For the past 30 years, deciding where to build a new factory is not difficult for many multinational corporation. Because China is undoubtedly the most sensible choice, where there is sufficient supply of “cheap labor”, low exchange rate, and the government also provide some benefits laws to attract foreign companies.
With the increasing of economic globalization, that’s starting to change. Multiple risks cause of multinational corporation began to seriously consider the question about “Build a new factory in China”. The risks are as follows:
Labor costs is rising: “cheaper labor” is the main reason that why China became the first choice for multinational corporation. When the labor costs increasing, the costs of overseas construction is …show more content…
As a result, Esquel invested in garment factories in Malaysia, Singapore,Vietnam. (Case P3) In other words, at this time Esquel’s overseas manufacturing sites(Malaysia,Vietnam...) just producing the shirts. In 1995, Margie took over as chairman after her father retired, Margie knew that the company should not compete on price but rather deliver value-added products. The one major decisions that she as a chairman committed Esquel to an investment and ultimately ownership of cotton farms in western China to ensure a stable supply of the best-quality cotton.(Case P6). So the basic difference about its factory investments in China with its factory investments in other countries is factory investments in China has extra investments for cotton …show more content…
So, Esquel may according to the sales reports (previous year), list the lowest sales of products and have a discussion about “The company really need manufactured these products next year? ”
Focus on product innovation. Competition is not only from the inside of industry but also from the customers. So, Esquel need produce new versions of their product to attract potential customer base.
Milton Friedman against spending shareholder 's money for anything that does not directly contribute to increasing shareholder wealth.(Web,2016) For Esquel’s non-business activities, i don’t think is an activities that does not directly contribute to increasing shareholder wealth. “Green” is become Esquel’s core competence. With the improvement of our society, more and more people start realizing the responsibility of protection of environment. So “Sustainable Development” will set up a positive corporate image and will attract more customers/companies.(For example, X brand deciding use the Esquel’s product because using “sustainable development” product will also increase X brand image, become
With the increasing of economic globalization, that’s starting to change. Multiple risks cause of multinational corporation began to seriously consider the question about “Build a new factory in China”. The risks are as follows:
Labor costs is rising: “cheaper labor” is the main reason that why China became the first choice for multinational corporation. When the labor costs increasing, the costs of overseas construction is …show more content…
As a result, Esquel invested in garment factories in Malaysia, Singapore,Vietnam. (Case P3) In other words, at this time Esquel’s overseas manufacturing sites(Malaysia,Vietnam...) just producing the shirts. In 1995, Margie took over as chairman after her father retired, Margie knew that the company should not compete on price but rather deliver value-added products. The one major decisions that she as a chairman committed Esquel to an investment and ultimately ownership of cotton farms in western China to ensure a stable supply of the best-quality cotton.(Case P6). So the basic difference about its factory investments in China with its factory investments in other countries is factory investments in China has extra investments for cotton …show more content…
So, Esquel may according to the sales reports (previous year), list the lowest sales of products and have a discussion about “The company really need manufactured these products next year? ”
Focus on product innovation. Competition is not only from the inside of industry but also from the customers. So, Esquel need produce new versions of their product to attract potential customer base.
Milton Friedman against spending shareholder 's money for anything that does not directly contribute to increasing shareholder wealth.(Web,2016) For Esquel’s non-business activities, i don’t think is an activities that does not directly contribute to increasing shareholder wealth. “Green” is become Esquel’s core competence. With the improvement of our society, more and more people start realizing the responsibility of protection of environment. So “Sustainable Development” will set up a positive corporate image and will attract more customers/companies.(For example, X brand deciding use the Esquel’s product because using “sustainable development” product will also increase X brand image, become