Contesting globalization in the rise of nationalism the case of us china trade conflict

ABSTRACT This case study examines globalization in the rise of nationalism via the scope of the events in the US-China trade war that started in 2017, yet the prediction of possible conf

VIETNAM NATIONAL UNIVERSITY, HANOI

UNIVERSITY OF LANGUAGES AND INTERNATIONAL STUDIES

FACULTY OF ENGLISH LANGUAGE TEACHER EDUCATION

FACULTY OF LINGUISTICS & CULTURES OF ENGLISH SPEAKING COUNTRIES

THE CASE OF US-CHINA TRADE CONFLICT

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE DEGREE OF BACHELOR OF ARTS

Supervisor: Đặng Ngọc Sinh, PhD

Course of Study: QH.2016 Student ID: 16040160

Ha Noi, 2020.

ĐẠI HỌC QUỐC GIA HÀ NỘI

TRƯỜNG ĐẠI HỌC NGOẠI NGỮ KHOA NGÔN NGỮ VÀ VĂN HOÁ CÁC NƯỚC NÓI TIẾNG ANH

KHOA SƯ PHẠM TIẾNG ANH

TRẦN CÔNG HOÀN

KHOÁ LUẬN TỐT NGHIỆP

TOÀN CẦU HOÁ TRONG BỐI CẢNH CHỦ NGHĨA DÂN TỘC ĐANG LÊN:

CÂU CHUYỆN CHIẾN TRANH THƯƠNG MẠI

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I hereby state that I: Trần Công Hoàn, QH2016.F1.E32, being a candidate for the degree of Bachelor of Arts, accept the requirements of the College relating to the retention and use of Bachelor’s Graduation Paper deposited in the library

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SUPERVISOR’S APPROVAL

DEDICATION

For my Father, who always believes that education can change this world

ACKNOWLEDGEMENTS

This thesis would have never existed without the amazing lectures in the Division of Country Studies, giving me the best support and encouragements for what I love and what I have trying to do

To my supervisor, Mr Đặng Ngọc Sinh, PhD for his priceless ideas and stop guidance

non-To the Head of Division, Ms Phùng Hà Thanh, PhD for her inspiration and countless cares for me and all her students

To my dearest friends in class 16E32 for your kindness and trust

And to my family, where I am never abandoned

ABSTRACT

This case study examines globalization in the rise of nationalism via the scope of the events in the US-China trade war that started in 2017, yet the prediction of possible conflicts between those two nations might root from much earlier, due to a long-lasting history of economic cooperation and trade engagement between two countries The trade war has inflamed different impacts on the society and the world economy, even political or economic development pathways of any nations that are related may suffer as their participations in the world economic platform However, one of the public’s leading questions is how two superpowers have gone globalized or nationalist,

to rebound upon each stage as the trade war’s escalation

This thesis includes perceptions, understandings and explanations from the chosen events to be analyzed, namely the tariffs and the following changes

of the global supply chain

The study then concludes that globalization is changing, not ending The previous approaches to globalization and nationalism need to be reviewed in several ways The trade war itself has not ended, so the research around it still remains huge to be done to broaden understandings of international relations This experience to globalization and nationalism can partly contribute to the debate of the dominating movement is either globalization or nationalism

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 1

Background of the Study 1

Research Problems and Questions 3

Methodology 3

Potential Significance 4

Overview of the Chapters 5

CHAPTER 2: GLOBALIZATION, NATIONALISM AND GLOBALIZATION IN NATIONALISM 6

What is globalization? 6

What is nationalism? 8

O’Sullivan’s theory: The end of globalization 10

CHAPTER 3: THE TRADE WAR IN A GLOBALIZED WORLD 12

China in the Force of globalization 13

Huawei and “Made in China 2025” 13

Apple, Costco and Tesla in China: The globalized policies of China 20

“The Tariff Man” and America First 26

Chapter 3 – Summary 33

CHAPTER 4: GLOBALIZATION IS CHANGING 34

US-Japan Trade Conflict Throw-back 35

New Coronavirus pandemic (2020) and the future of globalization 40

Chapter 4 – Review 42

CHAPTER 5: CONCLUSION 44

REFERENCE 46

LIST OF FIGURES

Figure 1 Costco opens its first store in Shanghai with fully crowded shoppers (He & Wang, 2019) 22Figure 2 Tesla's Giga Shanghai assembly line (Lambert, 2020) 24Figure 3 Tesla Chief Executive Elon Musk in the opening of Giga Shanghai on Jan 7th, 2020 (Whalen, 2020) 25Figure 4 Peak Pegasus loaded with 70.000 tons of soybean on board (Reuters, 2018) 28Figure 5 Annual US Trade Deficit with China (US Census Bureau) 30Figure 6 Chinese people trying to buy pork in a local supermarket (The Straits Times, 2020) 31Figure 7 US Agricultural Exports to China (USDA, 2018), as cited in Jones (2019) 32Figure 8 Japan's Economic Growth Rates (1956-2018) 36Figure 9 Japan's market shares of semiconductor 37Figure 10 Currency movements between USD and RMB (Lee Y N., 2020) 37Figure 11 USA and China GDP - PPP net (current international USD) (The World Bank, 2020) 39Figure 12 Wuhan lightshow on the reopening day (Zhong & Wang, 2020) 40Figure 13 Total active cases with Coronavirus in the US (from Worldometer) 41

