets. In China, a number of companies use the big economy advantage to reach other markets to the extent they become buoyant and increase their stature in the global market. Through their influence in the respective markets, the same is spread on a planetary scale. This means that the conglomerates take advantage of the parent company dominance in the other markets to make a mark in the place in which they are situated. Companies in India, China, Japan and South Korea do well in those respective markets (Kleinert 2004, p. 67). The same performance is spread to the subsidiaries to the extent that some companies find it difficult to sustain competition. Through such initiatives, there has been rising and growing role of the Multinational enterprise as pace setters in the market its terms of trade and technology. Conclusion The rise and growing role of multinational enterprises from the Asia Pacific in the global economy can be accounted for in different fronts. Case in point is that these multinational enterprises get support from respective governments to pursue their agenda in the global market. Consequently, the companies are able to acquire some stake in other companies or otherwise have a complete takeover of such companies. These raise the profiles of such companies, hence raising their influence and role in the global market. The multinationals also boast of big economies that help the multinationals to penetrate the global markets with relative ease. In this regard, the multinationals in the Asia Pacific have continually become more dominant in the global economic scene for a very long time. The rise and growing role of multinational enterprises from the Pacific Asia is set to increase even further since there is increased need to establish more multinational enterprises and as such a number of subsidiaries are to be established in the coming years. Bibliographies: Athukorala, P. (2007). Multinational enterprises in Asian development. Cheltenham, UK: Edward Elgar. Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy. Cheltenham, UK: Edward Elgar. Eroglu, M. (2008). Multinational enterprises and tort liabilities: An interdisciplinary and comparative examination. Cheltenham, UK: Edward Elgar. Kleinert, J. (2004). The role of multinational enterprises in globalization. Berlin: Springer. Palacios, L. J. J. (2008). Multinational corporations and the emerging network economy in Asia and the Pacific. London [u.a.: Routledge. Read More