Multinational Corporations

Multinational Corporations

Introduction

The behavior of the multinational corporations (MNCs) in China has somehow been proven beneficial for the Chinese economy, but economic development has emerged as a major hurdle to many multinational corporations. Economic security issues are top in the list of economic issues MNC are facing in China. This paper is going to discuss how the political, legal, technological and economic environment poses an opportunity or a threat to MNC's seeking to do business in China. The economic and security issues have been raised on many national and international platforms and are one of the major concerns expressed by foreign multinational corporations who intend to merge or acquire businesses in China to mark their entry in one of the biggest economies of the world (Barnett, 2006). There are number of the companies operating in China which are engaged in the management and professional work such as accounting, information systems support, management consulting, financial services, market analysis, etc., however, another issue the companies face is that they must hire locals and provide them training accordingly. These people constitute the earliest and most typical of the middle class in China. They are called “white-collar family to work in a foreign company. In the high-income and fringe benefits to the Chinese employees over Europe, Japan, the United States more attractive.

This reflects one aspect of U.S. multinationals involve in the cultivation of China's middle class and this formula is proven even better in China compare to Europe and Japan (Drucker, 2007). The second aspect is the emergence of new middle class in the country. Some domestic industries and multinational companies through the competitive differentiation attracts middle class in China multinationals-paying, plus labor and personnel system is reforming in China because of the presence of MNCs, which result in the social mobility of talent. This provides an alternative means for social and economic mobility for multinational companies in China that are helping to create middle-class human capital.

Discussion

If the state-owned enterprises need to retain their senior employees and compete with foreign enterprises, they will have to increase the pay in accordance with market. Multinationals face fierce pressure due to competition with Chinese especially state-owned enterprises, which is why they have adopted a performance management system designed for U.S. multinational companies, like equity and bonuses to reward outstanding performance of human resource. High salaries offered by multinational companies have also affecting the domestic industries pay and performance structure. Planned economy left with varying degrees of monopolistic industries, such as foreign trade, finance, real estate, tourism, electricity, gas, water supply, post and telecommunications, tobacco and other mental comparisons driven, have raised the standard of wages in the every industry (Marc, 2006).

According to the National Bureau of Statistics, the average wage of workers in these industries has been higher than the national average of 50% to 120%, close to the level of multinational companies. At the same time, multinational companies who intend to visit China pose a challenge similar to Western society, mainly the middle class private ...