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CHAPTER 1: INTRODUCTION

This chapter would like to provide fundamental materials about how the China trade war occurred, to locate the basis on globalization in the rise of nationalism and to introduce the research problems and questions, mode of inquiry and my theoretical perspectives, along with providing an overview of the research

US-Background of the Study

This research demonstrates my analysis of globalization presenting in the trade war in the rise of nationalism It is burdensome to conclude that globalization has disappeared in this time, because countries are currently cooperating, via both bilateral trading and multilateral trade agreements, such as North America Free Trade Agreement (NAFTA) and the recent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Apart from that, nationalism is witnessed in the case whenever nations have to face threats in their development, when nations prioritize their identities as independent nation-states to protect their countries from unwanted factors brought by globalization, mostly unstoppable trade deficit Accordingly, the trade conflicts between two superpowers have raised immeasurable awareness of the world’s modern politics and orders In addition, the US-China trade war could be considered the key event that could change the world order In that case, there is no absolutely secured solution to the problem when there is no absolute power,

or an observable bipolar context, when the globe seems to move into the time of multilateralism (Friedberg, 2005) To prove this, Stiglitz (2017) wrote:

“We have created a system of global governance without global government These institutions can help the world maintain an open yet regulated trading and financial system, even if the US withdraws into its shell, or decides to take actions which violate its obligations.” (p.444)

Apparently, maintaining national interests in the conflicts is the first concern of

any nations However, the process of globalization can be stated as the spread of

global sourcing and sub-contracting (Arndt, 1997), bringing interdependence among

nations when they cooperate, or when the multi-national companies (MNCs) do international investments The World Trade Organization (WTO) has been formed to

be a patron saint of international free trade, and has pursued common rules for nations

to initiate separated regulations (Vogel & Kagan, 2002); however, the promising future of the WTO can only be functioned under the theory of globalizationism, according to which the major of nations agree to prioritize global cooperation and apply for a uniform mechanism of development, demanding for the undeniable roles of international organization and their effectiveness in operation

However, the previous order has not been long-lasting, and the world seemed

to have changed enormously The Presidential Election of the US in 2016 ended with

withdrawal of the USA from international cooperation commitments launched by the predecessor government of President Barack Obama With the notorious slogan “Make America Great Again”, President Trump is considered to have challenged the basis of globalization by putting tariffs on China’s products exported to the US In reverse, Chinese government, led by President Xi Jinping, also imposed tariffs on US products and limited the investment of US companies in China mainland Besides, Trump also put strong tariffs on American allies such as European Union, Canada and Australia, and threatened to exit from the WTO, explaining that globalization and free trade did harm the US citizens and economy

It is clear that President Trump is pursuing nationalism and he is even criticizing globalization for the recession of US manufacturing industry, but the fact that the trade war can truly doom globalization is still inconclusive (Rudd, 2015) Trump’s pursuit of nationalism and his criticism of globalization exemplified the viewpoint that recognizes nationalism and globalization as two reversed ways of development In a different wording, nationalism results in anti-globalization, and globalization denounces nationalism With regard to this question, O'Sullivan (2019) proposed that globalization has come to its final, which means the world will move into a different stage of development, with multipolarity as the dominant ideology, represented by three great development polars: America, European Union and China-centric Asia Accordingly, nationalism, then, will focus on the participation of nations

in distinct groups, but there is no available free choices, so the nations are separated geo-politically

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O'Sullivan (2019) stressed the extinction of globalization as the rise of that new

type of nationalism in his new publication, The Levelling: What's next after

Globalization O’Sullivan’s ideas did light up my curiosity to investigate globalization

presented in the US-China trade war I began to find some more ideas from global think tanks, then read about how globalization is tailored, threatened and handled to bargain in the world’s politics and economy

Research Problems and Questions

I would like to contest the presence of globalization in this rise of nationalism with the theories of O’Sullivan (2019) Regarding the scope of analysis, it is important

to note that this research cannot represent worldwide process of globalization I will analyze the case of the US-China trade war to specifically answer the following questions:

- What are the factors and events during the US-China trade conflict proving whether globalization is going to end or keeps going on?

- How is globalization changing, in response to the rise of nationalism, in the case of US-China trade conflict?

