Foreign Companies Lead in China but a Chinese Company Leads the World

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There has been much focus recently on the roles of foreign investment and foreign companies in China, and the need for anti-monopoly measures and other restrictions. This is partly a result of nationalist protectionism, and partly due to a need to protect “national security” and state assets.

We already know that 58 percent of China’s exports are by foreign companies, but now the National Bureau of Statistics (NBS) has further highlighted the impact of foreign investment in manufacturing in its report, “China’s Top 500 Manufacturers in 2006”. While the top company was a Chinese one – Baosteel Group Corp., China’s biggest steelmaker, (RMB176 billion in sales in 2005) – Bloomberg notes the role of foreign companies:

    “Almost two-thirds of China’s largest manufacturers are foreign companies, first among them Motorola Inc., the world’s second-biggest cell-phone maker and No. 6 among all industrial companies in the world’s fourth-largest economy.”

While much of the recent debate on foreign involvement in China has been negative, the NBS report points out the fact that

    “Foreign invested companies are important players in China’s manufacturing sector…They help drive growth.”

Zhu Hongren, a deputy director of the powerful National Development and Reform Commission (NDRC), is also quoted as saying that:

    “China’s manufacturers have come a long way in their ability to compete with foreign rivals, but they will have to acquire more high technology in order to gain and retain a competitive edge,”.

Of course it was always been China’s strategy to invite foreign firms and technologies into the market in a controlled manner, and to use them to help develop China’s own, competitive, industry. This process is continuing, but will increasingly focus on the sort of technological development referred to above (and on policies that are protective of strategic local interests).

While Motorola, and other foreign companies, are being successful in China, we are reminded by China Daily that Chinese firms are already holding their own as world leaders:

    “China Mobile Ltd has overtaken Vodafone Group Plc as the world’s biggest mobile phone company by market value, the Sunday Telegraph reported…China Mobile’s market capitalization reached HK$1.02 trillion (US$132 billion).

Could this be the sign of things to come?

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One Response to “Foreign Companies Lead in China but a Chinese Company Leads the World”

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