In tour own words, how does the trade relationship between the United States and China effect...

In tour own words, how does the trade relationship between the United States and China effect United States Multinational firms?

Solutions

Expert Solution

There are different aspect need to be taken care for understanding the effect of US China relation on US MNCs which are as follows:

1. Exchange rate: Due to exchange rate there is disadvantage for US firm to produce goods in US becuase it is costly for them to sell it in the market.

2. Labor cost: Labour cost is far chaper in China which makes US compnay to get huge profit by manufacturing goods in China.

3. Market: Most of US firm has huge market in Asian nation thus it is easier for US firm to manufacture products in China which is nearer to its market.

4. Labour Law: In US there is strict labour law which is related to wages and working hours but that is not the cae with China market which increases the productivity factor for the US MNCs.

5 Labour market: In US there is shortage of bule collar workers which put pressure on the US MNCs to find right labor in US but that is not the case with China due to huge labour surplus. Thus US MNCs have to pay less for the per unit of work done in China in respect to US.

All this factor need to be taken care by the US MNCs before moving to US from China becuase it will imapct very adversly to US MNCs and they may lose the market share due to higher production cost by developing product in USA.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

The relationship between China and the United States is often in the news. To refresh your...

The relationship between China and the United States is often in the news. To refresh your memory, here are four facts about the Chinese economy: 1. China manages its exchange rate with the dollar. 2. China runs a trade surplus with the United States. 3. The Chinese central bank owns a large number of U.S. Treasury bills. 4. Individual Chinese residents are not free to invest their savings in foreign countries as they would like. Any movement away from a...

The relationship between China and the United States is often in the news. To refresh your...

Explain the trade relationship between US and China, and what are the effect on both sides...

Explain the trade relationship between US and China, and what are the effect on both sides and the world economy?

Consider the trade relations between the United States and China. Assume the leaders of the countries...

Consider the trade relations between the United States and China. Assume the leaders of the countries believe the payoffs to alternative trade policies are as follows. If both countries impose low tariffs, then both countries will gain $60 billion. If both countries impose high tariffs, then both countries will gain $40 billion. If one country imposes high tariffs, the country that has high imposed tariffs will gain $50 billion and the country that imposes low tariffs will receive $20 billion....

The relationship between the United States and China as market volatility threatens to make the bond...

The relationship between the United States and China as market volatility threatens to make the bond between the two nations that are already tricky thanks to the imbalance in trade and investment, even more, delicate.How would a stronger yuan affect U.S. companies? What benefits would a stronger yuan have for China?

The trade war between the United States and China might last for 2-4 years as the...

The trade war between the United States and China might last for 2-4 years as the world’s two largest economics have not found an efficient way to deal with their economic and trade problems, according to Douglas Paal. How do you think that all this would influence the economic and trade relations among China, ASEAN and Taiwan?

What are your thoughts on the ongoing trade talks between China and the United States? President...

What are your thoughts on the ongoing trade talks between China and the United States? President Trump has made it an important goal of his administration to try to level the playing for American producers. Without letting politics outweigh the economics, offer your thoughts on these trade negotiations. Most agree that an all out trade war would negatively impact both economies, at least in the short run. Is this a fight worth sacrificing for?

What are the major challenges in trade (and national security) between China and United States?; What...

What are the major challenges in trade (and national security) between China and United States?; What are the differences in political economy between US and China that created the above major challenges?; What should be the short term and long term approach in resolving the issue? write as much as possible thanks

Why should a person living in the United States be familiar with the trade relationship between...

Why should a person living in the United States be familiar with the trade relationship between the United States and Mexico or Guatemala and the fact that this relationship is experienced differentially on either side of the border? How might that understanding affect you as a consumer of goods and media in the U.S.? How might it lead you to question the symbolic violence that supports the structural violence?

Which trade theory do you think best explain trade flows between the United States and China?...

Which trade theory do you think best explain trade flows between the United States and China? Why? Do you think that China is pursuing an economic policy that can be characterized as neo-mercantilist?

Subjects