Methodology

A qualitative research approach can accommodate the purposes of this thesis It allows detailed description of circumstances in which globalization is contested by nationalist policymakers and practices The research also facilitates the persistent mission of understanding the impact of the trade war in representing and changing globalization in this era

This qualitative research attempts to analyze the development of globalization during the trade conflicts between the US and China The potential of global cooperation, as a result of globalization, is evaluated through observing the economic footsteps of leaders of two nations

The contesting of globalization in times of nationalism can be presented in this research, by reflecting on the ideas of the final end of globalization by O’Sullivan (2019) In his book and some recent interviews, there are different understandings

about globalization paradigm in the context of raising nationalism Those opinions are either to contest the presence of globalization, or to prove the continuance of discourse

of globalization

To the end, the research is not to express why and how the trade war and the trade agreements have been organized and negotiated, but to draw attention to the process of drafting and building national discourses over globalization and nationalism,

by the counterarguments and explanations, in order to explain if globalization is severely threatened in the trade war Moreover, the distribution of power and the realization of nationalism in both nations, can also be a promising issue to be resolved

This research would not fall in simple tweets and quotes analysis, but to analyze the process of creating discourse of globalization to optimize national benefits

The framework for this thesis is based on a case study, as it is an important political and economic event that can strongly affect both the participants and even more and more nations having trade relations with two economic superpowers Moreover, this study used content analysis to explore figures from sources that are considered suitable for an undergraduate thesis The study calls on literature review and data collected from a variety of carefully examined sources

Potential Significance

This thesis aims at contributing to the discussion of globalization in the rise of nationalism, or how globalization is processing that can affect the world economy and development Moreover, it may possess some potential significance for the understanding of globalization, one of which could be globalization contain with

“nationalist acts”, representing even in the rise of nationalism, but in a paralel movement In this regard, this thesis helps presenting a new theoretical pathway for dealing with globalization effects, in terms of typical segregation of globalization in the rise of nationalism Besides, analyzing globalization in this case study is also to predict the trend of the world economy from inside the trade war, or how it is proceeding

This study also tries to contribute to an understanding of globalization in a specific case: the trade war between the US and China, the event that can lead to

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massive changes in the world economy, policies, or even attitude towards globalization

Overview of the Chapters

After the Introduction in Chapter 1, Chapter 2 will shorly introduce the groundwork and method of understanding to globalization and nationalism This is the basic understandings I used in this thesis

In Chapter 3, I analyzed the China and US approaches to the Trade War, showing their pathways in globalization in the rise of nationalism

In the next chapter, Chapter 4, the event of the US-Japan trade conflicts will be compared with the US-China trade war and will explain the situation that the world basic norms are overthrown

The last chapter concludes my understandings throughout the thesis and discusses the limitations of the study

CHAPTER 2: GLOBALIZATION, NATIONALISM AND GLOBALIZATION IN

NATIONALISM

Globalization is generally interpreted as a process, while nationalism can be embedded as a discourse (Kahler, 2009) Moreover, Liu & Woo (2018) addressed globalization and nationalism as two reverse but parallel processes and mentioned the theory of equilibrium of either more global or more national reactions of states towards diplomatic and political issues The difference between globalization and nationalism can be regarded from their word formation, with the distinction in their suffixes Much as it can be noticed, globalization is not the antonym of nationalism that can be the reason to understand the key features of these two terms This thesis prioritizes the discrepancy between them as the entrance to explain and interpret the practice of two nations in the trade war

However, it is a common understanding that globalization is the way the world blends in, and nationalism is when the world separates This could not offer correct insights of how people may think and do, as it would be the huge misleading into the basic morphological explanation I do not assume, at the beginning stage, globalization and nationalism in their confrontation The two terms should not be built and appear as

a current stereotype about a non-existing definition Nationalism should be the setting

or the primary background for globalization, because it forms the basis of nationhood and encourage the focus on inner-state issues This is the reason why the title of this thesis implies globalization in the rise of nationalism

This chapter lays the basic groundwork for the thesis by reflecting the description of globalization and nationalism, together with the explanation of O’Sullivan (2019) about the end of globalization The understandings below are vital

to implement what this thesis is trying to focus on, as this research is not able to draw attention to all theories and explanations The main point currently is to demonstrate globalization as something not totally refusing nationalism

What is globalization?

Globalization always includes the context that people use to define it There are

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number of ideas and interpretations of globalization However, globalization can be understood broadly as something covering mostly economic relations, then technology, political models and socio-cultural exchange This research will put the scope on the effects of globalization in economy

Globalization evokes, in some ways, a process that happens in the world economy, by “aiming and controlling” markets It helps with the supply of product, then ultimately with developing markets, from regional to global ones (Arndt, 1997), because cooperation prompts nations to decide to be involved or not That may lead to several changes in the willing-to-join nations, if they want to be included It appears that being included is a globalized action, because policymakers need to adjust their nations’ development pathways to fit in a new lawsuit In reverse, a refusal can be considered “not globalized”, because that nation chooses to stand out of a group of nations, whose the first and foremost reason is to protect domestic manufactory Donald Trump’s “walk-out” of Trans-Pacific Partnerships (Taylor, 2018), to protect American manufacturers and to promote US-made products can be a good example of prioritizing national benefits of the US government

One of the biggest and most debatable questions, even before US-China trade war, tends to be whether globalization is apparently unstoppable or if it has its own ups and downs (Pryke, 2012) Held & McGrew (2003) introduced a notable theory of a debate between “globalists” and “skeptics”, having tried to describe a backlash of globalization in the eyes of “skeptics” Apparently, the process of globalization can be affected differently under the prism of viewers, and it is equally important to investigate globalization with economic (or economic globalization), political and socio-cultural viewpoints (Held & McGrew, 2003) Meanwhile, globalists argue that globalization is the central force to shape the world order, in which MNCs help change

positively facilitated by globalization Moreover, globalists may support the idea that globalization can challenge inner-state economic options, because developing countries may be the passive factor in approaching to globalization, by depending on

