Nike: a Multinational Company in China

Nike A Multinational Company in mainland mainland china Nike is one of the largest athletic shoe brands in the world and sells millions of shoes and turn each year. The conjunction was founded on January 25, 1964 by a University of Oregon introduce athlete Philip Knight and his coach Bill Bowermanas. It was set-back named Blue ribbon Sports and it officially became Nike, Inc. on May 30, 1978 (Nike). As a multinational company, it operates sell stores domestically and overseas and all of the merchandises it sells are manufactured by self-sustaining letors located predominantly in foreign countries.Nike first entered the international food market through mainland China overcoming the many challenges it faced while trying to do business with them. Nike has no involvement in the manufacturing of its products and all of its production has been outsourced, in the main to manufacturers based in low-wage countries. In 1980, Nike created its first joint- judge with the Peoples Rep ublic of China (Nike Inc. ). It entered into the emerging economy just after the country rose from the turmoil of the pagan Revolution.In James Austins case study of Nike in China, he described Nikes entry strategy into China to be truly difficult and found the Chinese government almost impenetrable to do business with. To gain entrance into the tough country Nike hired David Ping-Ching Chang, who was in the beginning from China, as a consultant to help arrange a spread over between them (Austin 34). Chang had the experience and knew the language and customs that it would take to create a happy agreement. The first thing they set out to do was salvage a proposal to the Chinese government outlining their objectives and the benefits their joint venture would contain to China.Chang was familiar with how the Chinese performed business transactions and used that as an advantage to get their foot in Chinas tightly closed door. The Chinese are relationship-orientated and to them a transaction is non save business. subsequently writing a very well written proposal translated in Chinese stating how Nike was committed to long-term business with China, they received an invitation to start negotiations. study problems arose between the two when China demanded for more control, pricing, and rights to each factory (Austin 35).The Chinese felt that Nike was trying to take advantage of them when Nike would not allow them such(prenominal) control. The Chinese became was very close to ending any negotiations they had hold upon hardly luckily settled on an agreement. Nikes primary objective was to try out the means by which they would buy a finished shoe product from the Peoples Republic of China, as written in their submitted business proposal (Austin 29). more or less of Nikes other aims Austin describes in his case study were a target goal of 100,000 pair of shoes per month in the first phase and growth to 1,000,000 pair per month.Five months after their in itial offer, a contract was signed and shoe production began by October 1981. Nikes joint venture with China promised lower costs because of their cheap labor and high production. However, by 1984 production had only reached about 150,000 pairs per month instead of the 1,000,000 they had previously agreed on. During the 1990s, another problem Nike faced during its joint-venture in China was the bad running(a) conditions and low wages at their factories.Nike was accused of profiting from sweatshop labor that included babe labor, physical abuse from factory managers and exposure to dangerous chemicals. They originally denied claims against them however, in an article published by AllBusiness online in 2001, Nike director Todd McKean stated that since Nike does not own the factories in China, we dont control what goes on there. This brought a major uproar in the media and along with it came campaigns of human rights groups who would endorse only companies who use sweat-free labor.Ac cording to Business Week Magazine, when Nike began to see protests from factory workers they decided to ultimately make a change and monitor working conditions in factories that gain their products. They hired independent auditors to make sure subcontractors used by the company follow Nikes code of conduct (Hill 152). Although Nike faced many challenges with their joint-venture, China gained some advantages with doing business with Nike. Nike donated equipment to schools and paid them to open up after-school run around teams for children.In 1995, Nike sponsored all the Chinese pro-basketball league teams and provided uniforms and shoes for them. Another benefit China received was the outsourcing of jobs into their country (Sports). Granting, the sweatshops were an enormous mistake that Nike should have never let occur, they have corrected the problem and it has produced over 500,000 jobs in China alone. Nike is instantaneously working with the Xiaochen Hotline Program in China t o provide training on their labor laws and to improve workers accessibility to the hotline (Dutton).Nike is a not bad(predicate) example of a multinational company that faced major challenges accounting entry the emerging economy of China in 1980. Nike was confronted with problems while negotiating business with China and also during the actual manufacturing in their facilities. Even with such problems there came advantages to two countries China acquired many jobs and Nike experienced lower costs that lead to higher(prenominal) sales. Nike and China have turned out to be a successful joint-venture and should continue to advance if both take into consideration each others needs.