China and its power
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China, which has a vast territory of 9.6 million km2 of surface, is an important nation with a lot of potential in many areas. Its GDP increases every year in a powerful way. The forecasts say that there will be a GDP of at least 7.5% per annum, every year, until 2020. In 2020, the GDP of China will account for approximately 22% of the world's GDP.
China attracts many investors. About $55 billion of foreign capital was invested in China in 2003. The reasons behind these investments were: abundance of people willing to work i.e. 752 million active Chinese people, cheap labor, and an enormous domestic market. The population of China made up for more than 20% of the world population, with approximately 1,300 million individuals, in 2003.
One of the major problems of land involves the problem of disparity between individuals. Only 200 million people can live with a level of income that is sufficient for them. Hence, the companies in China either meet a need, or produce goods at lower costs, before exporting them. But China's strengths are not confined only to this.
It is also the largest producer of: steel, meat, mobile phones, household goods, etc. China thus has many challenges to take up. Globalization of its companies happens to be one of the important challenges that China has to face. Globalization is everywhere, and China is no exception, as shown by its accession to the WTO in 2001. This globalization is a powerful engine of growth for her.
So it became a major issue for her both at home and abroad. For now, it attracts more foreign direct investment (the total stock of FDI amounted so far to $ 560 billion) that it invests abroad. We must therefore try to adopt the right strategies to follow in order to attack the markets of emerging countries and developed countries.
Chinese companies are at the forefront of these strategies and the Chinese government is not left to give them directions to follow. Indeed, it is ubiquitous on the development of Chinese enterprises abroad. The illustration of the Chinese interest to internationalize is materialized by the adoption in 2003 of the slogan "Be global" by the Chinese government.
The objective in the medium and long term China is increasing its influence in the world; it therefore requires a good image and a greater power of Chinese enterprises.
There are several reasons for the internationalization of Chinese enterprises. First, they are many in China and this creates problems of development and growth. Indeed, the strategy adopted in China for the development of their businesses is the creation in each province of industrial identical.
Therefore the major competitors of Chinese firms are the other Chinese firms. In addition, accession to the WTO in 2001 has resulted in strengthening an already highly competitive.
These two facts may explain some difficulties such as: the realization of economies of scale; obtaining financial resources.
Economies of scale is one of the levers to be competitive, not doing so constitutes a drag on growth of Chinese enterprises. That's why the financial resources are insufficient.
This has resulted in Chinese companies find themselves faced with a lack of infrastructure for production and marketing. Marketing and research and development are also suffering from this lack of resources. In a market as fragmented, some companies feel too cramped; their salvation therefore requires an international development.
This is particularly the case for the following sectors: consumer electronics, computer components and equipment. But without the help of the state, it would be difficult for companies to internationalize.
Tags: China; power; GDP of China