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New developing countries include Brazil, Russia, Indian, China and South Africa

the manufacturing process and technology, so the governments are supposed to be more flexible in navigating their nations to face globalized impacts

Alternatively, looking at how globalization can affect the world order and the way people live is much easier than answering the question whether there are any currents that make the nations gradually refuse to be more globalized It brings industrialization, liberalism and mercantilism to developing countries explained by the example of China, an industrialized nation with huge economic relations to most of the countries in this world China has enjoyed great trade surplus with the USA and a lot

of its other partners, but it remains closed to several international companies to protect national sovereignty

During the debate of “globalized” and “not globalized”, there is an idea proving that globalization in a narrow understanding is westernization or more civilization, and globalization will continue in a way with no more westernization (Jacques, 2009) Consequently, westernization cannot be understood as globalization anymore, so globalization should make a comeback to the root of it Globalization needs to be more adaptive to the new world order, and it should not be the process of Western-centric and industrialized westernization (Jacques, 2011) The theory of Jacques (2009 & 2011) is an important keynote for crafting the ideas for the argument of this thesis

What is nationalism?

Writings about nationalism can be located in various sources, created by

academic conversations by many authors However, the word nationalism can be

understood differently in each nation For example, in Vietnam, nationalism can be understood as an ideology attached with patriotism, national independence, and the nationhood and the unity of people (Vu, 1996) On the other hand, Pryke (2012) mentioned nationalism by refering to economic and historic changes, mostly as

globalization, and he even named it economic nationalism In this thesis, nationalism

is more likely to be understood as Pryke’s (2012) economic nationalism

The essential goodness of free trade has been praised as globalizing the world economy, yet nationalism is pursuing militarism, imperialism and economic

Wolf (2004) also pointed out that nationalism can be interpreted as a part of capitalism, in which national identity is more appreciated than globalization, because nationalism in the aforementioned understandings, is not only about domestic manufactory and politics, but also about the national, or civilian identity that is presented globally to tribute to motherlands and the pre-existing values (Pryke, 2012) For example, back in Meiji’s Restoration in Japan (1868), the reason for developing countries through industrialization, along with developing Japan, is to compete and to come abreast with foreign competitors (mostly Western countries) and to create the national belief of a developed and powerful country Consequently, nationalism can be the motivation for globalization through westernization and industrialization In this case, economic nationalism cannot be separated from globalization, but they are manipulated paralelly by the governments in order to pursue national goals In another wording, nationalism can be achieved by adapting globalizing strategies for economic development

Notwithstanding, nationalism seems to be specifically favorable in China Moreover, it is even leveled as a basic hypothesis of the society, Chinese nationalism, calling for international alerts of respecting the national dignity of China (Babones, 2019) The process of shaping Chinese nationalism in China essential to make people think more carefully about the difference between itself and traditional economic nationalism, in order to take a new scope on the arguments about the trade conflict Babones (2019) mentioned the historic march of Chinese students in Tiananmen Square in 1919 against imperialist nations (especially Japan and Chinese pro-Japanese politicians), and they, Western-educated students, believed that nation-states were the way of the future

O’Sullivan’s theory: The end of globalization

Recently, O’Sullivan (2019) has declared his new theories about the death of

globalization in his book The Levelling: What’s next after Globalization, instituting a

new aspect of post-globalization, accordingly In short, he mentioned the fall of globalization is the direct consequence from the raise of nationalism, and the world may move into the stage of multipolarity, shaping the new world order by three areas

of development: America, European Union and centric-China The nations tend to focus less on international issues and pay more attention to inner-state and inner-region problems

O’Sullivan (2019) focused on the market, especially financial market, to make his prediction about the world’s movement towards a non-Globalizational world It is important for a nation to have good and fair finance, but the demand for developing infrastructure or welfare (or public goods) is also essential Fortunately, globalization makes pricing less stressful for any nations, governments or firms to solve the problem

of price (Bown & McCulloch, 2009), by selling bonds or taking loans from international sources However, this is the factor that can mark an end for globalization, because a more financialized market can be based on the imbalance of money flow

We may witness no visible issues when the economic growth is stable, but can be a huge constrain when the economy is slowing down (O'Sullivan, 2019)

The second reason for the past of globalization is the unequal distribution of global economy, from income to manufactory and supply chains It is witnessed that the world economy or even human beings always have problems with their operating process, by making income gaps and development gaps More and more factories are built in China and several better-developing countries, rather than fairly distributed to any nations showing their warm welcome towards investors Apparently, the dominant multinationals (MNCs) prioritize serving their investing menus by several countries that are more profitable by their geographical benefits For example, textile factories are more likely to be located in nations around China and India, if they have to be outside the two powerhouses of world textile, because those factories can take advantage of the materials from their huge neighbors

