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8. China now sets the global benchmark for prices.

Over much of the business world, the term China price has since become inter-changeable with lowest price possible. The China price is part of the new conventional wisdom that companies can move nearly any kind of work to China and find huge savings. It holds that any job transferred there will be done cheaper, and possibly better.
It is plainly understood that asking suppliers to lower prices is merely another way of telling them they ought to be prepared to meet the best price out of China, even if they are making their products in Japan or Germany. General Motors, which buys more than $80 billion worth of parts a year, now has a clause in its supply contracts that gives its supplier 30 days to meet the best price the company can find worldwide or risk immediate termination.

In fact, in the U.S. between 1998 and 2004, prices fell in nearly every product category in which China was the top exporter. Personal computers, the most outstanding example, fell by 28%, televisions by nearly 12%, cameras and toys by around 8%, while other electronics, clothing of all sorts, shoes, and tableware also dropped in price.

9. China's 'Carrot & Stick policy' of insisting on transfer of technology to be in the market.

Companies that engage with China must expect pressure to transfer their technology, and thus create their own competition in the country. The Chinese use the carrot of their vast market to extract concessions from foreign firms that will help build China's industrial might. It is a policy worthy of grudging admiration. When viewed from the Chinese side, it has a long record of success.

Motorola virtually invented China's mobile-phone market. Its corporate archives show that the company knew that eventually the transfer of technology to China would sow formidable rivals. Nevertheless, Motorola decided its best strategy was to get into China early and to bring its best technology. The proof today is in the size and efficacy of the country's mobile communications network: Calls get through to phones in high-rises, subway cars and distant hamlets - connections that would stymie mobile phones in the U.S.

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* Contributed by -
Syam Krishna V. K. ,
B.Tech. (Prod. Engg.), Kerala University,
MBA 2007, DOMS, IIT Madras.