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Corporate social responsibility on globalization
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Corporate social responsibility on globalization
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This assignment focuses on the impacts of foreign direct investment (FDI) in China. Inasmuch as this assignment will explore factors that make China an attractive FDI destination; it will also examine positive as well as negative impacts of FDI on the Chinese economy. Inclusive in this assignment will be an evaluation of positive and negative impacts of FDI on the economy of China, coupled with a discussion on corporate social responsibility (CSR).
UNCTAD (2003) defines FDI as
… an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy ([the] foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor... (UNCTAD 2003: 231).
While the above definition reflects on what FDI is; the justification for choosing to explore FDI in China is drawn from multiple studies that also explored FDI in China. Evidence from Shan, (2002) suggests that at provincial level, labour quality, market size, average wage, and level of infrastructural development make China attractive. A study that sought to explore FDI determinants, in Guangdong province of China using firm micro-level data Ng and Tuan (2003) found that quota effects, firm size and transaction costs were significant factors for locational choice by foreign investors. The justification for choosing China is also drawn from a research by Fung et al., (2002) which revealed that United States direct investments in China are influenced by local market demand, whereas Hong Kong investments in China are in influenced by labour costs.
Fundamentally, a discussion of FDI calls for consideration of globalization because economies are inextricably...
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...: University of Nottingham.
Syntao, (2008). A Journey to Discover Values: A study of Sustainability Reporting in China.
UNCTAD (2003). World Investment Report 2003: FDI Policies for Development. New York/Geneva: United Nations.
Venables, T & Yueh, L (2006). The China effect. CentrePiece Autumn Available from: http://cep.lse.ac.uk/pubs/download/CP208.pdf Accessed: 02/04/2014
Zhang, KH (2006) WTO, China and Asian Economies. Paper presented at: University of International Business and Economics (UIBE) Conference. Beijing, China, 24-25 June, 2006.
Zhang, Z (2004) Cross-cultural challenges when doing business in China. Singapore Management Review 26(1): 81
Zheng, Y & Chen, M (2006). China moves to enhance corporate social responsibility in multinational companies. Briefing Series–Issue 11. China Policy Institute: University of Nottingham.
Windsor, D. (2001). The future of corporate social responsibility. International Journal of Organizational Analysis, 9 (3): 225-256.
In 2001 China entered the WTO it has made major stride in the world economy especially with trade agreements with the biggest capitalist economy and the biggest GDP and most developed country in the world the United States of America which has nearly 2.3 trillion of exported goods and service in 2013 (President, n.d.) When China entered in the WTO it had become the sixth largest economy and the largest market trade and was slightly ahead of Italy and just behind France. “China is third largest trading partner with the U.S and its trade surplus with the U.S. has increased to $201 billion around 2005 and by 2014 the total China-U.S. trade deals was 591 billion”. (Morrison, 2015) It had a global current account of $160 billion around 2005 (Hufbauer, Wong, & Sheth, 2006). As of 2015 “China is the U. S’s second largest trading company and the third largest export company and its biggest source of import”. (Morrison, 2015) Sales from a foreign affiliated U.S. firms in China totaled at 364 billion by 2013. (Morrison, 2015). What is also amazing is that China has the biggest U.S. treasury bonds and that keeps U.S interest rate low. Between 2010 to 2014 General Motor sold more cars in the Chine’s market than in the U.S. market and many U.S. firms participate in Chinese market to stay globally competitive. (Morrison, 2015). This kind of
I believe that one of the best investments I could make would be an FPI (foreign portfolio investment) into state-owned industries in China. Announced on April 23rd, the government has opened 8 state-controlled industries to investment. I’d recommend FPI (as opposed to FDI) in this venture because, while China is opening these industries up, they are not opening them up for control. Still, companies like Sinopec Ltd., a large oil company, are up to selling about 30% of the SBU that controls its filling stations, a unit valued at over $20 billion. As the middle class continues to grow and be able to purchase more items (like cars), the huge population’s demand for necessary products like these will continue to grow. Companies like Sinopec are adamant that they will not give up any control, and that’s why FPI would be preferable to FDI when it comes to these industries. Another significant reason that I’d prefer FPI over FDI in China is due to risk (political, socioeconomic, etc.) These companies say the reason they won’t lose control is because they don’t want to have to change their operational practices. With FPI, these companies won’t get paranoid that investors are trying to change them. The previous reasons are very specific, but China has general policies, procedures, and trends in place (good or bad) that make it plain for investors to see that they are wanted, and business is a priority. China has an autocratic government, which is very efficient in getting things done, so it is more conducive for companies to work in. China also has very low wage costs ($1.74 per hour). Also, China has some of the least progressive environmental regulations laws, which lowers costs. China’s GDP growth rate is still at 7.5% (14th in the wor...
Wild, J. J., Wild, K. L., & Han, J. C. (2008). (CH2)Cross-Cultural Business and (CH5)International Trade,. International business: the challenges of globalization (4th ed., pp. 48, 61-62, 132, 136, 147). Upper Saddle River, N.J.: Pearson Prentice Hall.
