Reason behind multinational companies leaving China

China business by Adeolu Eletu on Unsplash

Reason behind multinational companies leaving China

China is considered to be one of the most economically developed and balanced countries around the world. China is a member of the World Trade Organisation and is the world’s largest trading power. The country had a total international trade value of US$3.87 trillion in 2012. But, recently, multinational companies like Li & Fung, which manages an international supply chain for clients in more than 50 countries, refused to invest predominantly in the country.  China has been locked into a trade of war with the United States. Spencer Fung a member of Northeastern University’s Board of Trustees and group chief executive officer of Li & Fung said,

 “Because of the US-China relationship, everyone is trying to get out of China. Many companies are seeking to follow the example of Li & Fung by diversifying to other countries. China is no doubt the factory of the world. It was always because of its work power, efficiency and now technology.”

The president of USA, Donald J. Trump, has alleged China on the thievery of American intellectual properties by launching three rounds of tariffs last year, at rates up to 25 percent, on a wide variety of Chinese products valued at more than $250 billion. China responded with tariffs on $110 billion of US exports. Trade talks between the two world powers have failed to end the stalemate, raising global concerns that Trump will make good on his threat of an additional $325 billion of tariffs.

 

Ravi Ramamurti, a distinguished professor of International Business and Strategy at Northeastern University and founding director of the Center for Emerging Markets, says, “Ultimately, how will the global trading system be affected with this trade war?”As speed and efficiency are one of the main factors of the business field in China, there are chances of profits at 25 percent tariffs.

 

It has been seen that companies in China, India, and Turkey create and sell products within a span of five days. As per Fung, full-fledged automation will further diversify the market. Whether trade wars are temporary or permanent, studying and realizing from it should not stop. Plans are to be made accordingly to diversify and to apply strategies for the same.

 

Sarthak Sinha

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sarthak sinha

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I am persuading the degree of B.com presently. When I am into something I try to provide my best to that particular job. Some of my friends keep me motivated but I believe that self-motivation is the best motivation.

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