Introduction
Currently, the dominant view is that China has immensely benefitted from globalization. This is generally evident in the country’s high GDP. Chinese companies have increasingly getting bigger and stronger, given the expanding market for their products and services. Globalization has enabled China to industrialize itself rapidly, making it one of the promising economic superpowers in the world. However, this popular view can actually be challenged from different fronts. For instance, globalization has greatly stimulated an export driven high GDP by exploiting the country’s comparative advantage in terms of cheap labor. As such, the Chinese people are increasingly exploited by the firms that utilize their services (Beeson, 2014). Additionally, globalization has impeded China’s industrialization considerably by locking the local enterprises at the low-end of the global value chain. This has prevented Chinese businesses from upgrading in terms of technological advancement. The influx of multinational companies has also had both advantages and disadvantages on the country’s economy. While they have facilitated economic growth, they have also impeded the growth and expansion of local firms. Although the economic globalization in China has led to immense economic growth, it has intensified competition, as well as an elevated degree of interdependence.
Since its ascension to the WTO, China has focused on increasing its openness to trade and foreign investment with other countries around the world. Globalization has facilitated the growth of China’s GDP, making the country one of the world’s economic superpowers. The country has adopted strategies necessary for promoting economic growth and development. This has made China a significant global player in terms of trade and industry. As a result, China has become prosperous and successful in the global economy. For instance, the standard of living of the Chinese population has increased significantly. Essentially, globalization has facilitated free flow and optimized allocation of capital, information, technology and service. Opening to and integrating with the outside world results in many opportunities for economic development and growth. Such opportunities can be in the form of reforms aimed at keeping up with the steps of the changing world. Thus, globalization has helped China to find a road to development that effectively suits the national conditions. It is important to realize that China has consistently maintained an annual growth rate of over 9 percent per month on average. Millions of Chinese people have benefitted from the employment opportunities created by foreign investors. As such, a significant proportion of the country’s population has been lifted out of poverty. Globalization has not only opened up China to developed economies, but also to developing economies. The country benefits from developed economies through the influx of foreign direct investment from such economies. The foreign investors create employment opportunities for the locals. On the other hand, China benefits from the ready market offered by emerging markets, particularly in developing economies, such as those in Africa. The country has also benefitted from increased investments in industrialization and infrastructure. These important elements have fuelled the growth of businesses in the country. Additionally, the entry of new businesses and expansion of existing businesses have significantly increased employment opportunities for Chinese people (Teets & Hurst, 2014). This means that the people have more disposable income that creates considerable demand for products and services. It is also important to note that the economic growth has attracted western expansion market. The influx of foreign companies has also served to spur economic growth through foreign direct investment. This has also led to the introduction of advanced technology in China. The increased competition from foreign businesses has significantly helped to stimulate te development of new technologies. The advanced technologies serve to improve the economic output in the country through more efficient processes. Additionally, globalization also enables large organizations in the economy to realize economies of scale, leading to reduced costs and prices. This further supports economic growth in the country. Essentially, globalization has enabled China to make better use of foreign direct investment in promoting industrial development.
