International Management III

Individual Assignment
Globalization Impact, China

Name: Azhati Yiliya (Elyar Azat)

Student ID: a1179542

Tutorial Time: 1pm-2pm Friday

Tutor: Mr. Tareq Rasul

Due Time: 5pm Thursday, 29th March

Globalization Impact, China

With the development of modern technology and global economy, the distance between different countries is getting closer; it links the whole world together. So, what is globalization? By definition, it means the process of integration among countries around the world with a vision of a single market entity (1). Globalization involves economic, political technology and cultural exchanges made possible largely by advances in communication, transportation and infrastructure (2).

China, the biggest communism country was a very poor region after Second World War. After 10 years Culture Revolution disaster, the Chinese leader Deng realized that China cannot be developed without the connection with the rest of the world, and then he decided to open the country’s economy in 1979. Today, China has become the second largest economies ranking after the USA. China’s GDP is growing at 10 percent in the recent 10 years. How did this happen? Globalization! Of course the Globalization has two types integration: positive and negative to different stakeholders such as local companies, the foreign companies, the government, the workers and the environment on different aspects including technology, trade, off-shoring, migration and environmental pollution.

In the early 1980’s, the Chinese government opened several special zones along the coast, especially the south part of Guangdong province. The Shenzhen special economic zone became the fastest developing region of China. Before the government changed the economical policy, Shenzhen was just a village where people rely on fishing for living. However, Shenzhen has no longer been restricted by the local legislation on the economic aspect. It became a free trade area, the government and all the other social organization or private business men can do any business in these zones without too many restrictions. Therefore, there were millions government organizations and private business people went to Shenzhen to started their business there. First of all, it allowed them to import advanced technology from overseas even though most of the technologies were nearly out of date in the western countries, but they were still advanced enough for a country which just started developing. Therefore, millions of millions factories were built in there; the villagers became manufacture workers and totally changed their life styles.
Later on, after few years rapid developing, the local government as well as the western investors realized that China has a huge domestic market and it has great potential to be invested. Hence, the local government decided to give great convenience to the foreign investors such as lower corporate taxation, higher pollution standards and great space of negotiation in order to attract as many as foreign investors they can. They foreign investors also realized that China has huge domestic market and the labors in China were very cheap because Chine has the largest population and most of them were unemployed. Therefore lots of multinational companies decided to start doing business off-shore especially in China. This brought much more jobs to China and lots of people started going to Guangdong from other provinces all over the country just for a job. Some multinational companies chose to do their business by themselves while the others chose to corporate with the government or local business people.

The positive effects of globalization on China include: 1) International trade improvement: the globalization allows products can be purchased and sold among countries and zones by a large amount. It makes China becomes a much more free trade country without too many restriction as before. The location of China is quietly important in the world; it is a bridge links the Euro-Asia and the Pan-Pacific region including America and Oceania. Therefore, the increasing economic of China has a leverage impact to the whole world’s economic. 2) Technological improvement: more and more multinational companies join in the global competition, companies and government have upgraded their level of technology in order to become more competitive. The local companies learn the management skills and the advanced technologies by cooperating with the multinational companies to become much more competitive. Of course they make a great profit for themselves. 3) Multinational companies increased their influence in China: An example is a car company whose head office is based in Japan. This company has branches in different countries including China. While the head office controls the subsidiaries, the subsidiaries decide on production. The subsidiaries are tasked to increase the production and profits. They are able to do it because they have already penetrated the local markets. The rise of multinational corporations began after World War II. Large companies refer to the countries where their subsidiaries reside as host countries. Globalization has a lot to do with the rise of multinational corporations. 4) Power of the WTO: the World trade organization is playing another important rule in the world; it offers world trade rules, legislations, negotiation opportunities and regulations even some restrictions when needed. After 13 years negotiation with the WTO, China has become one of them in 2001. This brought China a better opportunity to do international business with the rest of the world. 5) Greater mobility of human resources across countries: globalization allows countries to source their manpower in countries with cheap labor. For instance, the manpower shortages in Taiwan and South Korea provide opportunities for labor exporting countries such as the China to bring their human resources to those countries for employment.
6) Greater outsourcing of business processes to other countries: The foreign investors or multinational companies enjoy the huge discount on corporate tax, comparatively cheap price of the land and the labors, open the largest market all over the world and increase their reputations. Overall, they make great profit for themselves. It also brought a large number of work opportunities to the people there. This increase the workers’ incomes and skills by working and being trained in the factories and companies. 7) Civil society: An important trend in globalization is the increasing influence and broadening scope of the global civil society. Civil society often refers to nongovernment organizations (NGOs). There are institutions in a country that are established and run by citizens. The family, being an institution, is part of the society. In globalization, global civil society refers to organizations that advocate certain issue or cause (3).
8) The government generates large amount of tax and it levels up the China’s whole economic to a much higher level.

