The Rise And Growing Role Of Multinational Enterprises From The Asia Pacific In The Global Economy

How can we account for the rise and growing role of multinational enterprises from the Asia Pacific in the global economy? Specify your reasons using corporate cases of multinationals from different industries and different countries of origin.

Please note that when you are analyzing, for example, Japanese multinationals in the electronics industry, your comparisons do not have to be limited to Japanese rivals. Comparisons with Asia Pacific and European multinationals may be more apt and useful. The same point applies to Korea, Chinese and Taiwanese firms.

Consider a number of perspectives, including the aims of Japanese multinationals in relation to global strategies; the aims of Korean and Chinese multinationals and international business strategies; differences between industries and types of business; the degree of global versus regional control, and changes in operational control over time; the competitive advantages of these multinationals compared to those of rivals; variations in management, organization, and operations between home country and host nations; the ability of Japanese, Korean and Chinese multinationals to compete in Europe, Asia and North America, and their ability to adapt to changes in policy and markets; and the policies of host governments and the relevance of the EU.

The Evolution of Multinationals from Japan and the Asia Pacific

Notably, multinationals are agents of civilization, commercial and industrial advancement in regions such as Asia, Africa and South America. Further the rise of Asia Pacific multinationals has been linked to boosting commercial relations and ties between Asia Pacific countries and the global economy. Noteworthy, multinationals are criticized for favoring home country with regards to economic policies and decisions as compared to foreign home concentration. Through the globalization, multinationals are able to enjoy large economies of scale and enjoy competitive or comparative advantages which would otherwise be not available thus accounting for the rise and growth of multinationals (Reference for Business  2017).Various Asia Pacific nations have Multinationals regionally and internationally.

The rise of many multinationals can be attributed to the fact that there’s ready availability of raw materials for trade in the Asia pacific regions because it makes it easier and cheaper to engage in production .Also ,the ready market available for the goods and services provided by the Asia Pacific countries has made the rise and growth of multinationals all the more easy and rampant due to the fact that without a market ,products go to waste and there’s no need for production(Gillies  2000) However ,ready market requires a constant or surplus supply of goods thus making profits for multinationals .Also, some Asian Pacific multinationals have risen and grown due to the need to exploit raw materials in foreign economies and to explore and penetrate new markets thus accounting for the growing globalization of companies.

Additionally, favorable foreign investment initiatives such as low production costs, tax breaks, subsidies have engineered the rise of multinationals from the Asia Pacific Region to global heights (Malik and Aggarwal 2012).Moreover, through a foreign country with low production costs multinationals are able to maintain cost competitiveness which is an advantage to companies and businesses. Further, the rise of multinationals have been attributed to the fact that some multinationals possess various advantages over certain environments thus able to thrive in weak environments. Multinationals have strong home concentration and advantages thus its able to cross borders and service. some multinationals are believed to possess internationalization capabilities thus the ability to venture into foreign markets .

Usually, Multinationals enjoy low labor and production costs in more foreign countries inclusive of surplus profits which has immensely  contributed  to the rise and growth of multinationals across the globe. The liberalization of home markets by Japanese, Taiwanese ,Korean and Chinese governments has encouraged foreign direct investment. The role played by multinationals in the Asia Pacific region can’t be ignored in the sense that through the rise and growth of multinationals, employment opportunities have been created both in home and foreign economies, revenues for both governments have been boosted hence contribution to high gross domestic product for both home and foreign countries (Research matic 2017).Trade liberalization, economic growth are some of the significant role played by various multinationals.

Rise and Growing Role of Multinationals from the Asia Pacific Region

Through foreign direct investments, multinationals are able to boost economic growth levels of the host country through its addition to the investments index of the foreign country..

According to the International LABOR Organization, multinationals distribute capital ,employment opportunities and technology through their operations thus benefiting both their home countries and host countries. Through the activities, multinationals transfer technological knowledge and expertise between the two countries ,create employment opportunities in both host and home countries and transfer management strategies from home countries to host countries(Soni  2012).Further ,there increase in the trade volume of the host country in the event of multinationals setting up. Through the entry of multinationals  ,some host country monopolies might be broken due to entry of new players thus increasing consumer choice, variety and sovereignty. With the recent technological advancement, host countries are able to enjoy research and development outcomes emanating from the operations of multinationals .

