Asias globlization Essay Example For Students

Asias globlization Essay In business today there are many companies and countries conducting global business. The Japanese, Chinese and the South Koreans are all very aggressive in this growing trend among countries and corporations. Whats interesting is the present state of our political relations with the Chinese and our direct investment in them. Its no secret that if we went to war with China over some unforeseen problem that it would be quite a challenge, so weve taken an alternate route. Keep them close and invest. China received just over 45 billion in 1997 but Foreign Direct Investment and has not shown signs of slowing down. Jiang Zemin (Chinas commander and chief) in a recent press conference with the Asia-Pacific Economic Cooperation forum reassured the pacific rim CEOs he would continue to open his markets to foreign investments. This way of thinking began in 1978 when the Chinese leadership began to move the economy from a restricted market to more of a capitalist market. The results at the fore front of this movement were small, only about 2.7 billion between 1985 and 1990 and then exploded in 1997 to a record of 45 billion. (international business-186) Mainland Chinese corporations are acquiring overseas assets with the pace picking up. Shanghai Automotive Industry Corp. said it would pay $60 million for a 10% stake in the revived Daewoo Auto, now led by General Motors Corp. China Petroleum Chemical Corp. (Sinopec) bought a 75% stake in an oil field in North Africa for $394 million. Huayi Group of Shanghai is paying $20 million for the battery-making assets of Moltech Power Systems, a bankrupt company in Gainesville, Fla. Granted, Chinas investment overseas is tiny compared with the vast amounts of money flowing into the country but its just the begining. Chinese companies will spend at least $2.4 billion abroad this year, but thats just a fraction of the $50 billion in foreign investment China is projecting for 2002. The modest numbers, though, hide grand ambitions. One strategy of Chinese companies is to buy into new markets. For example, television maker TCL International Holdings Ltd. paid $8 million for Germanys bankrupt Schneider Electronics. Their sales and distribution channels are very good, says Connie Lau, deputy director of investor relations at TCL. This is a key step for TCL to enter the European market. Chinas expansion follows a pattern set by Japanese companies in the 1970s and 80s and by Koreans in the 1990s. But those companies grew behind protective tariff barriers and then expanded overseas because domestic markets offered limited growth. With China joining the World Trade Organization, mainland companies are going abroad to acquire technologies and skills they need to survive in the increasingly competitive market at home. Last year, Holley Group, a Hangzhou maker of electricity meters, gained a foothold in Chinas booming wireless business when it bought the mobile-phone design and software operations of Philips Semiconductor. TV-component maker Beijing Orient Electronics Group Co. wants to buy Hyundai Display Technology Inc., which makes liquid crystal displays, to boost domestic sales. Chinas biggest overseas investments by far have been in natural resources, with surging demand in China forcing Beijing to invest in oil and mining outside its borders. In June, Baosteel paid $30 million for a 46% stake in an Australian iron ore mining joint venture with Rio Tinto PLCs Hamersley Iron unit. And Chinese smelter Jiangxi Copper Co. is looking at deals in the Philippines and Chile. If we want to become stronger, we have to look overseas, says Jiangxi spokesman Huang Dongfeng. Despite their ambition, Chinese companies have yet to prove their global mettle. Indeed, some say Chinese corporations overpaid for assets in their early oil and gas deals. My impression is that the Chinese companies buying abroad are getting taken, much like the Japanese with real estate in the 80s, says a Hong Kong investment banker. C NOOCs Qiu agrees that some companieshis own not includedhave paid too much. Buying things isnt success by itself, he says. We have to learn to play world club; you cant just play domestic league. 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