B.StrategicimplicationsofChina'sWTOentryforforeigninvestorsWhatistheimpactofthechangesintariffandnon-tariffbarriersonthecompetitivepositionandprofitabilityofforeigninvestorsinChina?Whichstrategicoptionsdoexisttocopewiththenewsituation?AndwhichnewchanceswillpossiblyemanateforlatecomersandnewcomersamongtheforeignfirmswhichhavenotyetbuiltasignificantpresenceintheChinesemarket?LetusfirsthavealookontothestrategicimplicationsforforeigncompanieswhicharealreadyactiveinChinaasmanufacturesorservicecompanies.Therearethreebasicrules:First:Basedonthelogicofcomparativeadvantages,itisclearthattheimpactoftheabolishmentoftradebarriersismoredramaticforthosebusinesseswhichhavealreadyreachedahighdegreeofglobalization,liketheautomotiveindustryortelecom.Andtheimpactnaturallycorrelateswiththedegreeofprotectionwhichtheindustryenjoysinthelocalmarket.Ontheoppositeside,businesseswhicharepredominantlylocalbycharacter(e.g.theconstructionindustryorcarmaintenance)aremuchlesseffected.ThesameappliestothoseindustrieswheretheChina-basedmanufacturersdonotenjoyprotectionfromimportedproducts(e.g.textileandapparel)andareworkingundercomparableconditionsastheirinternationalcompetitors.-1-AdjustmentpressureoncompaniesoperatinginChinaSecond:thepressureandtheimplicationswillbemorefeltinthoseindustrieswhereprotectionisnotonlystrongforend-productsbutaswellforthetotalvalueaddedchainandwherethesuppliershavebeenprotectedthroughlocalcontentrequirementsortariffandnon-tariffbarriersfrominternationalcompetition.Typicalexamplesaretheautomotiveindustryandsomeelectronicconsumerproducts.Astherequirementsoflocalcontentwilleventuallyberelaxedovertime,manufactureswillsystematicallyanalyzewhichcomponentsandmodulescanbepurchasedatalowerpriceoratbetterqualityfromoutsideRPC.Thisimpactwillbefelttomuchlessextentforagriculturalproductsandforrawmaterialsaswellasinthoseindustrieswherethehighestvalueincreaseoftheproductsisconcentratedonthelaststepofthevalueaddedchain(typicallylocalservicebusinesses).AdjustmentpressureonmanufacturersoperatinginChina-2-Third:ThosecompaniesandbusinesseswillbemosteffectedbyChina'saccessiontotheWTOwhichrelyheavilyonsales,marketing,andbranding,namelybecauseChinahasofferedintheWTOagreementstoabolishtherestrictionsforforeignfirmsintheretailanddistributionandmaintenancesectoronarelativelyshorttermperspective.Thiswillmakeitpossibleforforeigninvestorsnotonlytotaketheirowndistributionandsalesnetworkundercontrol(uptonowonlyChinesejointventuresareallowedtoengageinsalesanddistribution)anditwillopenachancefornewcomerstoentertheChineseretailandserviceindustry.LookingontotheimplicationsofChina'saccessiontotheWTOonthelevelofindividualindustries,weexpectthemostdramaticalimpactintheautomotiveindustry,followedbymanufacturingofelectricalandelectronichouseholdappliances,durableconsumergoodsandpharmaceuticalsaswellasmachinery,theretailsector,telecomandfinancialservices.Muchlessdramatictheimpactwillbeonsteelmanufacturing,themetalindustry,theconstructionindustryandonthegenerationanddistributionofutilitiesortheexploitationofrawmaterials.AthirdgroupofindustrieswillpossiblyprofitfromChina'sWTO-Access,astheycompetealreadytodaysuccessfullyontheinternationalmarketswiththeirproducts,e.g.:-3-TheapparelindustryThefurnitureandwoodindustryTheleatherandshoeindustryandBasiccommodityproductsThefollowingtablegivesyouanoverviewonthedegreeo...
