Rise and Growing Role of Multinational Enterprises Coursework

Rise and Growing Role of Multinational Enterprises - Coursework Example A veritable explosion in e-based connectivity since 1995 as well as the emergence of a completely new global Information Technology outsourcing industry has resulted to the networking of service and product providers globally (Heshmati, Sohn, and Kim, 2007:116). Consequently, hastily expanding trade in both goods and services is becoming an increasingly powerful engine in driving the dynamics of growth and development to a global state. This paper will account for the rise and growing role of multinational enterprises form the Asia Pacific in the global economy and particularly in Europe. Aims of Chinese multinationals in international business strategies When it comes to the global economy, no nation is self-sufficient. Each needs involvement at different levels in trade in order to sell what it produces and acquire what it lacks as well as produce more efficiently in some economic sectors than its trade partners. As conventional economic theory supports, trade promotes economic eff iciency through the provision of a wider variety of commodities, regularly at a lower cost, notably because of specialization, economies of scale, and the related logical advantages (Rudman, 2006:149-151). Documented evidence asserts that international trade is a subject of contention because it can sometimes be a disruptive economic and social force as it changes the conditions of wealth distribution within a national economy, predominantly due to changes in prices and wages. As of this moment, a small group of developing countries is transforming the global economic landscape. Led by China, Japan, India, and Brazil, these expanding economic powers pose a variety of challenges and opportunities for European economic interests and leadership of the global economy. Chinese hesitant stance suggested the precise nature of global flows and the impacts are still poorly understood. The rise of Chinese investment in European nations differs from earlier waves of investment from the United States and thereafter from Japan. A huge number of Chinese firms are heading abroad to become globally competitive instead of going to exploit advantages developed at home. With this aspect, according to European policymakers, Chinese investors resemble in behavior Korean multinationals (Feenstra and Wei, 2010:517). While in Africa and in Latin America, many Chinese investments are seeking to secure energy resources, those into Europe or North America are more likely to be in search of a market or strategic assets. Direct Chinese investment among European countries is still relatively insignificant. However, over the last past few years, it has and still is showing a clear upward movement. The EU, according to some sources, accounted for merely one per cent of Chinese outbound M&A in terms of value between 1999 and 2005. Numerically, he Greenfield investment projects outpace acquisitions despite the fact that many of these tend to be minimal. Greenfield investments wise, although th e amount of venture in European projects funded by China increased by 500 per cent since 2000, it commenced from a low base thus remains modest. A report released by the French Agency for International Investments (AFII) pointed out that, Chinese firms accounted for a mere 0.5 per cent of all manufacturing projects and 0.9 per cent in job creation in Europe between 2002 and 2005. The growing role of China in the European market accounted for 1.2 per cent of Greenfield investments over the period between 2004 and 2006 (Tang, 2010:5-7).