Review: China vs.

the World
Introduction to IB

Introduction
TheArticleChinavs.theWorld,writtenbyThomasM.HoutandPankajGehmawat,publishedinthe HarvardBusinessReview,Volume88,in2010,dealswithChinasstruggletoensureitsplaceasan economicsuperpower. Havingadisadvantageonitsownmarket,theChinesegovernmentdecidedtoexpandtheireconomy andtogainmoreadvancedknowledgetocompetewithhightecheconomiesaroundtheworld.One steptoachievethisgoalisbyincreasingtheirinvestmentinresearchanddevelopment.Alsothe introductionofnewpoliciesarrangesthatmultinationalcompaniessharetheirknowledgewith governmentownedfirmsbyforcingthemintojointventurestogainaccesstoChinasfastgrowing market.ThisisoneofthethreemainaspectsofathreeprongedplandevelopedbyChinese government.Moreover,theplancontainsoftheChinesegovernmentbeingboth,buyerandsellerin certainkeyindustries,asforexamplethepublictransportationindustry.Alsoseveralmanufacturers wereunitedintoafewnationalchampions. DuetothisdevelopmenttherelationshipbetweenChinaandothermajoreconomies,especially towardstheUS,tendtoaggravate,causingpoliticaltensions.Despiteofthissituation,multinational companiesaremoreandmoreabletoimprovetheconditionsoftheChineseworkmarket.

Critical evaluation
Therearethreemainthesesmentionedinthearticle.Theauthorsdelveintothepaternalismof foreignorganizations.TheydescribehowChinadealswithforeignorganizations,whichhavea spiritualorfinancialinfluenceontheChinesecommunity.Thisisillustratedbyanexampleofthe currentsituationoftheCatholicChurchinChina,whichisnotunderthepatronageoftheVatican, butratherunderthecontroloftheChineseReligiousAffairsBureau(p.95,ll.1ff.).Furthermorethis extendstoforeignprofitorientatedorganizations,whichareforcedtobepartofaChinesejoint ventureandthereforesharetheirfirmspecificknowledgeadvantages(p.96,ll.40ff.). Additionally,theauthorsissuetheeconomicgrowthofChinawhichnearlyunscathedbytheworst globalrecessioninrecenthistory,[it]poisedtoreclaimitsplaceasoneoftheworldspreeminent economies(p.95,ll.23ff.).AccordingtoGhemawatandHoutChinaalsoaccomplishedtotransfer fromasuccessfullowandmiddletechmanufacturingeconomytoacomplexhightechone (p.96,ll.1113).AnotherstrategyofChinais`toincrease[their]R&Dexpendituresfromitscurrent level`,likeinfundingmegaprojectsinsunriseareas(p.96,ll.16ff.).Anothermajorargumentwhich influencestheeconomicgrowthisthemassiveinterferenceoftheChinesegovernmentinthe economy.Byestablishingthethreeprongedplan,Chinasuccessfullyboostsitslocalcompaniesand ensurestheircompetitiveness(p.98,ll.19ff.). ThethirdthesisdealswithChinaspotentialconflictswiththeUSconcerningitsuniquestrategies (p.101,ll.13ff.).TheresultisanaggravationofChinaspositionwithintheworldsorder.This, moreover,increasespoliticaltensionsbetweentheeasternandwesternworld. TheauthorsprovidethereaderwithagoodoverviewofthestrategiesChinaappliestoimprovetheir economicgrowth,positionwithintheworldmarketandtheinternationalconsequenceswhich 2

emergewiththese. However,theauthors,ProfessorHoutandProfessorGehmawat,areinfluencedbytheirwestern educationandthereforehavearathersubjectiveviewonthissubject.Moreovertheargumentsthey statearenotprovidedwithenoughproveandthereforehaveaninsufficientcredibility. TakingtheUSasrepresentativeforthewholeworlddoesnotallowanaccurateassessmentofthis situation,sincetheUSisnotlikelytoactthesameas,forexample,Europewoulddo.

Conclusion
Wewouldliketoasktheauthorsfollowingquestions: 1)AssessingtheChinesemarketof2011,howwouldyouprognosesthedevelopmentofthe ChineseUSrelationshipinthenexttwoyears? 2)HowdidyourexperiencesinChinacontributetotheanalysisofthesituation?Haveyoubeen involvedinanysituations,whichhavebeeninfluencedbythetensionsbetweentheUSandChina? 3)HowwouldyouanalyzethesituationbetweenEuropeandChinaconsideringthesameaspects asyouhaveusedinthisreview? Whatdidwelearnfromthisarticle? Chinaistryingtoincreasetheireconomicgrowthbygaininghightechknowledgeandaccessthe FSAsofforeigncompanieswhoaretryingtoentertheChinesemarket. IfwehadtolinkwhatwehavelearnedtoourIntroIB.coursewewouldrefertoFSAs.Inorderto benefitfromChinaslocationboundadvantagesforeigncountriesneedtosharetheirtechnologies withtheirChinesecompetitors.TheycompanieshavetodecideiftheywanttolosetheirFSAinorder tobenefitfromthelocationboundadvantagesofChina.