For many global companies, China represents a highly attractive market in terms of size and growth rate. Yet China ranks lower in terms of economic freedom and higher in political risk than some other countries. Despite these risks, hundreds of companies have established manufacturing operations in China. This is because the Chinese government makes selling in China contingent on a company’s willingness to locate production there. The government wants Chinese companies to learn modern management skills from non-Chinese companies and to acquire technology. Some believe that Western companies are bargaining away important industry know how in exchange for sales today by agreeing to such conditions.
Address the following in your short paper:
Should companies go along with China’s terms, or should they risk losing sales by refusing to transfer technology?
What do you think might be the long-term results of either solution?
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