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China Case

In: Business and Management

Submitted By Camillaskiffard
Words 474
Pages 2
China – entry into WTO * Reduction of trade barriers, and limits to import. * Reduction of goverment subsidies and other form of support. * Equal treatment for foreign and domestic firms. * Trade barriers between provinces removed. * Market size up, opportunity to export. * Opportunity to offshoring and outsourcing.

Steel – before 2000 * Many low quality steel mills; subsidies * Overemployment * Only 8 mills reached min efficiency to win profits. * World’s biggest production of steel and iron. * Productivity – 10% of other countries productivity. * China demand for high-end steel: undersupplied, but supply off low-end stell: oversupply.

After 2000:
Reduce subsidies – small steel mills exit * Acquisitions mergers * Ricardian model: China specializes in low-end steel. * Krugman: small firms should exit * large firms grow * medium firms: characterize supply
PC: Before 2000 * China produces low-end products * High growth of the market, focus on education * Price wars in the late 90’s * Competitive with HP, Dell etc. * Profit seekers.

After 2000: * Market experience * Competitive with western firms
Monopolistic competition. AC falls.
Offshoring to China: Hardware and low skilled labor – wage difference

Before 2000:
Oversupply, saturated market. * Unused capacity * Financial support from the government * Foreign tv producers target high-end market: Sony, Panasonic and Samsung (R&D and Marketing) * Domestic firms low profit margin high volume
-> try to export, to india, developing countries * worker technology * limited export opportunities to developed countries import .
The reason why the chinese firms aren’t doing as well as they could is cause of the quality and the technical development.


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