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Multinational Corporations In China: Case Study.

1056 words - 4 pages

McDonalds, the leading fast food industry nowadays, is a Trans National Cooperation. Due to the lower production costs and potential market, McDonalds has been expanding its production and selling line in China.

It is seen to see it bring forth a positive consequence to China.

Economically.
The existence of McDonalds on China's soil increases the employment rate (though the Central Government keeps claming that the unemployment rate is 0). According to the official report, there are nearly 50000 citizens employed in the "McDonalds' sector" in more than 680 branches in China . Besides, the tax income from the incoming industry directly spurs the Government's revenues; in 2000 alone, McDonalds had already paid over one-fifth billion RMB to the Central Government . These two benefits can directly increase the national GDP and the Government then can reinvest the capital into the public sectors such as education and medical care and therefore to push the economy to move further. Nonetheless, to look behind the fancy benefits, there may have a heavier weight of defects to China's economy. From employment perspective, since most of the McDonalds staffs are teenagers and students, who successfully competed with the elder group, may lead to an unemployment of elderly, and since the old folks didn't have chance to receive high education, they lose the competitive ability. Plus the "no pension" system in China, elder people may probably be forced to commit poor jobs such as to collect cans in streets and sell them for living. Besides, due to the low wages and short working hours in McDonalds, (probably under 13 hours a week), people may not sufficient to feed their own families. And as they counted the "under-employed" inside the "employed" group, the huge number of employment rate could be just a meaningless figure. From the capital-flow perspective, McDonalds seems to boost China economy by investing. Yet, most of the income gained by McDonalds in China is sent back to its original country, America. If the Chinese's consumption (import) in this fast food company is higher than the company's investment (export), China will then suffer a trade deficit and furthermore, the entire economy's health will be worsen.
Second, the incoming company may bring a positive education to the Chinese locals: commerce students may get a practical opportunity to explore what they had learnt from textbooks and business men may perceive a brand new idea of managing a business from a western perspective. Nevertheless, most of the highest positions in McDonalds such as the chief managers, are occupied by American since they are more trusted by headquarter. Therefore, the genuine, actual business techniques might not been passed down to Chinese. Moreover, on account of the huge investment, McDonalds is able to rent the best positions in the city, such as in dominant shopping malls (Two McDonalds in New Oriental Plaza, Wang Fu Jing, Beijing) and convenient sites (sides on the...

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