In addition, through multinationals, host countries are likely to reduce the volume of imports and export more thus boosting its revenue from exportation of goods within its economy. Following the growth of multinationals, economic growth and development is likely to increase due to the stimulated demand for goods and services through the foreign direct investment by multinationals. Due to investment levels going up, more employment opportunities will be created in the host county, the availability of competitiveness will influence consumer choice thus leading to profits being made. In addition, the growth of multinationals in host countries has expanded due to the flexibility of rules and regulations on foreign investments and the availability of financial incentives such as low labor costs, low taxation brackets and tax breaks have immensely boosted the growth and rise of multinationals.

Also, multinationals have promoted research and development in developing countries. Most multinationals venture into less developed countries due to the competitive advantages of their home countries thus they are able to maximize profits and penetrate new markets through foreign investment .

Noteworthy, twelve Chinese multinationals were noted in the Fortunes Global 500 list to which the numbers have risen significantly since the year 2011.Notably, China has invested substantially in Germany various industries .Chinese multinationals have invested in its telecommunications industry through the acquisition of the Medion by Lenovo ,which is a Chinese multinational. Additionally, the Chinese have invested in  Germanys, Automotive industry through the Greely Holding Group and the Chery Automobile Corporation .Machinery ,Renewable energy and the Transport sector have Chinese Entrepreneurs in Germany through the Sany Group, Trina solar and China CNR corporation respectively(Ecovis,2014).

Role of growing Multinationals

                                                                                                  Source:  Ecovis.Com

Predominantly, Chinese multinationals have incorporated corporate strategy and management initiatives to guide the operation of its multinational companies. Mainly, integration, diversification of products and services  plus globalization are the pillar corporate strategies for Chinese multinationals(Zhanming N.d    ).Through integration strategies, Chinese multinationals have expanded their economies of scale and expanded their operations regionally and internationally .Integration strategies are vertical or horizontal. Notably, Tsingtao Beer is a good example of horizontal integration. Chinese multinationals have redeployed resources ,assets ,capabilities and labor in an aim to diversify its multinational companies .through horizontal diversification, innovative products have been introduced into the same  market hence the term diversification .Hisense is a living example of diversification.

Innovative strategies have been incorporated into the operations of multinationals to boost competitiveness for globalization purposes. The need to make products and services competitive at the global level to maximize profits and to expand to newer markets hence the term globalization. Most Chinese products are aimed at globalization due to their unmatched high quality thus boosting its trade expansion volumes at global and regional levels.

Noteworthy, Japanese foreign direct investment levels are lower nationally and globally. Specifically, Regarding China, Japanese multinational marker share is below that of the European countries, the United States of America, Taiwanese and Korean foreign investment levels. Predominantly, this is attributed to inadequate utilization of the China market share by Japan and the reluctance to invest in research and development opportunities .Also Japanese multinationals exhibit low localized management thus contributing to its low control of multinationals regionally and globally (Masuyama,2004).To Japan, China is an export hub more than an investment destination hence the low market share in China foreign multinational index.

The Japanese multinational adopted the alliance strategy with various  with small firms having competencies complementary to its multinational Sony thus enabling it to expand and enter new markets(Dumitrescu,Scalera,2012).Moreover, through an international strategic alliance Japan entered into an alliance with a Swedish telecommunications enterprise. ,Ericcson to partner with its own Sony Corporation hence the Sony Ericcson  electronics company based on the technological prowess  of both multinationals(Dumitrescu and Scalera,2012).There are various strategies implored by multinationals to stay afloat and make profits. Commercial strategy, market positioning are some of the strategies implemented by many large multinationals .Notably, international strategic alliances are adopted by multinationals to penetrate new markets.   

China

Further, diversification is another strategic move on the part of multinationals in sense that through the introduction of extra menus and expansion of more delivery points the Macdonald s enterprise expanded its operations and profits significantly. Predominantly, Japanese multinationals have ventured into the ,telecommunications and manufacturing ,engineering and construction industries of various economies .Innovation is one of Japans strongest foreign investment opportunity .For instance ,the Japanese computer companies, Sony, Canon and Fujitsu are among the world leading brands .regarding electronics, Sony, Toshiba ,Panasonic, are among the leading multinational brands for the electronic industry and business(London 2017).

Additionally, the Automobile industry is dominated by Japanese multinationals such as  Toyota, Nissan ,Mazda among other business players forming multinational companies across the Asia Pacific region and globally .The engineering and construction sphere has various multinationals Takenaka, Komatsu, Kobe Steel among other industry players in various nations.

