Comparative Advantages and Disadvantages

With china being a grocery of more than 1. 3 jillion people, competition for this newly emerging market Is rich. The following brands argon omitting In the Chinese market. 1. 3 topic comparative advantage The possibility of comparative advantage propagated by the classical economist David Richard proposes that a rural attractiveness to foreign investment is trammeld by its inherent rude(a) factors such as land, natural resources, labor, and the size of the local population.Michael Porters Diamond of National Advantage extends the theory to propose that a nation empennage piss new advanced factor endowments such as skilled labor, a strong technology and knowledge base, government support, and ultra. Kicker uses Porters model here to determine the national comparative advantage. 1. 3. 1 Factor conditions China can purpose quality products because of its comparatively crummy labor. China has become the location of woof for global manufacturing. This is usually attributed to its low wages.Chinese factory workers today earn 50 cents to $2 an hour and often work long shifts, getting minimum time off for weekends and holidays. Prosperity, 2005 Competitive Labor Chinas workers are not in force(p) inexpensive but literate, hard irking, already reasonably skilled and grand to be trained. There is also a sizable and growing cellular phone of university-educated technologists and professionals. For example, China is now graduating 330,000 engineers and scientists annually, as compared with 398,622 for the United States Prosperity, 2005.Abundant resources Apart from competent and cheap human resources, China also boasts of huge natural resources. every the knifelike materials required for producing Kicker are easily available in China at very competitive harms. 1. 3. 2 Demand Conditions The take on for car speech sound is increasing rapidly in China, as already noted in a previous chapter. The demand has outgrowthd steadily, however, not from Kickers c urrent objective lens market, which is the higher income earning group.The demand for Kicker products will stagnate if it does not lower its price to suit the needs of the upcoming middle class group. Growing market populations China offers a huge market population of 1. 3 billion people. As seen earlier, the middle class car purchasing group, which is Kickers new hind end group, is increasing phenomenally wing to national growth. 1. 3. 3 Related and musical accompaniment Industries Kicker sources most of its raw materials from China, who are suppliers of global standard raw materials.Kicker can benefit from the humanity of its support industries in China. 1. 3. 4 Firm Strategy, Structure, and competition Kicker is not a single player in the market. This is good because the existence of competition ensures that there is sufficient motivation for product innovation. It also indicates that the demand for foreign car audio exists in the market and has the potential to expand. All the factors together indicate that the time is ripe for Kicker to begin its operations in China. . 3. 5 Government attitude towards FED / foreign firms The biggest advantage for China is its open policies on foreign direct investments. China is attracting multinational companies by improving relevant policies to attract multinationals to invest in China Chinas intentness of Foreign Investment, n. D. . The efforts are paying off well, as indicated earlier, the phenomenal increase of over 142% in foreign direct investment from 1999 to 2003.