A STUDY OF HOW NATIONAL VARIATIONS EFFECT THE BUSINESS PRACTICES OF MULTI-NATIONAL COMPANIES IN CHINA.

Abstract

A sea change has occurred in China's perception of multinational corporations since the country's economy opened to FDI in the late 1970s and international brands like 3M, Coca-Cola, and Volkswagen began exploring the country's market. In the 1980s, the country warmly welcomed the arrival of new multinational firms (MNCs), such as NEC, Philips, and Motorola. They paid half the corporation tax rate that local enterprises were had to pay and were exempt from paying customs on capital goods they imported. Both the government and the general populace generally had great respect for them. Foreign firms remained the subjects of awe and admiration in China as the country and its citizens continued to learn more about multinational corporations (MNCs) even into the 1990s. During that period, there existed an almost constant preference among Chinese customers for products and services provided by MNCs. There is now a lot more of a focus on checking whether MNC activities are in line with national interests. Moreover, local treatment is being extended to international firms at an increasing rate. This claim is backed by the fact that on January 1, 2008, the rates for corporate taxes owed by local and foreign companies would be equalised. More and more, in areas like employment and environmental standards, international firms are held to the same, or even stricter, standards as their domestic competitors. Another thing they're finding out is that those standards are being applied with a little more rigour than before.