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O’Sullivan’s (2019) theory is worth examining in this research, because his analysis covers the development process of globalization and his prediction about a non-globalized world However, I would like to address my viewpoint for the argument that globalization cannot end yet and to compare how the world has been doing after one year of his book publication

CHAPTER 3: THE TRADE WAR IN A GLOBALIZED WORLD

US and China seem, or at least seemed, to be in a huge boat together When the

US is a huge consumer, China, in reverse, is a nation of manufacturing According to the US President’s Trade Representative (2018), China is the leading exporter to the

US, equaling to $539.5 billion US goods trade deficit to China totaled $419.2 billion

accounted for no more than 7.2% in total US exports

On the positive side of globalization, it is presented that there was a boom in globalizing economic process between two superpowers In fact, globalization helps turning the US into an importer and China into an exporter, or even a superpower, by

Furthermore, China is even predicted to outweigh the US in terms of PPP in 2020, and India’s economy is to exceed US in 2030, due to the rise of India as a promising manufacturer (Jonhson, 2019)

Apparently, something is wrong When nations enter globalization, they hope for free trade and common benefits, but in this case, there are nations taking possibly more profits than others do, totally separated from the basic framework of globalization In common consideration, economic globalization can be understood as

a process that helps nations to improve their economies together by free and fair trade, and let consumers to enjoy better priced products Given that context, China is supposed to become an important division of global supply chain However, it has become the central manufacturer of the world, after settling the goal of the nation having the ability to produce everything and produce for the entire world The USA, or any other nation, now has (or has to) inactively turned into a consummative country, while the US companies in service area access to China to make profits from Chinese new middle class (Zarroli, 2019)

In this chapter, I am trying to analyze how concrete the world market and supply chains are, marking the continuous collaborations among nations in the future,

as a part of globalization Moreover, the way that two superpowers’ governments deal with the economy is also descriptively portrayed

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China in the Force of globalization

The previous chapter implied the navigation of globalization that can lead to necessary cooperation, with good-will aims for partnerships I have also described O’Sullivan’s (2019) idea of globalization as the basis of an old-fashioned interconnected world Globalization consistently evokes an everlasting debate on its advantages and disadvantages The trade war erupts in the meantime to extend the question of the necessity of globalization, the rise of nationalism and the tension between economic growth and national independence (or in fact national independence

of economy) In Trump’s presidency, that the US President condemned China for the negative influence to the US economy, is the main phenomenon having activated the conflicts However, at short notice, the nationalist acts were also conducted by Chinese

There are various examples and cases during the trade war, most of which have not come to the finale I hereby chose the noticeable incidents that relate to both countries, to analyze how the trade war affects their economies About China, I chose Huawei to investigate how the Chinese government supports domestic brands and how the US government prevents the Chinese giant Besides, I want to look at several famous American brands doing business in China to figure out the differences in how domestic and foreign companies are treated in China About the US, the “tariff attack” starting by President Trump is mentioned to measure how American companies suffer

or benefit during the trade war Furthermore, I want to justify the continuance of globalization and the interdependence of two nations during the trade war

Huawei and “Made in China 2025”

“Building a fully connected, intelligent world” is the motto of Huawei Branch

located in the USA Founded in 1987, by a former Chinese People’s Army officer Ren Zhengfei, rising from a small manufacturing company in Shenzhen, Guangdong Province, Southern of China, Huawei has become a leading provider of technology infrastructure and smart devices in more than 170 countries, with more than 180000

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This word refers to the prevention of Trump’s government against Huawei, when there was a ban declared and then an extension to not execute the ban

employees and USD 103 billion in sales3 The company ranks at the top of smart device manufacturers in China mainland, and the second largest phone making firms

in the world, led by Samsung with its significant market share (Smith, 2019) It is also the world largest supplier of telecommunication devices, the value of which is even twice as big as the following company’s value (USD 92.55 billion of Huawei vs USD

48 billion of Cisco Systems) (Rauhala, 2018) With the advance in 5G technology, Huawei should have enjoyed the bright future of development However, the sunny days for the Chinese technology giants do not seem to last so long, as soon as the US government implies restrictions on the business During Trump’s Presidency, Huawei has been pushed harder and harder to the edge of difficulties for which they may have never prepared As an example, ZTE, a Chinese tech giant, a top-of-the-world telecommunication device maker and a 5G technology developer, has been banned from cooperation with US technology companies and production of mobile devices using American accessories, leading it to the verge of collapse At first glance, Huawei tends to follow the path of ZTE to their gloomy days However, the story of Huawei can be distancing, and the policies that Trump has used to deal with the two companies are totally different

Huawei, ZTE and numerous other Chinese companies have enjoyed a booming age of development, thanks to globalization, when China came to the world by the economic reform in 1976 The globe has witnessed the amazing rise of China According to the World Bank (2020), the nation’s surprising annual GDP growth, most of the time, has doubled that of the USA since 1978

Globalization helps China to open to the world Becoming the nest for foreign companies and the manufacturer of any product for the whole world is exactly what China has done to globalize Previously, Western countries developed themselves by manufacturing and industrialization (Mor, 2018) Accordingly, China has followed the pathway of being a supplier and has been doing well up to now However, the distinction of Chinese management is how the government deals with any MNCs in need of nesting in the country Chinese government requires any manufacturers, with the desire to set up their new production line in China, to cooperate with a native firm

