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By Ling Liu

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Additional resources for China's Industrial Policies and the Global Business Revolution The Case of the Domestic Appliance Industry (Routledgecurzon Studies on the Chinese Economy)

Sample text

For example, the German banks both directly invested in and heavily lent to the steel industry and from time to time put pressure on ‘undisciplined’ companies to maintain cartel arrangements. Worried that the weak profitability and low market value of Germany’s banks could make them vulnerable to foreign predators and so undermine national economic interests, the government advocated further consolidation in the banking sector. As Mr Schröder, the Chancellor of Germany, said at a conference, ‘My pressing appeal to commercial banks is that they should finally start consolidating.

Hence it is more difficult to discriminate in the way they treat them. At the firm level, the global big business revolution requires a reappraisal of the strategies pursued by firms in the developing countries to create and sustain competitive advantage in the face of intense competition from global giants. The crucial questions are: is there any possibility that they may ultimately catch up through intensive government support and become competitive players on the ‘global playing field’? In another scenario, if the global business revolution signals the end of government-led industrial policy to construct large, globally competitive firms, will it be possible for enterprises to grow merely by subcontracting high value-added production processes from TNCs?

With respect to foreign investment, China has become the largest FDI recipient among developing countries and is second only to the USA in the world. FDI has become a significant force in China’s economy and will undoubtedly continue to effect fundamental changes in the near future. Centralisation vs. decentralisation Decentralisation Provinces have been key political and administrative units in China for a long time. China’s provinces are large, in terms of both population and area. On average, each province measures 270,000 square kilometres and has a population of 50 million, the same as a medium-sized country.

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