China’s world factory
China’s world factory was extensively created by foreign multinational organizations and has been an instrumental aspect that has established its economic growth and development. The concept is associated with labor-intensive assembly and processing by small and medium-sized enterprises (SMEs). However, the instrumental pillar is currently under stress because the domestic production costs related to resources, infrastructure, labor, and regulations have increased significantly despite the increasing demand for goods in western countries. The Chinese infrastructure is also an instrumental pillar that facilitates the country’s economic growth. It’s operated by multiple state-owned organizations that are vertically integrated. Numerous elements like energy, telecommunication, shipping, and logistics are therefore installed and operated by state owned entities. However, the Chinese infrastructure is also currently under stress because it was built on cheap labor, capital, and land. The country’s logistical costs have also increased to 18% of the overall production costs. On the other hand, the Chinese financial supply chain’s benefit provides the necessary financial resources to construct numerous infrastructure networks; hence, it’s a fundamental pillar that has facilitated its economic growth. It crucial to note that the system was created by state-owned organizations that financed multiple infrastructural projects. It now under stress because the financial system has not addressed the numerous challenges the financial industry is experiencing; hence the benefit is declining. Assistance from the government services supply chain is also declining due to social equity and environmental issues. They need proper coordination of stakeholders involved to eliminate resistance from multiple interests.
Question 2
Silicon Valley Bank is successful in china because it specializes in startups, venture capital firms, and entrepreneurs. Therefore, the large Chinese economy and population serve as an important market for the bank because the growing SMEs need financial support. In this regard, the high number of customers has contributed to the bank’s success in China. The country’s pillars that advocate for a China-based world factory are also instrumental in the bank’s success because they increase and encourage people to venture into various business activities. The aspect contributes to the bank’s success in China because there is increased demand for financial resources. Therefore, the entrepreneurial culture and the many companies based in China are the major success behind the bank’s success because they serve as its customers.
Question 3
The ongoing US-China trade war will affect the economies of both countries because they will disrupt trade. The idea is based on the fact that both countries need each other since each nation cannot sustain their needs fully. Business organizations in both countries are likely to experience economic hardships from the trade war because their sales volume will significantly drop due to high tariffs and taxes. Moreover, multinational organizations might opt to move their operations to other countries, which will lead to unemployment and economic growth decline. It shows that a global financial crisis might arise from the trade wars because both countries have the largest economies in the whole world. Disrupted trade activities will also affect other countries because the United States and China are crucial international trade economies.
Question 4
Maximization of public consumption involves increasing the value of products and services people acquire via the public sector. It also involves improving the net benefits of public consumption. The aspect is fundamental in increasing social efficiency. However, public goods are non-excludable because an individual cannot be exempted from consuming them. Law enforcement is an excellent example of a public good. In this regard, maximizing its consumption could involve identifying appropriate and effective supply strategies. Externalization consists of sharing resources with suppliers, customers, and other stakeholders. Externalization benefits include increased staffing expertise, reduced employment costs, and good planning and monitoring. The aspect is based on the idea that sharing resources foster good relationships, trust, reliability, and cooperation. For instance, externalization can increase the staff’s expertise if they acquire more business partners’ skills. Reassurance entails the communication between a business and its customer or other stakeholders that is meant to keep them calm and less worried. It’s an essential strategy for restoring lost confidence and trust on the customers. For instance, a business can reassure the customers that all their complaints will be addressed if the complains are related to the products’ side effects, quality, or prices.
Question 5
Shaun Rein recommends that business organizations have a real understanding of Chinese politics to succeed in the country. It’s instrumental to note that the government is ruled by a communist party with different political ideologies different from those in the United States. In this regard, an organization shopped to understand the different political aspects to structure effective strategies involving their external environments. For example, organizations should know that the Chinese government is applying economic carrots to reward and punish various companies. The information is critical for a given organization because it might translate to unhealthy competition that could reduce its sales volume. He also recommends minimal investments in China because it is composed of many multinational organizations; thus, it can be affected when they hedge. Shaun also encourages business organizations to apologize to the Chinese government if it decides to punish them. They should also keep a low profile. For instance, they should comply with all regulations and directives provided by the government.
Question 6
American companies can be successful in China by adopting numerous strategies like collaborating based on long term goals, recognizing the big cultural difference between the US and China, respecting the country’s world view, and hiring local partners and learning from them. Collaborating with the long term goals in mind is instrumental for American companies because the local people might have a negative attitude towards their products. Therefore, it’s essential to collaborate with individuals and stakeholders to understand its values and visions. Recognizing the big cultural difference between both countries is necessary in the brand establishment because they will produce products that suit the new culture. Moreover, respecting the Chinese worldview is crucial in establishing and forging a good relationship with the customers. It’s also essential in understanding the new market. American companies can even succeed by hiring local partners and learning from them because they know their market and the type of goods with huge demand.
Question 7
Nike’s winning formula involved applying campaigns and competition correctly. The company used a creative idea of creating a rivalry between various gates in a game between ancient turf wear and popular culture. The rivalry was vital because it attracted many fans to watch the match. It’s essential to note that the competition’s logo was designed based on a Chinese character with a basketball. It was constructed as an entrance to ensure that the people could get the message since they passed through. On the other hand, the company conducted an effective awareness campaign to attract many basketball fans to the competition. The players were selected from all agates via print, outdoor work, street tagging. Moreover, useful and appealing posters established an identity of all the nine gates and attracted the kids’ attention in Beijing. The company also launched the gates newspaper the created awareness and covered the competition. In this regard, the company’s creative marketing strategy attracted many basketball fans, translating to its mindshare in China.
Question 8
The statement explains that the Chinese economy’s future hangs in the balance because its stake as the world factory is declining. Moreover, the integral pillar that had encouraged the country’s massive economic growth and development is significant stress undermining productivity and investments. The current trade war between the country and the United States is a crucial aspect that indicates China’s slow economic development. It has affected its domestic industries because the trade war has encouraged the US government to impose high tariffs and taxes on Chinese products. The United States is the largest economy and a key market for Chinese products; hence declined exports indicate its declining economic development. The impacts of the coronavirus pandemic on China’s economy have also slowed its economic growth due to economic lockdowns.