Emergent movements undermine MNC networks: the case of China

11-16-2015

Emergent movements undermine MNC networks: the case of China 

Note: This is a short analysis meant to be submitted for a course and is not peer reviewed. As such, errors may exist. Please feel free to correct me or contact me with ideas!

Multinational corporations (MNCs) have economic and infrastructural influence around the world. A recent analysis by a group of systems design researchers in Switzerland showed that much of the wealth is linked to a small number of these large corporate conglomerations.  They found that this large portion of the economic wealth of the world is tied into, tightly packed network of MNCs, as operating revenue passes from economic inputs into economic outputs. This is important for understanding that much of the economic products pass through a small number of corporations; but this has been clearly shown both in popular press and by the oft-mentioned “Occupy” movement.

Figure 1. The red dots are the tightly-packed connected companies, out of the full 1318 companies which dominate the global economy. The size of the dot is representative of the revenue of the company. Image © 2011 Vitali et al. 

More important to our work is the propagation of changes through this network. Since only a small number of companies dominate the global market, the downturn of one largely connected company could bring down an entire portion of the network of financial trading. This could have huge implications on the global market, especially in light of these growth-stunted times. This type of interconnection has even been highlighted as a new geography (Beaverstock et al 2000), and has been analyzed as such.

Multinationals also have a large influence on the regional economic level within countries such as China. Rapid development after the opening of much of China’s economy in 1978 has created with rapid advancement in foreign direct investment, mostly by large MNCs (Pearce et al, 2012). They have introduced new technologies and increased exports. However, in the mid-2000s, the local competition for market shares became greater, along with an increasing rate of reported crises situations in the media and on internet sites. This happens often with local stakeholders, or even general consumers. This is important, since small changes on the micro-scale can have wide spanning macro-scale impacts.

Figure 2. Number of crisis incidents as reported in the Chinese media from 2000-2011 (blogs.ft.com).

 Many of these crisis incidents include labor strikes against major manufacturers. In 2010, a major protest movement occurred against the car manufacturer Honda which called for a “restructuring of the labor union.” This was organized by “poor migrants with no more than a middle-school education, but they were digitally savvy and used local online networks to communicate with fellow workers around the country.” This is a remarkable reimagining of the worker’s rights movement in a country which is traditionally viewed (within the US at least) as a socially restrictive area, especially for worker’s rights. These MNC are attempting to interface with the public on the local level in response, with limited success. For example, Proctor and Gamble suggests they are “Being a Chinese Citizen”. However, these attempts for connection with the people have not shown success in stopping stakeholder discontent at the local level, as they are unable to address the underlying problems. These problems are highlighted by the socially dense, highly relational culture of the Chinese people, which runs counter to the top-down structure traditionally used by MNCs (Fu et al, 2015).

In this way, the power structures of the large corporations, which we know dominate current global economic superstructure (Vitali et al, 2011) are undermined by emergent movements. The enabling conditions of electronic communication and density and strength of the social fabric are present. This relates directly to the problem of water in China, where is has been shown that collaborative environmental governance at the lowest levels in important for responding to drinking water pollution (Miao et al, 2015). We have seen self-organization occur in the prices and planning of homes in communities in China as well (see here for one example), and the author suggests that this is one possible route for solving the decentralized problem of point source water pollution, especially by MNCs. These large entities are not able to respond to the rapid emergent change fostered by an entire class of people gaining access to social media, and rapid spread of information allows for an unprecedented ability for citizens to respond to the actions of discrete companies, and create change.

Sources
Beaverstock, Jonathan V., Richard G. Smith, and Peter J. Taylor. "World‐City Network: A New Metageography?." Annals of the association of American geographers 90.1 (2000): 123-134.

Dou, Ming, Yanyan Wang, and Congying Li. "Oil leak contaminates tap water: a view of drinking water security crisis in China." Environmental Earth Sciences 72.10 (2014): 4219-4221.

Fu, Qiang, et al. "Toward a Relational Account of Neighborhood Governance Territory-Based Networks and Residential Outcomes in Urban China." American Behavioral Scientist (2015): 0002764215580610.

Miao, Xin, et al. "The latent causal chain of industrial water pollution in China." Environmental Pollution 196 (2015): 473-477.

Pearce, Robert, ed. China and the multinationals: international business and the entry of China into the global economy. Edward Elgar Publishing, 2012.

Vitali, Stefania, James B. Glattfelder, and Stefano Battiston. "The network of global corporate control." (2011): e25995.