International sub-contracting
In this arrangement, a company place orders with a foreign enterprise to produce components or assemble finished products using inputs and technology supplied by this company, which absorbs the final products for its own production or marketing needs.
A company that wishes to build its global presence may also acquire a local firm or set up its own manufacturing subsidiary, which is known as foreign direct investment (FDI). This is the establishment by a company of an affiliate in a foreign country over which the parent firm is therefore assumed to exercise effective control. Indeed, this is what essentially defines a MNE (a multinational enterprise).
ACTIVE VOCABULARY
1. transaction – сделка, операция
business transaction – хозяйственная операция
2. deal – сделка, соглашение
to make/strike a deal – заключить сделку
to seal a deal – скреплять сделку (печатью)
3. interaction – взаимодействие
to interact – взаимодействовать, влиять друг на друга
4. environment – условия, обстановка, среда
business/economic environment – экономическая обстановка/ ситуация
(un)favourable global economic environment – (не)благоприятная мировая экономическая ситуация (экономическая обстановка в мире)
5. venture – коммерческое предприятие; вторжение в новую область производства
to venture – рисковать, осмелиться; спекулировать
venturer – предприниматель, идущий на риск; купец, ведущий заморскую торговлю
joint venture - совместное предприятие
incentive - стимул, побудительный мотив
to pay off – 1) окупиться 2) расплатиться, погасить долг
economies of scale – эффект масштаба
drive – 1) кампания, движение 2) направление, стремление, цель
to pursue – 1) выполнять план, программу 2) преследовать цель,3) проводить (политику)
to pursue investor-friendly policy – проводить политику поощрения инвестиций
to globalize – интернационализировать деятельность, выходить на мировой рынок (мировую арену);
syn. to go global
to enter, to penetrate, to break into, to make a push into a foreign/overseas market – выйти на зарубежный рынок
market entry – проникновение на рынок
market access – доступ на рынок
market presence –присутствие на рынке
to build market share – завоевывать долю рынка
to withdraw from the market; to pull out/back – уйти с рынка, прекратить свою деятельность на данном рынке
inter-firm - внутрифирменный
alliance – союз, альянс
international strategic alliance - международный стратегический альянс
15. agreement – договор, соглашение
binding agreement – юридически обязательное соглашение
contractual agreement – соглашение в виде договора: вид соглашения об установлении договорных отношений в отличие от соглашения о членстве в
cooperative agreement – соглашение о сотрудничестве
16. licence (B.E.) – license (Am.E.) – лицензия, патент, разрешение
to license - предоставлять лицензию
licensing – лицензирование, выдача лицензии
licensing agreement – лицензионное соглашение
licensee – лицензиат, получатель лицензии
licensor – лицензиар, фирма, продающая лицензию
17. duration – срок действия, продолжительность
copyright – авторское право
franchising – франчайзинг
franchise – франшиза (право на использование торговой марки)
franchisee – франчайзи, покупатель франшизы
franchiser – франчайзер, компания-продавец франшизы
20. outlet – торговая точка, торговое предприятие
trade mark - торговая марка
21. brand name – текстовая часть фабричной марки или фирменного знака
22. royalty – роялти, лицензионный платеж
operational control – операционный контроль, контроль за выполнением производственных коммерческих функций
to perform control, to exercise control – осуществлять контроль
consortium – консорциум
sub-contracting – суб-подряд
board of directors – совет директоров
input – вклад, взнос, участие.
Но: inputs – затраты на производство; факторы производства
host country – принимающая страна
pool – 1) пул, объединение картельного типа 2) общий фонд, объединенные запасы
to pool resources – объединять реcурсы
to assemble – собирать
assembling – сборка
assembly shop - сборочный цех
components – комплектующие
acquire – покупать, приобретать, овладевать
acquisition – покупка, приобретение, поглощение
mergers & acquisitions – слияния и поглощения
parent company - материнская компания
subsidiary – дочерняя компания
Questions for discussion:
Why is it impossible for any country today to limit its business activities within national boundaries?
What are the most common motives for a company to enter a foreign market?
Why do some companies refrain from international involvement?
What factors beyond a company’s control can force it to seek globalization?
What are the possible ways of penetrating an overseas market?
What are the main advantages of having a local partner?
What incentives do governments of some countries offer to attract foreign partners?
What is the difference between a joint venture and a subsidiary?
What criteria do globalizing companies use when they chose location of their manufacturing operations around the world?
What are the advantages of subcontracting for both partners?
Search the newspapers or the Internet for some information on the recent
1) cross-border mergers and acquisitions,
2) cooperative/franchising/licensing agreements,
3) successful examples of joint ventures.
Suggest the Russian for the following word combinations.
International ventures, domestic company, international operations, resource availability, tax exemptions, risk insurance, interest-free loans, economies of scale, international competitors, foreign customers, to get well established in international market, to go global, to enter a foreign market, intensification of global competition, inter-firm cooperation, to share costs, international strategic alliances, binding agreement, to enter into a joint project, a licensing agreement, provision of technical know-how, to provide the right to use one’s brand name, to perform operational control, a joint venture, market access, to form a consortium, to place orders with, to assemble finished products, market expansion, to establish an affiliate in a foreign country, to set up a manufacturing subsidiary, to exercise effective control.
Suggest the English for the following word combinations.
