Term Paper: Business Role of China as Emerging Manufacturing Superpower Pros and Cons of Production Outsourcing

Pages: 9 (3168 words)  ·  Bibliography Sources: 8  ·  Level: College Junior  ·  Topic: History - Asian  ·  Buy This Paper

Business Role of China as Emerging Manufacturing Superpower

China is fast emerging as a world superpower due to the roles taken in becoming a major source of the outsourcing sector. China, with its weakened economic state of previous years, has now become a major part of the world's economy with the amount of outsourcing work that they have acquired. While this is good for China, what impact is it having on other countries and especially the United States? What are the pros and cons behind outsourcing?

The emergence of China as a world superpower also plays roles in the decisions of the United Nations and can have ramifications far more reaching than just in the economic situation. The role can have an impact on the regional security of nations and world security as China uses these gains in the areas of military and weapons. What effects could be felt from the region and the world as China gains superiority? This paper will attempt to address these questions and examine the overall picture of China as an emerging superpower.

Literature Review

China is in no doubt becoming a superpower due to the role of outsourcing from countries like the United States. China's economic status has increased at an alarming rate of approximately 10% a year and the gross national product (GNP) of China will overshadow that of the United States by the year 2045 (Bossher, 2006, ¶3). The only problem facing the Chinese government so far is civil unrest and the accusations of human rights violations within the country. The Chinese government has already released statistics that relate to over 58,000 major incidents of civil unrest in the country in the year 2006 (Bossher, 2006, ¶3). The upside for the United States is the more the country grows with wealth and addresses the issues of social reforms the greater the opportunity for democracy and freedom in the country (Bossher, 2006, ¶10). Freedom and democracy is needed to ensure the threat from the Communist Party in China is no longer a world threat to world security. Taiwan has been a source of aggression for the Chinese, since the Chinese declare the land is theirs as well as the access to the sea around the small country. To stop the aggression, the only hope is the development of democracy in the Chinese leadership.

In the year 2004, China became the third largest trade associate of the United States with only Canada and Mexico being larger and China made up for approximately 13% of the trade with the United States. China has climbed the ranks with the United States as a one of the major energy consumers and the impact from the rising fuel consumption is being felt by the global markets. China is now classified as a middle income society with its per capita income setting at above the $1,200 mark (Wayne, 2005, ¶2). Most of this is from the revenues in the outsourced jobs the Chinese have acquired. The status of the China imports and exports with the United States has changed dramatically between the year 2001 and the year 2004. The exports to China in 2001 was approximately $17 billion and the exports in 2004 was $35 billion and showed an increase of import of commodities, eight times the number of United States exports in regards to what was sent to the rest of the world. This resulted in China becoming the fifth ranked export market for the United States in 2004, up from ninth place in 2001. The United States imported goods from the Chinese in 2004 in excess of $197 billion and was twice the number of imports for the year of 2001 making China the second largest supplier to the United

States (Wayne, 2005, ¶10). The Chinese have moved up in ranks in the world in terms of becoming the biggest manufacturer of steel, number in the consumption in oil, and a major reason the prices of commodities has risen.

In 2005, the United States desired a cooperative and open relationship with China.

Then Secretary of State Rice stated,

" the framework of a constructive relationship that recognizes fully the transformation that is going on in China, a remarkable transformation that people around the world are watching. I'm quite certain that we will be able to manage the many issues before us and we will be able to do so in a spirit of cooperation and respect for one and other" (Wayne, 2005, ¶2).

The growth of the relations with China resulted in the bringing of North Korea back to the 6 Party Talks and allows for the parties to try working out differences. The result has a possible positive effect from the emerging status of the Chinese government.

The growth of China is only going to increase as time proceeds. In the 2005 Current Event article, Supersized! China's Economy Booms," the United Nations Intelligence Council is cited as writing, "In the same way that commentators refer to the 1900s as the 'American Century,' the 21st century may be seen as the time when ... China ... comes into its own." China represents the third largest producer in the world of manufactured goods only behind the United States and Japan. China experienced a massive building boom in 2004 with the preparation of Beijing for the 2008 Olympic Games being held in the city. The only downside to the booming cities is the agricultural lands are being consumed and the Chinese have to import the commodities that once were self sustaining.

Since the 1949 founding of the Republic of China under Mao Zedong when the nation controlled all aspects of business and banned Western imports, the country has experienced more freedoms to own businesses with each successor and have experienced increases in the rights of the individual. Due to these relaxed freedoms, China is the number one attractor of foreign funds and investments (Supersized, 2005). China will continue to increase in strength and wealth as time goes on.

The shipping industry has grown in relation to the increased status of China as the seventh largest economy in the world and is viewed as the fourth largest in terms of owing ships and supplying seafaring labor (Zhao, 2006). China with its increased shipping capabilities is flooding the world market with high value added products in addition to textiles, toys, garments, furniture, and household items.

Now the role of outsourcing must be addressed in the affect it is having on the United States economic structure. One source of concern is the number of jobs lost as companies outsource their business to countries where wages are lower and more profit can be made. Other areas of problems have been noted such as the quality of the goods coming from China into the United States economy since the year 2007. In the 2007 Medical Product Outsourcing article, "Sourcing medical devices in Asia: a guide to doing business: not every Asian country is created equal, and knowing the differences can help avoid pitfalls," Gross and Minot proclaim, "China's export of defective, flawed or contaminated products, including toys, food and drugs, has been widely reported in the news media. In addition to the generally poor practices of some Chinese manufacturers, China's medical regulatory structure also has taken much of the blame." The Chinese are dealing with corruption in some of the regulatory sectors by means of execution of the head of the State Food and Drug Administration for accepting bribes and causing the deaths of several Chinese and additional measures are being implemented for the punishment of bribery and fraud, increased inspections, and the recall of defective products (Gross & Minot, 2007). The rise in the number of industries in China has caused the leadership of some of these businesses to be held by inexperienced and sometimes incompetent people.

As China has become known as "the world's factory," the ramifications have been hard felt by the companies in the United States that supply the same types of materials. The outsourcing of products and the low prices of Chinese goods are causing companies in the United States to cut their prices by as much as 30% (Lifang, Xiaohang, & Sim, 2006). Though low labor costs remain one of the reasons for Chinas advantage over countries with even lower labor costs, the other reasons for Chinas success can be attributed to the demographics of the country. China has low costs in the supply chain of producing materials due to lower costs of raw goods, logistic processes, and competitive marketplace. Lifang, Xiaohang, & Sim, (2006) in the Supply Chain Management Review article, "Supply clusters: a key to China's cost advantage: why does China enjoy such a huge manufacturing-cost advantage over other countries? Low-cost labor certainly comes into play, but it's only part of the answer," declare, "In other words, China's low costs are reflected in the entire supply chain from component sourcing to manufacturing, logistics, warehousing, storage, and finally, commercial transaction." The Chinese are showing efficiency in all… [END OF PREVIEW]

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