GLOBALISATION - CHINA CASCADE - REVIEW
Nolan and Jin Zhang ‘Global Competition after
the Financial Crisis’
recent article merits study and discussion. It is a corrective to the
chorus about an unstoppable Chinese national-market-state displacing the
article begins by noting that
from the ideological blinkers of neo-Classical economic correctness, it
is easy to see why ‘free trade’ opened doors to further monopolising.
companies from the advanced economies vastly expanded their
international investment, building production networks across the globe.
Chinese capitals have advanced during the current crisis as their rivals
slid down the ranking of global giants, US and EU firms also
strengthened their position through further concentration, (oligopolising).
got onto the finance list in part because of the
loss in the market capitalisation of financial houses, but mostly
because the Chinese banks dominate their own turf. They are huge but not
networked. As Nolan and Zhang put it:
the links to carry through take-overs, can Chinese capitals buy their
way into the other nine sectors? Only construction equipment has a level
of concentration below 50% - at 44%. The next lowest is for PCs at 55%
and third is mobile handsets at 65%.
these oligopolies dominate R&D, and thus have their hands on the
future drivers. They also dominate foreign direct investment (FDI). The
combined FDI by the big four newcomers -
much vaunted $2.3 trillion of foreign-exchange reserves that China held
in 2009 needs to be contrasted with the $63.7 trillion available to the
top 500 asset managers in the West. Moreover, Chinese reserves amounted
to only $1800 for each Chinese but $5,600 for a South Korean and $8,400
for each Japanese.
by every measure, Chinese firms are in the infancy of global corporate
behaviour. The challenges are qualitative more than quantitative.
1980, ‘The age of globalisation witnessed the rapid consolidation of
systems-integrator firms and their supply chains’. China’s
competitors retain advantages from nearly 150 years of installing
management systems, domestically and around the planet. Since 1980, the
non-Chinese corporations have increased and upgraded those barriers and
links. Those developments were not initiated against
up is not just a matter of Chinese workers pushing out more and cheaper
cars or tie-pins. It also involves the ‘visible hand’ of management
beyond the factories, the integration of finance with supply, production
and distribution. Chinese workers and executives are more than capable
of performing those soft power functions. At issue is whether will they
be able to buy their way through the gate of earthly profit. Or will
they be checked by a new great wall – one that keeps the Chinese in,
not the barbarians out?
addition to acknowledging this obstacle, any prognosis for
top of these domestic matters, Chinese growth remains vulnerable to
contractions of demand for its products in the rest of the world,
whether from budget cuts in the EU or recession in the