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Retrieved from Huawei Technologies USA on April 1st, 2020 at

https://www.huawei.com/us/about-15

and to do technology transfer4 to their local partners (Frankenfield, 2019) Basically, companies reserve the rights to decide their business scopes, but their limited choices are carefully legalized by the authority, from a Wholly Foreign Owned Entity (WFOE)

to a Joint Venture (JV), according to the percentage of capital held by Chinese domestic companies and foreign partners respectively This is no longer the way to allow Chinese companies to work as “copy-cats”, but the way for foreign companies to receive authorized protection from Chinese government and to truly and officially get access to China mainland, a dream place for their planning factories and a dream market, with more than 1.4 billion of workers and consumers, and especially an advanced logistic system that can never be found in India or South East Asian countries (Rapoza, 2019) However, this does not guarantee the issues about IPs5 are totally cleared, due to various reasons such as miscommunication among partners, unconventional management styles and cross-cultural differences (Kaufmann, 2017) This has yet affected the desire of MNCs to China, because the possibilities of IPs issues are thought to be forestalled by carefully revisited documents of cooperation Literally, they must have taken the risks, and there must be progressive and undeniable benefits for them so that there are more and more foreign companies choosing China

as their new homes In general, China tends to be still an acceptable nest for the production line and, at least, a fruitful market, with more than 1.4 billion of consumers and a continuously soaring number of middle class people of at least 400 million (Zhou X , 2018)

Aside from replenishing foreign companies’ entries to China, resulting from the opening of the governmental legislatures, there settles an immense number of soaring and maturing domestic businesses, especially in “extremely important and restricted

participants only by cooperating with Chinese companies with proper and legal FTT (Frankenfield, 2019) In that development pathway, by focusing on science and technology, an indivisible part of which is telecommunication, China quickly masters

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Technology transfer in China often works as Forced Technology Transfer (FTT) In China, it is presented as

the method that companies have to undertake in exchange for the market access (Frankenfield, 2019)

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Intellectual Properties

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Key areas refer to the checklist of 10 fields to initiate China main focus in manufacturing: New information

technology, high-end numerically controlled machine tools & robots, aerospace equipment, ocean engineering equipment & high-end vessels, high-end rails transportation equipment, energy-saving cars & new energy cars, electrical equipment, farming machines, new materials and biomedicine & high-end medical equipment

most of the technology accomplishments, and even becomes an influential manufacturers and a vital factor of global supply chain, marked with the births of domestic business giants Only in technology, from a nation of outsourcing firms to the tech leaders from the USA (Apple), Europe (Nokia, Motorola), Korea (Samsung, LG) and Japan (Sony), China has developed a domestic technology league with strong and famous representatives, such as Huawei, ZTE, Xiaomi and BBK Electronics It is considered as nationalist acts from China to protect and develop its domestic manufacturing (Brown S R., 1979) In comparison with India, the nation popular with manufacturers in mass-production of low cost products, China has become the manufacture hub for much more famous brands, ranging from high-end fashion to modern technology China has taken advantage of globalization to serve its nationalist goals, “Made in China 2025”, aiming at turning China into a powerhouse of

manufacturing, especially in 10 key areas

The greatest and most unpreventable burden of Made in China 2025 may be the Presidency of Donald Trump, and the first target to be bombarded is Huawei, the

“eldest brother” of Chinese telecommunication manufacturers having practical sales

administration from the White House regarded Huawei as “a party of concern” via an executive order blacklisting the Chinese brand Four days later, Google announced to

no longer function newly released Huawei’s devices; while continuing to allow access

accessible for any new Huawei’s devices, resulting in that Huawei’s stock will surely struggle to have good sales in international market9, where Google’s service is still dominating Although ZTE should have been more worried than Huawei as it directly imports most accessories from the US suppliers to manufacture phones, Huawei still suffers tremendously Huawei can be more self-sufficient and less dependent on the

US partners, but a huge amount of accessories for Huawei’s phones come from America and have no substitution Huawei’s phone-manufacturing sector has fallen in

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their greatest leap ever since, with inevitably overseas sales deficiency of 60%, with USD 60 million loss only for folded devices, just two months after the ban (Doffman, 2019) The impacts of the blacklisting are so severe that the CEO of Huawei, Ren Zhengfei, estimated that the sanctions may slash its annual revenue by about USD 30 billion in the coming two years with little hope for any recuperation (Bloomberg, 2019)

Huawei has witnessed the gloomiest days of their company’s history, but the crisis to the Chinese brand is even exacerbating Their strategic products - telecommunication devices - especially newly developed 5G technology, have been stringently criticized and intercepted by President Trump 5G technology and

commodities are surely in the top list of Chinese key areas in the strategy Made in

