Globalizing and localizing factors OR Uppsala model of firm internationalization - Essay Example

Added to that the purchasing power dazzled one and all and Multinationals of all hues went headlong to get a piece of the action. It has been ascertained that both India and China are quite similar and are perusing similar liberalization policies. Culturally too there is affinity and therefore investing in China will be a wise move. Liberalization of the economy and a bent towards industrialization in a hurry offered huge opportunities for expansion. As of now as many as 320,000 foreign ventures have come up on mainland China, and they are growing by the day.

China is the second largest recipient of Foreign Direct Investments that have crossed 400 billion dollars. Investments have come in from all quarters of the world, mainly from the USA. It would be prudent for us to take advantage of the situation and make a move in the Chinese market now by setting up a manufacturing unit in one of the SEZ’s as a FIE. As a growing garment exporter to the world with an annul turnover of over Rs 5000 crores, equivalent to $ 1.25 billion the Pearl Group of India is faced with a dilemma of competition from China.

With the onset of a quota free regime US and European countries are free to buy their requirements from any country of the world and China as a source of cheap labour as well as due to its effective control on the Yuan has emerged as a strong contender against export of Indian garments. As the company plans to add to manufacturing capacity to meet growing demand, it is actively considering converting this threat into an opportunity. There are 2 options. First Option is to add to capacity in India.

Second option is to set up a manufacturing unit in one of China’s special economic zones and make it another exporting hub taking advantage of their labour and currency factors. In the past China followed a foreign exchange policy similar to India. Exporters were required to surrender 100% of their foreign earning to the Central Bank and could not use this