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The investment boom in China, driven by an influx of multinational companies, has had negative impacts on the Chinese enterprises. The wider market, along with the cheap labor made the country one of the best production sites for multinational companies, largely drawn from Western economies like United States and United Kingdom. The multinational companies grew to become market leaders in China. As such, they became more competitive, and they ended up dominating the country’s high-tech sectors, as well as international trade (Wu, 2006). The multinational companies eventually possessed the global market, global procurement systems, and global brand, rendering indigenous firms unable to effectively compete on the global level playing field that had been established on the country’s home market. The indigenous firms were limited to the importation of designs, manufacturing equipment and critical components. As a result, the indigenous firms reaped a small portion of the value-added at the final stage of the labor intensive assembling (Wan et al., 2007). Thus, the Chinese enterprises are rendered losers even if they specialized in importing cutting edge manufacturing equipment. The local firms find it hard to land top talents in their respective industries, as the multinational corporations poach most of the skilled employees. As such, the growth and progress of the local enterprises are impacted negatively. For a business to grow, it has to employ skilled and talented individuals who are a position to work towards the achievement of set objectives. However, when multinational firms employ highly talented and skilled employees, the local firms are left in trouble. The multinational companies are able to attract the best talents because they are more likely to pay more for manpower compared to the local firms. Furthermore, the multinational companies compete with local enterprises for the limited resources. It is important to realize that foreign firms are more willing to pay more for raw materials. This implies that suppliers are more likely to favor foreign firms in terms of timely delivery of raw materials. Limited access to raw materials has significant negative impacts on local enterprises in China. The challenges posed by the multinational corporations in China on local enterprises have rendered several local enterprises bankrupt. Basically, China’s industrial concentration is too low to compete with foreign enterprises. Additionally, the domestic indigenous enterprises in China are generally short of capital, and have no ability to improve technology rapidly, compared to multinational corporations, mostly drawn from developed countries like United States. Therefore, the indigenous enterprises in China have been affected negatively by the influx of foreign enterprises.
Globalization has introduced significant elements of the Western culture to China. The influence of western culture has a negative impact on the Chinese culture. This is because the western lifestyles have infiltrated into the local people’s lifestyle through mediums such as media (Bucker et al., 2014). As such, the western culture has significantly impacted the Chinese society. The cultures and traditions of China are seen to change as they gradually try to adapt to the new lifestyles of foreigners. Additionally, a lot of ambiguous information is spread through the internet, and are spread at a fast rate across the Chinese communities. Such external influences have resulted in some of undesirable vices such as human trafficking. The health of the Chinese people has also been significantly affected by the new foreign lifestyles. Unhealthy diets consisting of junk foods are easily available at fast food restaurants like KFC and McDonalds. This is because a significant proportion of the Chinese population tends to eat outside in restaurants. Chinese people are increasingly adopting western culture as their own. As such, they are more inclined to western cultural heritage, instead of their Chinese heritage. The education in China is also being influenced by western cultures, with new courses and curriculum being introduced into the Chinese education system. Clothing, a cultural aspect that formed an integral part of the Chinese culture, has been changed. More Chinese people prefer to wear jeans and t-shirts. However, the original Chinese culture lays emphasis on wearing cheongsams and coats. This shows that globalization has negatively affected the traditional Chinese culture and heritage.
In conclusion, globalization has had both advantages and disadvantages in China. Globalization has benefited China in terms of economic growth, shown in the immense growth in the country’s GDP. International trade and foreign investments have fuelled economic growth. They have created employment opportunities for thousands of Chinese people. Many people who would have otherwise been trapped in poverty have been empowered through employment. However, the increased competition caused by MNCs has impacted indigenous businesses negatively, as the foreign businesses dominate the economy. Foreign enterprises subject indigenous enterprises to stiff competition. As such, the growth and sustainability of the local Chinese enterprises is put in jeopardy, as the foreign players enjoy economies of scale, which make their prices competitive. Foreign cultures have also infiltrated the Chinese culture, leading to undesirable outcomes. A significant proportion of the Chinese population is tending toward western culture instead of preserving their Chinese heritage.
References
Beeson, M. (2014). Regionalism and globalization in East Asia: politics, security and economic development . Palgrave macmillan.
Bücker, J. J., Furrer, O., Poutsma, E., & Buyens, D. (2014). The impact of cultural intelligence on communication effectiveness, job satisfaction and anxiety for Chinese host country managers working for foreign multinationals. The International Journal of Human Resource Management , 25 (14), 2068-2087.
Teets, J. C., & Hurst, W. (Eds.). (2014). Local governance innovation in China: Experimentation, diffusion, and defiance . Routledge.
Wan, G., Lu, M., & Chen, Z. (2007). Globalization and regional income inequality: empirical evidence from within China. Review of Income and Wealth , 53 (1), 35-59.
Wu, Y. (Ed.). (2006). Economic Growth, Transition, and Globalization in China . Edward Elgar Publishing.