China 2025, and Huawei is the leader of 5G manufacturers, not only in China, but also

in the whole world with authorized technology of speed boost (Bicheno, 2020) What

is more, the greater objective of Huawei is to help any nations to employ its devices, with the ideal goal of good collaboration Huawei hopes to become a leader in 5G

enough customers to make 5G devices cheaper However, the fact that Huawei is helping its partners may not be able to veil the ambition of leadership in 5G technology of Huawei itself, because those countries will have to use Huawei’s 5G technology infrastructure with commitments to keep up with the standard made by Huawei Moreover, the recently installed devices will have to rely on Huawei’s updates and maintenance, and any new branches of the 5G network in those nations tend to have no other choice but Huawei This directly resulted in that American companies have slowed down in the race with Chinese technology companies in creating reliable and affordable 5G connections

The enthusiasm of reaching to the global influence of Huawei or any other Chinese technology firms is not only the issue of business, but also globalization encourages them to go offshore and expand their market After the restriction from Trump, Huawei is still enjoying the feast in China, while its market share surged to the record of 38% due to “patriotic boost” (Strumpf, 2019), the movement that Chinese

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Huawei mentions 5G leadership as the nation’s leadership of technology in their homepage at

https://www.huawei.com/ca/industry-insights/innovation/5g-leadership

people prioritize buying domestic products Arndt (1997) mentioned the benefits of going abroad for a company, from creating more jobs and raising wages for domestic employees Moreover, going globalization is a good way for a nation to get noticed and become more powerful, along with bringing more economic opportunities (Carlton, 1961) According to those theories, globalization is the pathway that China, exemplified by Huawei, has chosen to claim power if they can build a telecommunication system that is “addictive” and costly to be uninstalled, in any nations they set foot on In other words, any countries that can make other countries depend on their technology may take great advantage and power over other nations The most visible examples in this situation are Huawei itself and ZTE Both companies tightly rely upon American technology, from software cores to electronic accessories, and are strongly affected by US restrictions in technology cooperation Any thunders from the US leaders can lead to a severe halt in revenue and normal industry of them

In the verge of that Huawei is globalizing its 5G devices that help the Chinese brand to surpass US companies to become the leading 5G manufacturer of the world,

his state visit to India, Trump announced that Huawei was “mafia” in technology and

and competition with other competitors (Javers, 2020) Trump also addressed numerous times about vulnerabilities of Huawei’s devices that customers may have to face with, especially in cyber security A notable example is the fear of spying in British Parliament, which is fulfilled with Huawei hardware, rising tremendous concerns (Sabbagh, 2019) Trump also called on the priority for US allied manufacturers such as Ericsson and Nokia, two co-leaders in research and development (R&D) for a fair 5G technology

However, the nationalist act from US President might not be as effective as he presumed, because the global supply chain has been working well with globalization Any executive force to separate China, an essential part of the supply chain, may not soothe the US manufacturers, because they are not able to select non-Chinese suppliers

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immediately With the preeminence in 5G technology R&D of Huawei, it could be a burden of resistance to affordable 5G devices from the Chinese company For example,

a smartphone with available 5G telecommunication technology may double the price

5G connection are still allocated in high-end series priced at above USD 1000 The cheapest 5G phone – Galaxy A90 5G, lately presented by Samsung in 2020, still cost

Any companies that can produce more affordable 5G devices and can widen the number of their device users can surely win the battle Back to the time when the world is changing from 3G communications to 4G platform, 4G devices were as expensive as the way 5G products are priced now (Minoli, 2013) For instance, 4G models doubled the price of 3G models and were 5 times more expensive than 2G

by just providing cheaper phones and Internet connection hubs The most reasonable 4G phone of Huawei was just about USD 100, and Huawei can surely manage to sell 4G network devices for the whole world (Letcher, 2019) This could be of concern when the dependence in Huawei is confirmed all over the USA, as small Internet providers in the US are mostly committing with Huawei’s devices In order to initiate Trump’s intention to eliminate Huawei from the battle of 5G transformation in the USA, the government needs to allow financial aids to small and middle enterprises in telecommunications, requesting billions of US dollars from the government (Statt, 2020) In addition, if Trump also wants US allies to withdraw 5G development partnerships with Huawei, there may be subsidy or encouragement from the government that compensate the loss from that refutation (Boxwell, 2020) Up to now, what Trump has done is only warning towards US allies about threats when those nations try to work with Huawei, without any better economic deal or assistance It can

be concluded that globalization cannot be stopped without proper economic treatment

Apple, Costco and Tesla in China: The globalized policies of China

American companies in China are important factors of the global supply chain

As previously stated, what China has achieved in developing the national economy is greatly contributed by foreign companies, especially US firms Before 1976, China was known as a closed and mysterious country, just the same way as how the world media is portraying North Korea: inaccessible, non-cooperative and restrictive The Economic Reformation has renamed China as a happy land for foreign investments From then on, Chinese economy has been flourishing thanks to its more and more globalizing policies Describing themselves as a nation with vast land, cheap labor and richness in natural resources, China has turned into the world’s factory to dramatically boost the economy Recently, with changes in the economic structure, with more people upgrading into middle class, China now is also thriving on the potential to become a gigantic consuming market This is exactly when China domestic market witnesses the entrance of several foreign brands to satisfy the desire for a different system of production and consumption, along with bringing in more employments for Chinese people

