In the last three decades, MNCs have poured in huge numbers, however after the financial crisis, for many companies China provided salvation. At present it looks as though the gold rush may be over though. Some firms like GM and Apple made profits but for many other foreign companies, situation is getting difficult. This is partly because growth is deteriorating, and rising costs. It is difficult to find the young talent among workers as pay soars.
The Chinese government has restricted market access for certain sectors like foreign banks and brokerage houses. They have a great firewall to block internet access and firms, including Facebook and Twitter. This includes other hardware firms like Cisco, IBM and Qualcomm post-Snowden backlash. Starbucks has been accused by state media of price-gouging.
Competition is heating up and does not only include the MNCs, it also includes the local firms since they now have overseas experience, and moreover some are developing inventive products. World class smart phones are being developed by Xiaomi and Huawei, Consumers will not pay a premium price for a foreign brand. China is internet savvy and lack brand loyalty which makes them the most demanding customers (Demurger, 2000).
‘OneChina’ policy needs to be revisited as the taste varies from one region to another in China. Companies need to keep a close watch on standards and behaviour. The product development as well as marketing should be localised. Companies must make sure their executive’s behaviour as well as their safety standards are maintained as anywhere else in the world. The Chinese consumers are more socially active than those in the West, so news is instantly broadcast nationally. China is still a viable market however, with changes in policies; firms must boost their productivity, improve their governance and respond to the local taste so that they can continue to prosper.