market in China.
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For many global companies, China represents a very attractive market in terms of size and growth rate. Yet, it ranks lower in terms of economic freedom and higher in political risk than other countries' markets because it has a communist government. Despite these risks, many popular and reputable companies have established manufacturing operations in China.
This is largely because the Chinese government makes sales in China contingent on a company's willingness to locate production there. The government wants Chinese companies to learn modern management skills from other international companies and acquire technology. Some observers believe that when Western companies agree to such conditions, they are bargaining away important industry knowledge in exchange for short-term sales.
Should companies comply with China's terms?
Should they risk losing sales by refusing to transfer technology?
With at least 3 references
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Should companies comply with China's terms?
Companies should comply with China's terms when there is a lucrative market for the products in China and the profits can be repatriated to the home country. Also there is no need to give away trade secrets to Chinese counterparts. That technology which needs to be protected should be applied only in the home country. The assembly work and other processes that do not have proprietary technological inputs may be carried out in China (2). The result ...
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