However, every coin has two sides: China is also facing lots of problems which are brought by the globalization at the same time. The main negative effects of globalization in China include migration and environmental pollution. 1) The reason why people moved out and into China in the past and now are quite different. In the past, people chose to migrate to other countries were basically looking for freedom and a better life, because 30 years ago China was very poor and also experienced a disaster which is called Culture Revolution. Therefore, lots of scholars or student chose to stay in the developed countries instead of go back to China. It was a huge loss of human resources for China at that time.
After 30 years rapid development, China is becoming richer and richer, the domestic market in China is just so huge, the whole world realized that it is really easy to make money in China by doing business there. Therefore, lots of Chinese business people, government officers and even lots of students go overseas to study the advanced technologies and knowledge in the developed countries. Most of them chose to go back to China to start their own business or get a better job in their mother country, even lots of foreigners from the developed countries and developing countries start going to China to do business or get a better opportunity. This brings China so many precious human resources, and it seems to be a surplus now.
However, there is another problem, corruption. It is well known by the world that China is a communism country which is simply controlled by one party, the Communists Party. The media is controlled by the government and there are lots of restrictions for the public if they want to look for some sensitive information which the government does not want them to know. The corruption brings injustice on all aspects including business, human rights, public awareness and even personal safety of citizens. Hence, lots of business people feel unsafe about their property and lives, so they chose to migrate to developed countries for justice and a safer life. Also, lots of corrupt officials fled to other countries with large amount of public funds. This takes away large amount of capital from China to overseas. On the other hand, the globalization also has a negative impact on China, especially the environmental pollution. Chinese mainland, the waters of Pearl River Delta region of Guangdong province, is destroying the local rural economy. In recent years, the Pearl River water pollution is becoming more and more serious, the experts unanimously expressed as “disturbing”. The consequences of the Pearl River Estuary pollution is that the polluted Pearl River water irrigates the famers’ land, and they could only watch planted crops die and crop failure. The large industrial cities of the Pearl River Basin have enough ability to build clean water equipment and systems. However, they refused to allow farmers to use it. As a result, the local people are forced to drink contaminated water which pose a serious health consequence and also caused social tensions between the rural and urban. To this end, the expert warned that let people rely on their own strength to clean drinking water is not possible. At this stage, the government needs to take some certain measure to stop this. Liu Chen, the director of the Pearl River Water Resources Protection Bureau, he said that “if the Pearl River pollution at the mouth cannot be resolved, then the efforts made by the Guangdong Province is not very useful”. The experts stressed that if the source "to continue coming to pollute the water, and then clean the well water does not have any effect". The Secretary Liu Chen said: "all aspects recommended a lot of suggestions for the clean water issue, but has never been implemented." Pearl River Delta, the coastal areas of the city does not recognize the seriousness of the problem, therefore they do not considered to provide assistance and support for the poor people either. According to official statistics provided by the Marine Environmental Protection Center, up to 8,655 tons, 65,637 tons of nitrates and ammonia, 59,853 tons of crude oil runs into the South China Sea annually. In addition, the pollution of the Yangtze River is worse than Pearl River (4).

In conclusion, the overall effects of globalization in China are still quite good. China’s GDP has increased 67 times from 1978 to 2007 (4). The globalization or international trade already made China became the second largest economies. The multinational companies generated huge amount of profit and shared the largest market in the world, their names are much more wildly known today. The domestic companies learnt from the advanced technologies and management from developed countries, they are growing very fast and becoming much more competitive in the global competition. The government is getting stronger and powerful, they have great ability to take macroeconomic police to control the whole countries economy. The people in China today have a much better lives than before. Though there still have some problems like corruption, migration and environmental pollution, China is going to find a way to figure it out. Nothing is perfect in the world, we cannot avoid problems, but the question is how we can solve or make the negative effect down to the minimum level.

Nowadays, the Asia and Latin-America countries is catching up with the developed countries, and I believe that in the next few decades, the Africa will level up their economies as good as the rest of the world as long as we continue the globalization in a very healthy way.

Reference: 1. Slide 5of lecture notes 1. 2. AsiaNews.it: http://www.asianews.it/news-zh/%E7%8F%A0%E6%B1%9F%E4%B8%89%E8%A7%92%E6%B4%B2%E5%9C%B0%E5%B8%A6%E4%B8%A5%E9%87%8D%E6%B1%A1%E6%9F%93%E6%83%85%E5%86%B5%E4%BB%A4%E4%BA%BA%E2%80%9C%E6%8B%85%E5%BF%A7%E2%80%9D-3264.html 3. Definition of globalization 78: http://hotbabefatchicks.hubpages.com/hub/Definition-of-Globalization 4. The main statistics of China during 1978 and 2007: http://zjw381222.blog.163.com/blog/static/16586902220105147585681/