Research Report: Challenges of Local Companies in China vs MNCs

This research project investigates the challenges faced by local companies in China due to the increasing presence and influence of multinational corporations (MNCs). The study examines several key themes, including profitability, competition, corporate governance, and external challenges like fierce competition and rising labor costs. Data analysis, presented through charts and graphs, reveals insights into the impact of MNCs on local businesses. The conclusion highlights the negative effects of MNCs, such as colonialism and undermining social and economic rights. The report recommends government policies to support local companies, focusing on internal improvements to enhance their competitiveness. The research emphasizes the importance of price/quality ratio and high customer satisfaction as key strategies for local firms to succeed in the face of MNC competition. The report provides a comprehensive overview of the current business landscape in China and offers actionable recommendations for local businesses to navigate the challenges posed by MNCs and secure their future in the market.

Research Project
TASKS - P5, M3 & D2

INTRODUCTION
◦ In the present scenario, firms in emerging nations are getting globalized as they strive to save
their cost of manufacturing and gain more grow potentials. This is leading local firms to face
the issue of increased competition, reduced profits and customer base, decreased market share,
etc. Present study is based on identifying the problems faced by local organisations with
entrance of MNCs in China and suggesting suitable strategies to overcome the same.

Theme 1: Local companies in China are not
incurring profits.
Yes
No
0 5 10 15 20 25 30 35
No. of respondents

Theme 2: Competition is the major issue which local
companies are facing being the local operator of
China.
Bureaucracy
Governmental Challenges
Consumer Preferences
Competition
0 2 4 6 8 10 12 14 16
No. of respondents

Theme 3: MNCs have a direct impact on the
competition level in market of China.
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
0 2 4 6 8 10 12 14 16 18
No. of respondents

Theme 4: Company’s operations being the
local operator are not profitable.
Highly profitable
Somewhat profitable
Not profitable
0 5 10 15 20 25 30
No. of respondents

Theme 5: Corporate governance is the major
internal challenge.
Innovation capability
Distribution problems
Finding and retaining talent
Corporate governance
0 2 4 6 8 10 12 14 16 18 20
No. of respondents

Theme 6: Fierce competition from MNCs is
the major external challenge.
Economy slowdown
Rising labour cost
Fierce competition from MNCs
Corruption
0 2 4 6 8 10 12 14 16 18
No. of respondents

Theme 7: Price/quality ratio should be the
factor to gain success over MNCs.
Price/quality ratio
Developing a strong brand
Effective distribution
Use of promotional techniques
0 2 4 6 8 10 12 14 16 18
No. of respondents

Theme 8: Future perspective of local businesses in
China against competition given by MNCs is
uncertain.
More optimistic
Less optimistic
Uncertain
No knowledge
0 2 4 6 8 10 12 14 16 18 20
No. of respondents

Theme 9: By providing high customer satisfaction,
profits in local firms in China in presence of MNCs
can be improved.
Providing additional benefits
High customer satisfaction
Charging low price
0 5 10 15 20 25
No. of respondents

Conclusion and Recommendations
 It can be concluded that there are several negative impacts which multinational corporations put on
local companies of China like colonialism, unmatchable influence, undermining social and economic
rights, environmental effects, etc.
 To reduce the negative effects of MNCs from the operations of local organisations in China, suitable
policies should be imposed by government to treat them as a helping supplement, rather considering as
an alternative to the investments made by domestic nations.
 China should focus internally and make improvements in the basic areas so that domestic companies
can be made able to better compete with MNCs and save themselves to get dominated from them.