The Globalization Myth: The Case of China

Zusammenfassung

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Rugman (2000) and Rugman and Verbeke (2004) have described the present limits to globalization, as measured by the level of economic interdependence among nations, but with a distinct focus on the role of large multinational enterprises (MNEs) in the development of such interdependence. Even the largest MNEs in the world appear to pursue regional strategies, with a focus on their home triad region. The authors extend this prior work, by demonstrating that China should now be considered as an integral part of the Asian leg of the 'broad triad', with much inward foreign direct investment (FDI) coming from other Asian countries, and most outward FDI geared toward other Asian countries. They found that much inward FDI in China is Asia-based, primarily from Hong Kong, and that most of the Fortune Global 500 firms have only a limited presence in China.

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The Globalization Myth: The Case of China

Introduction

The 'globalization' concept has received much attention in international business literature, ever since Levitt's seminal article on global strategy in the early nineteen-eighties (Levitt 1983). The quest for globalization can be viewed as intrinsically linked to the nature of the capitalist system (Soros 1998). Globalization facilitates the economic development of the countries involved through increased cross-border flows of trade, investment, and financial capital (Economist 1997).

Research in economic geography suggests that as the pace of globalization increases and many economic activities become increasingly mobile, firms can disperse their production activities across locations, and become increasingly capable to supply more distant markets and customers. This mobility has allegedly paved the way for MNEs to pursue global expansion in both production and marketing (Krugman 1991a, 1991b, 1998, Krugman/Venables 1995). Lower transaction costs, resulting from more efficient supranational governance mechanisms, have also led to increased international trade and financial flows over the last two decades (Keohane/Milner 1996).

A number of international business researchers have argued that, due to economic liberalization, technological advances, and a decline in transportation costs, 'global integration' is ubiquitous and 'the borderless world' or the true global economy is now a reality. They therefore advocate a global strategy for MNEs as the appropriate response to this new environment (Julius 1990, Ohmae 1990, Govindarajan/Gupta 2001, Naisbitt 1994, Jeannet 2000, Yip 2002). Some authors ...

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