Impact of Multinational Companies on Local Chinese Organizations

This research project investigates the challenges faced by local organizations in China due to the increasing presence of multinational companies (MNCs). The study aims to identify the specific issues, analyze the impact of MNCs on the competitive landscape, and propose strategies to mitigate the negative effects on local businesses. The research employs a descriptive research design, utilizing a combination of primary and secondary data collection methods, including questionnaires and literature review. The findings, analyzed through thematic analysis, reveal that local companies face significant challenges, including reduced profitability, increased competition, and governmental hurdles. The report suggests strategies for local firms to improve their operations and competitiveness in the face of MNCs, offering recommendations for future research and improvements. The study's significance lies in providing insights for local businesses to navigate the complexities of the Chinese market and maintain their sustainability in the long run.

Research Project

TABLE OF CONTENTS
TITLE..............................................................................................................................................1
TASK 1............................................................................................................................................1
P1. Producing a research proposal...............................................................................................1
P2. Appropriate research methods and approaches to primary and secondary research.............3
M1. Making justification for the choice of methods...................................................................5
TASK 2............................................................................................................................................5
P3. Conducting primary and secondary research using appropriate methods.............................5
P4. Analysing the research findings and data..............................................................................8
M2. Advantages and limitations of data collection and analysis...............................................14
D1. Critical evaluation of research methodologies and processes to justify selected methods.15
TASK 3..........................................................................................................................................15
TASK 4..........................................................................................................................................15
P6. Reflection on effectiveness of applied research methods....................................................15
P7. Alternative research methodologies....................................................................................15
M4. Conclusion and recommendations for improvements and future research considerations 16
D3. Reflection and engagement in the resource process...........................................................16
REFERENCES..............................................................................................................................17

TITLE
Identifying the issues faced by local organisations due to entrance of multinational companies
(MNCs) in emerging markets
TASK 1
P1. Producing a research proposal
Background of research
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. Likewise, one of the largest emerging nations is China in which local organisations
are facing high trouble to survive as to gain higher revenues and increase scope of business,
many multinational companies have entered there which have reduced the demand of local
products and thus, resulting in making local firms difficult to sustain in the long run (Jia, Gosling
and Witzel, 2017). 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.
Aim/objectives
Aim – To identify the problems faced by local organisations with entrance of MNCs in emerging
markets – a case study on China
Objectives
 To analyse various issues faced by local companies of China
 To assess the impact of MNCs on competition level in market of China
 To develop the strategies to reduce negative effects of MNCs on operations of local
organisations in China
Research questions
 What are the issues faced by local companies of China?
 How does MNCs put impact on the competition level in market of China?
 What are the strategies to reduce negative effects of MNCs on operations of local
organisations in China?
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Rationale of the study
In today’s era, one of the latest topics of discussion is problems faced by companies in
emerging or developing economies. Among so many emerging markets, China is one in which
local organisations are facing trouble to survive as the major issue being faced by them is
entrance of so many multinational companies which are grabbing their market share as well as
customer base. With globalisation, firms that remain at home and not getting internationalised
are getting failed in terms of their profits and sustainability and even if they try to enter in
foreign markets, they have the risk to lose their home market (Top 10 challenges of doing
business in China, 2016). Thus, purpose behind conducting this study is to analyse the major
issues which local firms of China are facing due to entrance of MNCs and suggesting suitable
strategies to overcome the same.
Significance of the study
The present study will prove to be highly helpful for making the local organisations of
China able to cope up with issues that multinational companies operating there are creating in
their survival. Local companies operating in China will come to know with the ways to reduce
negative impact of MNCs on their business and thus, they can save their profits as well as
customer base. It will also help the firms to stay in market for longer span of time with
sustainability (Wilson and Wilson, 2017). Further, Ph.D. scholars and professors will also get
advantage of using the content of this study in their research and teaching students respectively.
Gantt chart
It is the representation of sequence of activities which study will be conducted to attain
the desired outcomes and meet set objectives. Gantt chart shows duration of each activity in
which it is to be completed and serves as a blueprint which helps in meeting the final deadline of
study.
Activities Week
1
Week
2
Week
3
Week
4
Week
5
Week
6
Week
7
Week
8
Week
9
Week
10
Determining
the aim and
objectives of
study
2

Framing the
research
questions or
hypothesis
Reviewing
the literature
available in
secondary
sources
Gathering
primary data
through
conducting
survey
Analysing
the collected
information
Making
interpretation
and findings
of study
Feedback
and
evaluation
Making
necessary
modifications
Final
submission
3

