Thursday, November 23, 2017
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The End of “Made in China”?

In the past decade, the world has been dictated by trends of globalization and technology. Travel across the Atlantic has been made easy through the proliferation of booking websites; access to information is now instant through the internet, and multinational companies now compete on a global stage for quality goods and services.

With systems and talents to cater to this trend, China and the U.S. have taken the stage as the two most powerful economies in the world. The two nations benefit from an interdependent supply chain with China as the backbone manufacturer for American – based multinational companies while the U.S. has served as the gateway of Chinese products to the world.

Today, their combined GDP stands at 37 million in GDP dollar (INT$). In the past five years, however, there has been a shift in roles as the demands of the global economy have shifted. Flexible government policies and the changing demographics are now leading Chinese firms today to enter the U.S market through mergers, acquisitions, or establishing businesses. According to a report by the Rhodium Group, China has provided 140,000 jobs through investments in the U.S. since 2009.

In 2008, many American companies suffered immense losses from the financial crisis. One of the companies that suffered was General Motors. Due to the 2008 financial crisis, it closed one of its largest SUV assembly plant in Ohio. Today, that plant is bringing back a projected 2,000 jobs through the $360 Million investment in Fuyao Glass America Inc. A Chinese-owned glass fabrication plant, Fuyao has been working with the local government of Ohio in search of everyone from production workers to employees with technical skills. Many applicants are those who were formerly employed at the General Motors plant.

In recent headlines, e-commerce giant Alibaba has also expressed interest in growing its wealth and breadth through investments in the U.S. Since its Initial Public Offering (IPO), Alibaba has taken the global stage with hundreds of millions of merchants and users using their platform to sell and buy goods. Earlier this year, founder Jack Ma met with President Donald Trump promising one million jobs by inviting U.S. businesses to become merchants on the online marketplace.

Ma shared that the growing wealth of Chinese citizens could help expand the market and wealth of American companies as it is helping Chinese companies who are already on the platform. This June, Ma attended the “Gateway 17” business summit and shared initial plans of partnering with Driscoll and other American food brands on its platform thereby switching the traditional roles of China and the US in being manufacturer and marketer.

Recognizing China’s shift toward foreign investments, other nations have taken initiatives to be a take part of the investment pie. Neighbor to the U.S. and continuously growing, Canada is now on the radar of citizens and businesses alike. Last year, Chinese nationals accounted for 33% of home sales across the country. Historically, business between the two nations revolved predominantly around oil.

Today, however, investors have expressed interest in both early-stage entrepreneurs and multinational companies alike. Toronto-based 500px received $13 Million from Chinese investors in the past year. Simultaneously, the government of Canada has also contributed to increased investment by opening their borders and strengthening diplomatic ties. A controversial bill to commemorate the Nanking Massacre on December 13 passed the second reading earlier this year.

Amidst the potential benefits of this bill to improving relations between Canada and China, local analysts have expressed concern over the impact of this initiative on Canadian relations with Japan. As China’s economy continues to grow, other nations such as Myanmar, South Africa, and Russia will soon join the U.S. and Canada in competing for Chinese foreign investment.