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Why Do Us Multinational Footwear Companies Stay In China?

2012/3/30 12:18:00 12

China's economy is slowing down, and some people estimate that its growth potential will remain above 7% in the next eight years. So why do the US multinational footwear companies still have to stay in China? Kenneth Lapoza recently published in the US "Forbes" biweekly website that the reason for US companies to stay in China is China itself.

The article pointed out that the China Chamber of Commerce issued the 2012 annual business environment survey report in China this week.

The report says US companies are expected to reduce their investment in China slightly this year.

But the main message that the report conveys is that the reason why the US companies stay in China is because they have taken a fancy to China.

Consumer

Rather than American consumers.

Respondents said that margins in China remain high, but they are under pressure.

When you enter any department store in the United States, you will find half of the goods on the rack, from canvas shoes to daily life consumer goods, all with "made in China" logo.

However, as the world

Exporting country

China is disappearing.

Instead, China is an importing country.

In the next ten or twenty years, the significance of China's domestic economy to its domestic and foreign investors will become more and more important.

This is quite different from the manufacturing industry in the first five years of 80s and 90s and even in the first half of this century.

Multinational companies are increasingly worried about what they worry about from beginning to end - rising wages and welfare levels.

China is entering the middle class society.

China will have to build a social security system that does not exist for the about one billion people at present.

This is no longer the China of the past.

It is difficult for American companies to find a market with a large scale and low wages, welfare and management level.

The new China is on the rise. Although this means higher costs for American enterprises, they seem to realize that a richer China, even more stringent in management, has to leave China.

Although production costs rose in 2011, 39% of respondents claimed that their profit margins in China were still higher than those in other parts of the world.

The members of the China Chamber of Commerce in the United States are less optimistic than they did last year when they look forward to this year.

These ones here

Shoe enterprises

Business in China is still profitable, but profit margins are shrinking.

So they have made relatively less investment and expansion plans.

Taking into account this year's business challenges, the concerns of American companies are mainly focused on operational and macroeconomic risks.

The report points out that the increase of cost and the restriction of human resources are bringing more and more challenges to the shoe companies.

The discontinuity of licensing system and forced technology pfer are the main obstacles to the entry of American companies into the Chinese market.

Although the Chinese government has been trying to protect intellectual property rights, respondents still think the protection system is rather weak.

"But our members are still deeply rooted in China," the report wrote. "In recent years, they claim that they are rooted in China in order to serve China.

market

The number of members has been increasing steadily and occupying the majority in the chamber of Commerce.