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What no one at Motorola anticipated was how crowded the Chinese market would become. Nokia and Motorola now battle for market share in the Chinese handset business. German, Korean and Taiwanese makers figure strongly. And all these foreign brands are now facing intense competition from indigenous Chinese phone makers. More than 40% of the Chinese domestic handset market now belongs to local companies such as Ningbo Bird, Nanjing Panda Electronics, Haier, and TCL Mobile.
The domestic makers have become so strong that when Siemens found its mobile handset business in China wanting, it joined with Ningbo Bird to gain both low-cost manufacturing and a developed distribution channel. Yet Motorola can't exit the Chinese market. If it did, says Jim Gradoville, Motorola's vice president of Asia Pacific government relations, the Chinese companies that emerged would be the leanest and most aggressive in the world, and a company like his would have no idea what hit it. So Motorola stays. Already the largest foreign investor in China's electronics industry, Motorola plans to triple its stake there to more than $10 billion by 2006.

How is the China Price affecting the U.S.?

In the past decade, U.S. trade and investment with China has increased dramatically. Today, China has become the U.S.'s third-largest trading partner, following Canada and Mexico. Foreign direct investment in China by U.S. firms has increased from only $200 million in 1989 to more than $7.8 billion in 2000.

Contrary to once-high expectations that China's 1.2 billion population would provide an ever-expanding market for U.S. goods, by 2000 the value of goods imported to the U.S. from China exceeded the value of U.S. goods exported to China by a factor of more than 6:1 - resulting in a bilateral trade deficit of $84 billion.

Today, the trade deficit with China comprises almost 20% of the total U.S. trade deficit and is the largest trade deficit the U.S. has with any single nation. Since the enactment of Permanent Normal Trade Relations (PNTR) legislation with China, production shifts out of the U.S. and into China have escalated. China's emergence as the production factory for the world needs has resulted in lots of positives and negatives for the U.S. economy, these have been listed below: -

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