Localization of operation is a strategic choice made by multinational corporations in the face of economic globalization, but the overseas branches of multinational corporations are all local.
The decision-making of chemical operation is a complex process, which is influenced by many factors and can be summarized as follows:
1. The need for multinational companies to maintain monopoly advantage and flexibility in decision-making.
Under the trend of economic globalization, international competition is becoming increasingly fierce, especially multinational companies should maintain their core advantages and monopoly position of decision-making flexibility.
It is important because the continuous internalization of core technologies of multinational corporations will lead to the loss of decision-making flexibility of enterprises, which will lock a large number of human and financial resources in their non-core competitive advantages, thus leading to the decline of core competitive advantages of multinational corporations in the wave of globalization. Therefore, multinational companies use network management technology to localize production in non-core competitive advantage areas, make full use of the core competitive advantage of local enterprises, subcontract production to local enterprises through "contract manufacturing", and use all their resources in core competitive advantage areas, such as R&D or marketing, in order to maintain their monopoly position in core competitive advantage and maintain the flexibility of decision-making. Therefore, most of the "OEM" in developing countries comes from developed countries, and of course some "OEM" comes from newly industrialized countries, such as Singapore.
2. Specific investment motives and strategies of multinational corporations. The implementation of localization strategy of overseas branches of multinational corporations is also influenced by investment motives.
The influence of. A large number of facts have proved that the overseas branches of multinational corporations motivated by the host country's internal market have a higher degree of localization than the overseas branches of multinational corporations motivated by exports, and it is easier for host country enterprises to cooperate with multinational corporations motivated by the internal market, because such multinational corporations have relatively low requirements on the quality and technical standards of localized products, and the main purpose of this localization strategy of multinational corporations is to take advantage of the core competitive advantages of local enterprises familiar with local consumption preferences; However, the overseas branches of export-oriented multinational corporations have a low degree of localization, and have higher requirements on technical standards, product quality and production costs, especially the overseas branches as part of the international production system of multinational corporations. However, once this export-oriented overseas investment establishes a stable first-class supply relationship with local enterprises, local enterprises will immediately integrate into the global production system of multinational companies, establish production and supply bases facing the global market, rapidly improve production design capabilities, update production technologies, and.
3. The degree of technology monopoly and market sensitivity of transnational corporations. First of all, the localization strategy is influenced by the technological advantages of multinational companies. For standardized products produced by mature technology and non-proprietary technology, overseas branches of multinational companies tend to produce externally, that is, localize production and purchase nearby, so as to select enterprises from many suppliers that are conducive to minimizing their own costs and reduce the investment in non-monopoly technology production; However, multinational companies tend to internalize their leading technologies with monopoly advantages, and only choose limited host enterprises to maintain the supply of production materials. Secondly, the localization strategy is also influenced by the reaction degree of multinational companies to the market. Multinational companies that are sensitive to market price changes and wage differences have a low degree of localization, and are often enterprises with free site selection, and are generally unwilling to invest in technological upgrading of local suppliers; However, multinational companies that are sensitive to technological innovation and market product quality have a relatively high degree of localization, and they pay attention to the long-term and strategic investment.
4. Functions, establishment time, entry mode and scale of overseas branches of multinational corporations. The degree of independent power and the time of establishment of overseas branches of multinational corporations have great influence on localized operation. Generally speaking, overseas branches with greater independent power and longer establishment time have higher degree of localization and closer relationship with local enterprises. Secondly, the way overseas branches enter also affects the degree of localization. Under the same conditions, the localization degree of overseas branches of multinational companies entering the host country through mergers and acquisitions is obviously higher than that of "green land investment", which is more efficient; Thirdly, the scale of overseas branches of multinational companies also has an impact on the localization of operations. Larger overseas branches are more localized than smaller branches.
5. Industries and fields invested by transnational corporations. Different industries of multinational corporations have different degrees of localization, which can generally be divided into different industries.
Products in a specific production stage are highly localized in their management. Specifically, the localization of multinational corporations in the primary industry is limited, because the production process of this industry has strong continuity and indivisibility; However, the degree of localization of multinational corporations in the secondary industry is relatively high, and of course there are great differences in different departments. For example, food processing involves a lot of investment in intermediate products, and the backward linkage effect is great. The overseas branches of multinational companies have close ties with local enterprises and have a high degree of localization; However, the linkage effect between textile industry and local enterprises is relatively small, because the textile industry can produce different kinds and qualities of textiles only with different mixtures, and the degree of localization is relatively small; Multinational companies have different degrees of localization in the tertiary industry, such as retail, construction, hotels and other industries, because these industries are highly related to local land, natural resources, capital and human resources, and the degree of localization is relatively high, but the products of finance, trade, tourism and public services are basically inseparable and the degree of localization is relatively low.