Find a recent news article that discusses an economic or political event that poses a risk to US MNCs operating in that country. In your post summarize the event and give your recommendation on how the firm should respond. Be sure to include the link to your news article.
Coronavirus: China is the EU’s biggest trading partner
Although the Coronavirus pandemic had affected the world’s economy, how countries have dealt with the effects of the worldwide pandemic play a big role in where their economy stands today. The U.S. and China’s rivalry to become the biggest economy worldwide has been an ongoing battle for more than a decade, but the Coronavirus has actually led to the boost of China’s economy during their recovery stage of the pandemic.
The U.S., as seen by it’s own country and outside countries, has poorly handled both the pandemic itself, and the fiscal policies meant to aid it’s citizens. Unable to contain the spread of the virus, we are at almost half a million Coronavirus deaths, and at an unemployment rate of 6.3%. Also, due to disagreements over the stimulus packages for Americans, financial aid has either been delayed, or below the average in comparison to other countries. However, China was able to avoid such an economic recession, and has reach an economic growth rate of 2% in 2020.
Businesses in the U.S. have already set foot in China, paying for cheaper labor and cheaper raw materials for their goods in comparison to what they’d be paying in the U.S. or in any other foreign country. However, these MNC’s are now facing huge risks in being taken over by Chinese corporations who can produce a similar product or better alternative, faster and cheaper than US MNC’s. Would you rather buy a phone case made in the U.S. for $30-$50 (which is actually a relatively common price range) or a phone case from China for $2? The only downside right now is the shipping delays due to the Coronavirus, but if its prodcuts people don’t need right away, most people are willing to wait longer shipping times if the prices are immensely lower than American goods. With China’s new growth, and the stagnant growth expected of the U.S. economy, China will continue to dominate certain goods and threaten U.S. business conducted abroad, especially now that China has overtaken the US as the EU’s biggest trading partner.
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