Noteworthy ,Korean multinationals have featured in the  Forbes Global 2000.Remarkably,Korean multinationals have ventured into the automobile industry through its notable Hyundai Motor Group of companies dealing in the manufacture of automotive in most countries .Moreover, Hyundai has three affiliated automotive manufacturing companies .Further, Korean companies have ventured into steel industry in foreign countries. Specifically, Posco is a Korean steel manufacturer (Hill, Wagner and Wong 2015).Also ,Korean multinational, Samsung has ventured into the telecommunications and electronics sector of various countries thus boosting its sales ,profits and creating employment opportunities. Moreover, Korea is ranked second as a semiconductor enterprise and memory chip maker thus putting Korean in the world top producer list of semiconductors.

In addition, Korea is a large foreign investor in the investment services sector .Through the Shinhan Financial Group, investment services have been offered to foreign economies to the tune of $19.6 billion which has ranked Korean at number 4 of the overall 249 countries under the world largest investment services companies and country. Moreover, Insurance makes Korea ranked at position 7 of 249 on the provision of health and Life insurance covers. Lastly, the 10^th largest   banking industry and companies in the world is Korea with a sales margin of $ 13bn.

Significantly, the Korean electronics industry has incorporated strategic control process to conform with the environmental conditions through organizational and structural processes .The organizational changes of a multinational are responsive to the economic changes through strategic control processes. Majorly, economic, technological and political changes have shaped the day to day operations of the Korean multinationals .Notably, Samsung Electronics Company has made organizational structures changes based on the abovementioned environmental conditions. Further, Samsung Company adopted differentiation of products and technological advancements in all its multinational companies through investing in research and development initiatives.

Also, The Samsung group has penetrated new markets, namely, in N. America, Europe, Africa, China and the Middle East. There s been a notable production shift to LDC s .Structurally, the Samsung Group has a structure based on product division. Due to the restructuring of the company, the various business divisions such as consumer electronics, telecommunications into one functioning division (Yeon- Hak and Campbell 1995).

Noteworthy, Taiwanese multinationals have ventured into the hardware and electronic industries through its Asus Tek Computer Company. Also the Benq Corporation produces electronics having ventured into the telecommunication industry. Notably, LCD monitors, projectors are the primary products for the corporation. Taiwanese multinationals have also invested in foreign investments in manufacturing industry.The Giant is a Taiwanese company producing bicycles and considered the biggest bicycle manufacturing country in the world. Specifically, the Giant group has branches in the Netherlands and China (Avril 2015). Taiwan has various leading globally recognized brand multinationals. Remarkably, Taiwan is among the world s major manufacturers of steel and machinery. Similarly, the Taiwanese multinationals like other multinationals have incorporated various strategies to stay afloat in business. Production strategies such as integration, vertical and horizontal, concentration both home country and foreign country and heterogeneous horizontal integration in their operations (Lin and Lin 2015).

Noteworthy, Korean is an active hub for Foreign direct investment by various multinationals due to its remarkable regulations regarding foreign investments  and favorable exchange rates .In addition, Korea is a good investment hub due to its strategic location to China, which is the considered a top investment host country (Mu-Hyun,2017).Primarily, Korean electronics ,shipyards and power generators have worldwide confidence ,trust  and recognition globally thus having a competitive advantage over other firms operating in the same industry Technological advancements is considered evolved and attractive in Korea thus the Incentive for most multinationals to set up in Korean economy due to the readily available technological advances.

Chinese multinationals exhibit various competitive advantages as compared to other multinationals and host countries. Noteworthy, Chinese multinationals enjoy the confidence alluded to its corporate superiority culture notion hence its competitive advantage. Usually, multinationals have high corporate culture as contrasted with their host countries. Also, most Chinese multinationals have ventured into research and development activities which has lead to the production of high quality goods and relatively cheaper costs thus making it enjoy low production costs which in turn translate to more high volume of quality goods maximizing the profits of such multinationals as compared to other multinationals and domestic firms with no competitive advantages (China About N .d)

Also ,there s the  ability of Chinese multinationals to have massive information and knowledge of the product market stems from the operation of the companies in different countries  hence the ability to keep their products more competitive than the goods or products of the foreign country. Majorly, Knowledge flow is vital for most market structures globally thus making the person with the most knowledge of the markets in which he or she operates in work best to his or her favor .The many Chinese multinationals have provided opportunities for collection of information which keeps the Chinese products competitive than goods of the foreign country. Organization learning has been incorporated into the running of many Chinese multinationals.