China’s economy is one very large indicator of its role in globalization. “In 2010 China became the world’s largest exporter” (CIA World Factbook). Without China many places such as the United States of America would be without billions of goods imported from China annually. An influx of companies moving their manufacturing to China has allowed people to flock to cities and find jobs. China’s economy has grown exponentially over the last few decades. In the last three years China’s economy has grown by nearly ten percent every year. Despite this influx of money to China it has also resulted in many drawbacks. For example, China’s environment has been obliterated. China burns more coal than every country in the world combined. Beijing has been so badly polluted that there are actually companies that sell cans of fresh air to people, and gas masks are a common sight. On January 12th 2013 Beijing’s air pollution reached a record setting 775 PPM. To put that into perspective, the scale for measuring pollution is 0-500 PPM. This set an all-time recorded high. In Los Angeles a high ...
In accordance with remittances, direct monetary profit from the overseas Chinese has also come from the aspect of foreign direct investment (FDI). As Newland and Patrick explain that, “China has long worked to attract direct investment and open trade opportunities through overseas Chinese communities.” (Newland and Patrick 5) Arguably, that policy towards the diaspora has been used by the PRC for developing its economy domestically and internationally. This is because as Newland and Patrick further explain, remittances and foreign direct investment influence, “the incidence of poverty in their home countries, market development (including outsourcing of production), technology transfer, philanthropy, tourism, political contributions, and more intangible flows of knowledge, new attitudes, and cultural influence” (Newland and Patrick iv).
China’s trade with the world grew substantially in the first three decades of the 20th century, marking a historic time for the country. In the 1840s, the Chinese economy was strongly closed; however, when Great Britain and other powerful countries pressured their economy, China was willing to open international trade within their own economy. Over the next 60 years, China experienced a small opening of trade amongst other foreign powers, allowing transactions amongst foreigners allowed. The funded railroad aroused industrialization, as well as publicity and overseas shipping (Yan, 2014). The main reason for moderation in China is because they are so much more focused on production rather than consumption. Last year, China’s consumption accounted for 35 percent of their economy; a little over 10 years ago, it was rated that 50 percent accounted for their overall consumption (Reich, 2010). Foreign exports and imports arose dramatically, increasing the yearly expansion rate of trade to about 7.4 percent. The Chinese economies share in world trade grew a little under 2 percent from the late 1800s to the mid 1900s. By the early 20th century, comparative advantage was presented all throughout their economy (Yan, 2014).
I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.
Morrison, Wayne M. "China and the World Trade Organization." Congressional Research Service (CRS) Reports and Issue Briefs. Congressional Research Service (CRS) Reports and Issue Briefs, 2002. Academic OneFile. Web. 3 Oct. 2011.
Nowadays, corporate social responsibility (CSR) becomes an integral part of each company. CSR can be understood as a management concept and a process that links social and environmental issues in business operations to a company’s interactions with it’s stakeholders. CSR not only gives the company a chance to help society but also enhances company’s reputation and investors’ attractiveness. In this paper, we will show a brief description about CSR and effects of CSR on international business, including pros and cons when a company applies the CSR program. Besides that, I give my ideas on conflicts of interest beween shareholders and the company’s managers. And then, advantages and difficulties for companies implementing CSR in Vietnam will be defined. Although CSR was first introduced widely in Vietnam many years, it is still a new concept. Therefore, pioneers in this area are facing lots of challenges in running CSR programs in Vietnam.
Hill, C., Wee, C. and Udayasankar, K. 2012.International Business:An Asian Perspective. 8th ed. Singapore: McGraw-Hill.
The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially. The protectionist policies of the United States especially in Washington and Beijing have been putting pressure on the Chinese to revalue their currency as well as protecting it from counterfeits, which may be of adverse effects to the trading relations. This paper gives a comprehensive discussion on the foreign trade relations with china. It further gives an elaborate discussion on the impacts of foreign tr...
Political and legal considerations were given first priority in this analysis with primary emphasis given to whether a country's legal or political system prohibits or impedes foreign investment. If a country's political or legal system discouraged or prevented foreign investment, that country was disqualified from further consideration. Factors considered when assessing the political and legal environment:
According to Teagarden & Cai (2009) Chinese companies have expanded abroad for three reasons. Firstly, ‘to secure natural resources to satisfy the demand of their home costumers for raw and fuel; secondly to identify and secure foreign technology and know-how; finally, to escape home market saturation and ruthless price wars’ (Teagarden & Cai, 2009: 73). In addition, Teagarden & Cai (2009) noted that in order to become multinational firms, Chinese companies followed a pattern of four phases:
In the year 2007, China and India ranked first and second respectively in the list of ideal foreign direct investment (FDI) destinations, according to A T Kearney, a global strategic management consulting firm (The Press Trust of India Limited, 2007a). The two nations, because of their similarities in geopolitical, economic and demographic aspects, are often compared with each other. To determine which one is more attractive for businesses to expand to, this essay will examine the business environment of both countries from the following perspectives: political/legal, economic, socio-cultural and technological.