Western Businesses in China

Paper Summary:

This paper discusses the recent phenomenon of Western businesses seeking a way to enter and benefit from the huge market inside China. It also discusses the warnings that are being presented by other businesses about certain dangers in entering the Chinese market. The paper presents the case of the car business and how it has enabled various Western companies to enter China, using a Chinese company, Shanghai Auto, as a partner. It then analyzes the case of Intel as a company producing computer chips for use in China and the concern that a Chinese company may someday produce a chip that would rival Intel.

From the Paper:

"However, competition is increasing, first from established companies like Advanced Micro Devices. It is also likely that Chinese chip makers will enter the market soon and compete with Intel directly. This is a greater threat in a country where there is no protection for intellectual property. Vogelstein discusses the size and scope of the marketing effort in China, and he also describes specific plants and companies that are involved in this process and considers how they are doing now and how they might be affected if Chinese companies gain a foothold in the same industry. In areas such as Chengdu, Intel has invested where the government asked it to do so, and Intel ahs gained greatly by this move. Growth in the Chinese market is already at a faster pace than in the U.S. market, so Intel may continue to do well even if more competition enters the field, at least for a period of time. The outcome in the longer view might be very different. In addition to chips for computes, Intel is expected to do well with chips for cell phones and similar devices, and Chinese companies are expected to do well in this area also, with China focusing on producing more and more engineers each year to take on this task. Some analysts see a greater potential for Chinese companies and believe that Western companies will lose out in the end, with China staling the intellectual property involved just as has happened with other Western products."

Sample of Sources Used:

• Taylor III, Alex. "Shanghai Auto Wants to Be the World's Next Great Car Company." Fortune (4 Oct 2004), 103-109.
• Vogelstein, Fred. "How Intel Got Inside." Fortune (4 Oct 2004), 123-135.

More papers on Western Businesses in China:

• Essay # 27246 : "Investing in China"
• Essay # 61516 : "Marketing Birth Control Products in China"
• Comparison Essay # 59754 : "China and U.S. Business Culture"

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