Multinational Corporations in China and Local Human Capital Development

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Introduction

China’s modern economic growth has been progressing on a scale that is unparalleled in the history of any nation, sustaining a growth rate of about 10% per year for the past 25 years. This is even more remarkable considering that the world is at a stage of transformation and globalization. In such times, countries with higher levels of technological development and human capital are naturally positioned to take advantage of the new growth opportunities. Although at the start of China’s reform era the nation was underdeveloped relative to the powerful nations of the world, it has been able to close the gap significantly over the recent years. One reason cited behind this progress has been that China was open to integration with the world economy and has taken advantage of foreign direct investment to accelerate its growth. I wish to analyze the dynamic of this FDI relationship and discuss the extent to which the Chinese parties in this relationship have actually accrued the benefits that they expect to receive. In particular, a large part of the expected benefit is to come from the transfer of best management practices by the foreign multinational corporations to Chinese firms, thereby developing the human capital of China. I will look to the recruiting practices of MNC’s in China to assess this level of benefit. Additionally, these recruiting practices may also prove to be an indicator that gauges the extent to which the Chinese-side business development has caught up to developed world standards set by the most economically dominant nations.

Driving forces in the MNC-local party relationship

As China has entered into the reform era and taken up the path to marketization and opening its economy, relationships ha...

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Works Cited
Farrell, Diana, and Andrew J. Grant. "China's Looming Talent Shortage." International Management in China; (2005).

Forster, Nick. "Expatriates and the Impact of Cross-Cultural Training." Human Resource Management Journal 10 (2000): 63-78.

McEllister, Robert. "Recruitment and Retention of Managerial Staff in China." International Management in China: Cross-Cultural Issues. Routledge, 1998. 98-110.

Ng, Ying Chu. "Training Determinants and Productivity Impact of Training in China: a Case of Shanghai." Economics of Education Review 24 (2005).

Sergeant, Andrew, and Stephen Frenkel. "Managing People in China: Perceptions of Expatriate Managers." Journal of World Business 33 (1998): 17-34.

Tsang, Erik W. "Problems in Sino-Foreign Joint Ventures." International Journal of Manpower 15 (1994): 4-21.

Worldwide ERC. 20 Dec. 2006. 05 May.

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