P2. Appropriate research methods and approaches to primary and secondary research
Research methodology
It can be termed as the set of methods and specific procedures which are used to conduct
study based on nature of topic i.e. whether it is qualitative or quantitative to make evaluation of
its overall validity and reliability (Research Methodology, 2018).
Research design
Research design serves as the framework in which complete study is being carried out
with specific arrangement of conditions. For the present study, descriptive research design will
be used to have an in-depth understanding of topic by observing and describing the behaviour of
subject in detailed manner (Bresler and Stake, 2017).
Research philosophy
It is basically the belief regarding way in which required information based on subject of
study is gathered and used. To identify the problems faced by local organisations with entrance
of MNCs in China, interpretevism research philosophy will be used in which qualitative
investigation will be made on selected small sample in an in-depth way (Daniel, 2018).
Research approach
This can be referred as a plan and procedure based on steps of broad assumptions
regarding collection, analysis and interpretation of data. In the present study, inductive research
approach will be used as topic is qualitative in nature. As per this, new theory will be generated
and information will go from specific to general to position it within the discipline (Research
Methodology, 2018).
Data collection
To identify the problems faced by local organisations with entrance of MNCs in China,
information will be gathered by using both primary and secondary methods. Under primary,
survey method will be used by using tool of questionnaire and in secondary, sources like books,
journals, online and published articles based on topic will be referred (Quinlan and et.al., 2018).
Sampling
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Under probability sampling, simple random technique will be used to select the sample
size of 50 in which everyone from the research population i.e. top authorities of 25 local
companies in China will have equal chance to get selected.
Data analysis
Qualitative method of data analysis will be used in the present study with the help of
thematic analysis tool in which different themes on the basis of responses gained in the
questionnaire will be made and interpretation of same will be given (Alavi and et.al., 2018).
M1. Making justification for the choice of methods
All methods stated above which are going to be used in the present study will prove to be
highly helpful in reaching at the final and accurate conclusion with giving suitable
recommendations for the strategies that local companies in China can adopt to reduce the
negative impacts of MNCs on their operations (Humphries, 2017). All methods selected are
based on qualitative type of research and thus, they will result in bringing fruitful outcomes and
the topic of study is theoretical and requires detailed explanation.
TASK 2
P3. Conducting primary and secondary research using appropriate methods
Questionnaire
Name of company:
Designation:
1. Is your company incurring profits with trading locally in China?
Yes □
No □
2. What are the major issues which your firm is facing being the local operator of China?
Bureaucracy □
Governmental Challenges □
Consumer Preferences □
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Competition □
3. Do you agree that MNCs have a direct impact on the competition level in market of China?
Strongly disagree □
Disagree □
Neutral □
Agree □
Strongly agree □
4. How profitable do you consider your company’s operations being the local operator in
comparison to MNCs?
Highly profitable □
Somewhat profitable □
Not profitable □
5. What is the major internal challenge for your company?
Innovation capability □
Distribution problems □
Finding and retaining talent □
Corporate governance □
6. What is the major external challenge for your company?
Economy slowdown □
Rising labour cost □
Fierce competition from MNCs □
Corruption □
7. According to you, what should be the factors to gain success over MNCs?
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Price/quality ratio □
Developing a strong brand □
Effective distribution □
Use of promotional techniques □
8. What do you feel about the future perspective of your business in China against competition
given by MNCs?
More optimistic □
Less optimistic □
Uncertain □
No knowledge □
9. How can you improve your profits in China in presence of MNCs?
Providing additional benefits □
High customer satisfaction □
Charging low price □
10. Kindly recommend some strategies to reduce the negative impact of multinational companies
on operations of local firms in
China_________________________________________________
LITERATURE REVIEW
According to Wilson and Wilson, (2017) there are many issues which local organisations
operating in China are facing like that are leading these businesses to either come to an end or
having lots of difficulties to survive and remain in market. However, since few years, some
issues have been resolved but there are still many which are creating trouble for the local firms
like administrative licensing and product approvals, investment restrictions, finding qualified
workers, slow pace governmental policy reforms, etc. Thus, it can be said that there is a big
problem for the firms to have market access in the service industry like in legal, financial or
information sector (Top 10 challenges of doing business in China, 2016). Companies are not
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having the consumer awareness as well due to which they are unable to grab the opportunities
available and so, not earning level of profits that they should.
On the other hand, as per Kolk and Curran, (2017) another major issue which local
companies in China being the emerging market are facing is of competition. Chinese companies
have now started focusing on improving the quality of their products and services which they
have decided to sell in foreign markets which led firms operating there to face high competition.
In the words of Child and Lu, (2018) there is one more issue being faced by local companies of
China that is of governmental challenges as regulatory authorities of this nation are very strict
and all organisations doing business whether local or foreign have to comply with the rules and
regulations imposed by them and perform trade accordingly (China - Market Challenges, 2018).
Non-compliance of same may lead organisations to face severe consequences or actions taken by
government against them.
It can be critically analysed in the words of Walcott, (2017) that MNCs put a huge impact
on increasing the competition level in the market among firms in China. Multinational
corporations lead to bring direct FDI (foreign direct investment) in China which means that the
firms are directly investing in nations in order to increase their business by getting expanded.
Because of this reason, local and national governments have to compete with each other.
Muralidharan, Wei and Liu, (2017) says that MNCs increases the investment in nation and so,
government tries to attract them more so that transfer of resources can be done in the form of
economic injections with the help of foreign sources. It ultimately leads in rise in the competition
level in China where when local organisations compete against MNCs, many get failed.
However, there are always some which achieve success by improving their goods and services in
terms of efficiency and quality to better compete with MNCs (Di Nauta and et.al., 2018).
P4. Analysing the research findings and data
Thematic Analysis
Theme 1: Local companies in China are not incurring profits.
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Yes
No
0 5 10 15 20 25 30 35
No. of respondents
Interpretation
From the above graph, it can be said that according to maximum respondents, due to the
presence of MNCs in China, local companies operating there are unable to incur profit and thus
getting failed as they do not have funds to make any differentiation in their products. They are
not making profits as customers are purchasing the products and services of MNCs over their
which is ultimately generating losses for local companies.
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
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Interpretation
In can be articulated from the above figure that competition is the major issue being
generated due to the entrance of multinational corporations and China as with their direct
investment made in nation, domestic companies are required to compete with them to survive.
Government is continuously taking initiatives to welcome foreign companies as their investment
is generating profits for the economy. However, due to same, domestic organisations are facing
trouble.
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
Interpretation
The above figure shows that MNCs are directly leading to increase competition level as
with selling their products and services in China, customer base and profits of local companies
are getting affected and so, they need to make efforts to protect their position in the market. If
this competition will keep on increasing, chances of local firms to deal with same would become
impossible and they might get failed.
Theme 4: Company’s operations being the local operator are not profitable.
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