Moreover, the Technological prowess of Chinese multinationals has encouraged the first move advantage in the sense that most Chinese multinationals have patented their products thus shunning away other multinationals or local companies form copying their way of operations and production thereby maintaining its competitiveness which has been motivated by innovation through research and development and benefits from organizational structure(China About n.d).Through the first move advantage, Chinese multinationals have enjoyed reputational advantages, confidence and loyalty from their consumers and the ability to set the standard for their products and services .Lastly ,the first move advantage has made Chinese multinationals ,cost leaders in their different industries of operations.

Through this advantageous move, the Chinese multinationals have managed to expand their operations and maximized profits and revenue in home country and foreign country. Predominantly, Japan is considered to be least endowed with natural resources. However, Japan is blessed with harbors, temperate climate and rainfall plus pleasant topography thus boosting agriculture .Also, Japan has ample water resources for energy and industrial supply thus making it a destination for foreign investment for renewable energy and nuclear energy for energy multinationals. In addition, Japanese firms are likely to enjoy low production rates due to the extensive domestic market available to them. Moreover, their efficient and productivity in the use of infrastructure which is considered attractive for foreign investment as compared to the United States of America and Australia which have smaller coordinated public infrastructure (Riew 2007).Geographically ,the availability of ports and harbors offer cheap transportation costs for foreign multinationals to invest in thus an incentive for foreign direct investments.

Similarly ,Japanese firm enjoy technological advantages due to the investing in research and development .It is  necessary for global competitiveness to embrace the ever changing technological changes in order to produce high quality products efficiently and stay relevant(West 2014).Remarkably, Japanese technological advancement levels are considered among the top notch technologies of the world thus a competitive advantage(West 2014).For Taiwanese machinery  Firms operate under low production costs thus making it competitive on the global economy because less production cost translate to more production volumes .Cost effective strategies have been adopted by most Taiwanese multinationals. Moreover, multinationals in Taiwan have incorporated research and development in their machinery and other industries (Wu 2016).

Typically, the ability to maintain low production and labor costs is a advantage for most companies let alone multinationals. Currently, Taiwanese multinationals have strategized to invest in low labor cost foreign and regional areas .Also, Taiwanese multinationals have embrace research and development initiatives for efficiency purposes which has contributed to the smooth and profitable running of its multinationals(Porter 2001).The adaptive ability of Taiwanese firms to technological advancements has helped the operations of its multinationals remain competitive and relevant .Further, venturing into low production cost foreign countries has made profit maximization easy for Taiwanese firms.

Largely ,it’s been observed  that the behavior and personality traits of Japanese expatriates in the United States of America exhibit different behavior over time as contrasted with their counterparts .Specifically ,Japanese managers exhibit concreteness and are more active iin their learning habits(Yamasaki and Kayes,2007).However ,Japanese expatriates in the United states of America aren’t assimilated directly into the system but have instead developed various adaptation modes which have specialized over time. This is an indicator that Japanese or other Asia pacific multinational expatriates can adapt comfortably over time to foreign policy and cultural considerations.

Undeniably, change in policies of a foreign country affects the operations of the operating multinational in that country. Same applies to the European policy decisions on euro zone multinationals .Following the Exit of Britain from the European Union, could negatively impact the Japanese investments in Britain (Mcurry 2016).Higher tariffs for the Japanese Nissan automaker will definitely cut in the profits of the multinational and increase the production costs for car manufacturing. Additionally ,there will be need to lay off some workers due to the high production rates of automotives triggered by high tariffs of operation in Britain. Also, following the exit of Britain from the European Union, Japanese companies are likely to lose market advantages previously available by virtue of Britain being part of the European Union.

Remarkably, Japanese multinationals have ventured into the European market thus proof that Asia Pacific countries can do business in Europe and other areas of the world .Noteworthy, Japanese banking and financial institutions have established themselves in the European economy. Since the 1980s, the Japanese companies have flourished in the financial sectors thus making room for growth globally and internationally(Dayanand 1995).The expansion of the Japanese banking sector is attributed to the strong financial institution and frameworks in Japan The existence of favorable macroeconomic factors of the economy has immensely boosted the growth and expansion of the Japanese banking system in both home country and foreign country. However, there’s need for more strategies on the global arena to maintain the Japanese expansion of financial institutions at an international level.

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