Philips Investments in China The Dutch consumer electronics, lighting, semiconductor, and medical equipment conglomerate
Koninklijke Philips NV has been operating factories in China since 1985, when the country frst
opened its markets to foreign investors. When Philips initially entered China, it had dreams of
Chinese consumers snapping up its products by the millions. However, the company soon found
out that the reason it liked Chinalow wage ratesalso meant that few Chinese workers could
afford to buy its products. So Philips hit on a new strategy: Keep the factories in China, but export
most of the goods to developed nations.
The initial attractions of China to Philips included low wage rates, an educated workforce, a robust
Chinese economy, a stable exchange rate that is linked to the U.S. dollar through a managed foat,
a rapidly expanding industrial base that includes many other Western and Chinese companies that
Philips uses as suppliers, and easier access to world markets given Chinas entry into the World
Trade Organization in 2001. By the early 2000s, Philips employed some 30,000 people in China
either directly or indirectly at joint ventures. Philips exported nearly two-thirds of the $7 billion in
products that its Chinese factories were producing. At this point, 25 percent of everything that
Philips made worldwide came from China.
As time passed, Philips started to give its Chinese factories a greater role in product development.
In the TV business, for example, basic development used to occur in the Netherlands but was
moved to Singapore in the early 1990s. In the early 2000s, Philips transferred TV development
work to a new R&D center in Suzhou near Shanghai. Similarly, basic product development work on
LCD screens for cell phones was shifted to Shanghai. In 2011, in a testament to just how
important China had become to Philips, the company moved the global headquarters of its
domestic appliances business from Amsterdam to Shanghai. By this point, China was far more
than just an export base. Demand in China had accelerated rapidly, and the country was now the
second-largest market for Philips.
Employees work at a Philips booth during a trade show in Shanghai, China. Source: © Weng leiImaginechina/AP
Some worry that Philips and companies pursuing a similar strategy might be overdoing it. Too
much dependence on China could be dangerous if political, economic, or other problems disrupt
production and the companys ability to supply global markets. Some observers believe that it
might be better if the manufacturing facilities of companies were more geographically diverse as
2 of 3 04/12/18
a hedge against problems in China. These fears have taken on added importance recently as labor
costs have accelerated in China due to labor shortages. According to estimates, labor costs have
been growing by 20 percent per year since the 2000s. On the other hand, there is a silver lining to
this cloud: Chinese consumption of many of the products that Philips makes there is now rising
rapidly. a) What are the benefits to Philips of shifting so much of its global production to China?b) What are the risks associated with a heavy concentration of manufacturing assets in China?c) What strategies might Philips adopt to maximize the benefits and mitigate the risks associated with moving so much product?
Why Work with Us
Top Quality and Well-Researched Papers
We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.
Professional and Experienced Academic Writers
We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.
Free Unlimited Revisions
If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.
Prompt Delivery and 100% Money-Back-Guarantee
All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.
Original & Confidential
We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.
24/7 Customer Support
Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.
No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.
Admission Essays & Business Writing Help
An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.
Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.
If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.