Apart from manufacturers cooperating with Chinese companies in joint ventures to produce and sell with their own brands, when the policies of the state becomes opener, some other American companies may greatly benefit and make surprising development in China For example, BMW has cooperated with Brilliance (a Chinese motor company), to produce BMW cars bearing the famous logo of BMW, and surely two partners had to get through proper technology transfer Those cars can never be in copyright issues In reverse, Apple has produced many of their products such as iPhones, iPads and Macs in China since 2008, but the American company has never transferred their technology to China As a result, any Chinese products resembling Apple’s outlets are called “copy-cats” Recently, when Chinese tech giants rise up, they have just taken off the badge of copiers Interestingly, Apple has been

working in the key areas that are forced to do FTT in China (electrical equipment and

new information technology) It is obvious that Apple, in one way or another, has avoided the requirements of the Chinese government, thanks to the one phrase that is shown in each and every Apple iPhone’s back: “Assembled in China” According to

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Meanwhile, Foxconn has been assembling Apple’s products in China for more than a decade, but it just owns and supplies the technology for the battery and electric inputs Apple cooperates with Samsung to manufacture the exclusive A-series micro-processors outside China, with Sony to design and apply camera technology and with

LG for OLED iPhone’s screens Ultimately, Apple is not and cannot be required to transfer its technology to any Chinese partners In short, Apple appears to China more likely as a retailer for its own products The US company opened its first Apple Store

in China in 2008 (Schwankert, 2008), then jumped to 42 stores in early 2020 (Byford, 2020) to sell the “Assembled in China”, without any manufacturing process directly done by Apple When the world goes global, there are always needs to protect the top secret of technology Only by doing that way can that brand become outstanding to others and can take pride in being a top American product and a leading in technology and designing

Another notable US firm feasting in China is Costco, operating about 800 wholesale stores in the US and several more countries Costco’s business model promises bright future in any new targeted market (Fifield & Siegel, 2019) The opening day of the first Costco store in China was truly booming to not only the Chinese consumers, but also Chinese media and Costco itself In the opening of Costco first store in Shanghai, there were so many customers that it had to shut down

conflicts due to temporal shortage of goods and overbuying Outside the opening store were terrible traffic jams, and a car may have to wait in line for at least 3 hours to get inside Thereafter, Costco announced to attract 4 times more customers than what it had after its first month in Shanghai (Yu Y , 2019)

Figure 1 Costco opens its first store in Shanghai with fully crowded shoppers (He & Wang, 2019).

The unpredictably overwhelming successful opening of Costco in China proved that how a foreign company can prosper in that market, although several US companies have penetrated China without such noticeable victory For example, Walmart entered China quite early in 1996, with its online store in collaboration with JD.com, a local online commerce platform and, spontaneously, is still working well with its independent supermarkets in big cities (Chan A , 2011) On the other hand, Target, Home Depot and BestBuy quickly withdrew from Chinese market after a short amount of time cooperating with Chinese retail chains (Fifield & Siegel, 2019) However, those comes and goes did not attract Chinese consumers as how Costco could perform, even the new plan of an USD 1.2 billion investment from Walmart to China was flooded with the news about Costco opening its first store (He, 2019) There must lay several myths about how Costco blossoms in this market, as Costco is

a Foreign Fully Owned Enterprise In 2014, Costco participated in China with Alibaba,

a domestic tech giant, in an online wholesale platform Therefore, this store opening ceremony in Shanghai could be considered a comeback of Costco to China, although Chinese consumers can hardly remember the joint venture between Costco and Alibaba

The story of Costco is not just about how it tailored a suitable business model

as a wholesaler, when it initiates warehouse-selling strategies in order to fascinate

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tend to be easily pleased with its enclosed and familiar membership program, and buying in a bulk for very good price (He & Wang, 2019) Furthermore, Costco has taken advantage of its adaptation to the changes of law in its destination, when China allows full control of foreign companies in non-primitive business areas Wholesale or Retail companies are allowed to fully take control in their businesses, and the presence

of Costco and Walmart also proved that China is conducting globalization apart from

their main focus key areas However, this country is still setting nationalist approach

by building strong and competitive retailers itself, such as Alibaba and PinDuoDuo (Zhang, 2020) Generally, the consuming market in China is still following the Invisible Hand theory, when going globalized, domestic business hardly receives any support or subsidies from the government and has to directly and freely compete with fully-experienced foreign companies

The new Foreign Investment Law (NFIL) took effect on the first day of 2020, marking the total openness of China to foreign direct investment According to Zhou

less stringent in mandatory information report17 and especially, less restrictions in

should be the happiest foreign investor in China, because it can open the first automobile factory in Shanghai, named Giga Shanghai (Kolakowski, 2019), without any collaboration or technology transfer to any local companies Tesla Giga Shanghai factory, costing more than USD 2 billion for construction, along with its sisters Giga Nevada and Giga New York City, is built to truly manufacture novel Tesla’s electric cars, while the premier models are manufactured at Tesla Factory in Fremont,

that, Tesla has opened 17 motor showrooms all around China