Международная экономическая обстановка, зарубежные заказчики и конкуренты, укрепить свои позиции на зарубежных рынках, выйти на рынок другой страны, усиление международной конкуренции, уменьшить риски, разделить расходы, международный стратегический альянс, лицензионное соглашение, осуществлять техническое обслуживание, право на использование промышленной собственности, использование торговой марки, осуществлять операционный контроль, создавать совместное предприятие, наукоемкие промышленные проекты,, размещать заказ на зарубежном предприятии, сборка готовой продукции, материнская компания, открывать зарубежный филиал, приобрести местную фирму, эффект масштаба, конкурентное преимущество.
T
RANSLATION
Text № 1
Translate the article into Russian in writing:
CHINA’S MERCHANT ADVENTURERS SEEK GLOBAL CONQUEST
Going global, Lui Chuanzhi, founder of Chinese personal computer company Lenovo, said last year, is like trying to change from being a small boat on a river to a ship heading out of port.
Not that Lenovo is dismayed by the challenge; after winning approval from Washington this week for its $1.75bn purchase of IBM’s PC division, the company is steaming full ahead into the wide horizons and storms of international business.
Lenovo is not alone: in recent years a litany of Chinese corporate champions including telecoms equipment makers Huawei and ZTE, white goods producer Haier, television set manufacturer TCL and computer screen maker BOE Technology have won unprecedented attention abroad.
Their pioneering efforts, backed by the “Go Global” policy of China’s communist leadership, have already prompted pundits to draw parallels with the arrival of international Japanese brands in the 1970s and 80s. Some even wonder aloud whether companies such as Lenovo, Huawei, or TCL might even be a future, world-conquering “Chinese Sony”.
Such heady speculation belies more substantial and immediate challenges that face the Chinese corporate globalisers, however.
Japan’s strongest companies made their greatest mark internationally by offering new products such as Sony’s miniaturized consumer electronics or competitive new approaches like Toyota’s “just-in-time” production.
By contrast, China’s manufacturers remain technical followers rather than leaders, whose competitive advantage rests in large part on the country’s low production costs.
Chinese companies also have a much more tenuous grip on their relatively open domestic market than protected Japanese rivals used to enjoy – and many international rivals are already taking advantage of cheap Chinese labour with local plants of their own.
Indeed, analysts say Chinese manufacturers are going abroad in large part out of weakness rather than strength, with strategies aimed at building or acquiring brands, sales channels and technology that will help them fend off increasing competition at home from global rivals.
John Chan, chairman of consultancy Beijing Anbound, says many of the state-controlled Chinese companies are venturing abroad already burdened by high levels of debt and with almost total lack of international experience.
“I think there will be many problems for Chinese companies going out into the world,” Mr Chan says. “They think they can build a global business empire, but it’s an empire built on sand.”
Mr Chan makes an exception for Lenovo, which is widely seen as one of China’s better-run companies and has structured its purchase of IBM’s PC business to make the best possible use of its current US management, brand strength and sales clout.
Yang Yuanqing, Lenovo chairman-designate, insists that the “time is right” for expansion overseas not least because his company has already hit the ceiling in its home market.
But making the purchase of IBM’s iconic PC business a success means managing it better than Big Blue could – a formidable challenge.
Other Chinese companies too, are risking buying into failure at high prices. BOE Technology’s purchase of the display business of South Korea’s troubled Hunix Semiconducter in 2003 helped make it a serious player in the world computer screen business. But it left it still trailing industry leaders’ technology, with added burden of hefty debt.
Shangai Automotive Industry Corp, a Chinese carmaker, has been toying with a tie-up with struggling MG Rover of the UK – a deal that would give it an international brand and design expertise, but also a business that even Germany’s mighty BMW could not turn around.
And TCL saw its shares slide last year as it laboured to make a success of a joint venture created when it took control of the loss-making TV and DVD operations of venerable French brand Thomson. Some Chinese analysts say such struggles show companies should aim at steady growth overseas rather than dramatic acquisitions.
Calls for caution also appear supported by experience of telecoms equipment producers Huawei and ZTE, which have been able rapidly to develop overseas businesses mainly by expanding their product lines and developing their own new sales networks.
Mr Yang of Lenovo says companies must not try to plot a single “Go Global” course. “I feel the decision should be made according to the different situations of different companies in different sectors,” he says. “It must not be a case of everyone rushing abroad because somebody sends a signal to “go out.”
Despite the scale of challenges, however, there is little doubt the flotilla of Chinese companies now venturing offshore will be followed by many more – even if some of pioneers struggle to keep their international ambitions afloat.
The Financial Times, March 16th, 2005
NOTES
Big Blue – часто встречающееся название компании IBM, возникшее из-за цвета логотипа компании.
ACTIVE VOCABULARY
white goods – электробытовая техника
brown goods – бытовая электроника
“just-in-time” production – система организации производства «точно в срок».
market leader – 1) компания, занимающая лидирующие позиции на рынке
товар, имеющий высокий удельный вес в обороте рынка
market follower - компания, не занимающая лидирующие позиции на рынке и не представляющая угрозы для лидера
expertise – знания и опыт
to turn around – добиться положительных результатов в деятельности компании
product line – ассортимент изделий, предметно-производственная специализация
sales network – сбытовая сеть
sales channels – каналы сбыта
to fend off competition – отражать натиск конкурентов
Text № 2
Translate the article into Russian orally and answer the following questions:
Why has Volvo decided to expand in Asian market?
What methods of entering the Asian market are being considered by Volvo?