Chinese resent foreing investment as Multi-National Coporations go on a buying spree.
An article done by Inernational Technology Network (ITN) explains that acquistions of Chinese enterprises by Multi-National Corporation (MNC) are increasingly being resented among a growing mood of nationalism. Critics warn that acquistion of promising local companies by MNCs are creating monopolies in a number of sectors. Another worry is that if M&A activity goes unchecked, China would only provide labor in the global supply chain and the ability to innovate would disappear leaving core parts and key technologies completely in the hands of MNCs. This mind-set is partly fueled by persisting resentment over Chinese oil giant CNOOCs failed $18 billion bid for Unocal, and a growing protectionist sentiment in the US and Europe against low-cost Chinese exporters. The Chinese government, however, welcomes foreing investment. Many investors now prefer acquisitions rather than green-field investments. China remains one of the most targeted countries for FDI, recording a total $66 billion in announced deals in 2005 compared to $58 billion in 2004.
I find this interesting since China has welcomed capitalist principles in its economy. But here shows that they have restriction for MNC acquisitions. My only question is: Is China showing with their Invesment restriction that this the furthest they can go with capitalist principles?
Source: International Technology Network. Volume II, Issue 2. 2006
posted by hammer06 @ 4:55 PM
3 comments
3 Comments:
It doesn't seem that they are really restricting capitalism as much as they are protecting themselves for the future. These people are stupid, they know that someday they are going to need to have more than cheap labor to support themselves as a growing super power.
At most, these restrictions are a feeble attempt to cling to a fading ideology. China understands world finances and knows it will need to embrace a more modern ideology to achieve its full economic potential.
It seems to me that the tightening we see on both sides of the Chinese export issue will only stand to make it more legitimate and worth more money to both involved. It is nice to see that the MNC's can't just buy everything will-nilly and that even if they do that they will not have inflated incentive to acquire such properties. One other point is that the China welcomes foreign investors. They make a smart move in tapping into the strength of capitalist economies that want to invest in China.
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