Danny Cross
Dr. Virginia Rae
BUS 100-100F
10/6/2015
China, the Modern Day Superpower
Foreign Outsourcing: “Contracting with foreign suppliers to produce products usually at a fraction of the cost of domestic production” (Kelly & Williams, 2015 p. 39).
Infrastructure: “A Country’s physical facilities that support economic activity” (Kelly & Williams, 2015 p. 42).
Direct Investment: “When firms either acquire foreign firms or develop new facilities form the ground up in foreign countries” (Kelly & Williams, 2015 p. 40).
In 2014 UN came together and declared the People’s Republic of China to be the best country in the world. One hundred ninety three nations are in the UN and this declaration is a result of judges from all one hundred ninety three nations voted on categories such as health, education and their economy. Chinas success is because of how inviting their economy is for foreign companies. In the next few years the top global companies will be Chinese and only the strongest companies will be able to stay in competition with them. Their market has all the right aspects for international trade. China has a population of 1,355,692,576 people, making them have unbelievable access to cheap production (Kelly & Williams, 2015 p. 35). Their market is also brimming with innovation and new markets that are not available anywhere else, like their organ harvesting market (Flanagan, 2014). As a result of these two other factor their market is unbelievably reliable, reducing the risk of investing there. The companies topping the Forbes list deal with oil and retail, this will not change. Although the origin of where these oil companies and retailers are based will. During the next few years the top five hundred companies in the world are going to be dominated by Chinese companies and any companies in business with the country.
With a workforce pushing one billion people living much cheaper than the American citizen does. Thanks to China’s brilliant management of their infrastructure their country can support such a giant number of citizens and workers. China has access to skilled university graduates who work for a fraction that the average American worker works for. For 110 years America led the world in production, as of 2011 China took over as the world’s leader in production. The standard of living is so much lower in china that each person lives on significantly less in less space. The average Chinese manufacturing worker only makes eighty one cents an hour (Facts about China: MANUFACTURING, 2011). China also has a one child law that only allows each family to have one child, keeping their number of dependents extremely low (One billion workers, 2012). Such cheap labor attracts international trade because the factors of cheap production aren’t available in most countries like it is available in China (Kelly & Williams, 2015 p. 36).
China is abundant with new cheap business innovations that have not made it to any other countries. This attracts a major amount of foreign direct investment. As a result of the foreign investments the Chinese market is booming (Kelly & Williams, 2015 p. 36). The country is full of relatively low cost engineers and scientists which allows foreign businesses and domestic businesses to develop new ideas that would be significantly more costly anywhere else. On top of the skilled labors available the Chinese government provides many initiatives and support for innovation just to catch up with the rest of the developed world. As well as their government China also has built an atmosphere that has encouraged innovation and independence through entrepreneurship at any level. With information technology jobs just as needed, the world is going to get more automated and run off more logarithms and have less human control. (Slavin, 2011) China also has a market that is growing faster than any other market in the world and has less risk when it comes to introducing new ideas to the public because the Chinese market is amazingly forgiving compared to the rest of the world so a bad idea doesn’t mean the end of business (Yip, 2014).
As a result of these other two factors China’s economy is the fastest growing and most reliable economy in the world making it the best investment opportunity for foreign companies. As a result of the foreign money flow their economy only grows stronger and stronger with outside funding as well as booming business opportunities in the country of origin make for powerful companies. Without needing to outsource to other countries Chinese companies have been able to become stronger, bigger, and better than any American companies, atop this the former super power of the world is now in unfathomable debt to them. Their entire country is booming. Reduced risk is one of the most important aspects of a country when a business is looking to use foreign outsourcing or venture into a new endeavor, just because a company’s home country is going through a recession doesn’t mean the company should suffer as a result. Foreign Outsourcing and focusing on foreign markets are the way to avoid this (Kelly & Williams, 2015 p. 37).