The Effects Of Globalization To Businesses In China And Philippines

The paper is an attempt to analyze and explain the effects of globalization to Small and medium businesses(SMBs)in China and Philippines which focuses on Foreign Direct Investment.FDI is a global perspective of transacting businesses of a country made by a company or establishment,which exists in another country.In Foreign Direct Investment,investment should be in the form of ownership/controlling ownership in the foreign company(Globalization has inspired companies to formulate various types of approaches to globalize their business,which results in activities like Foreign Direct Investment).SMBs are non-subsidiary,independent companies,which employ less than a given number of employees.This number varies in different countries.The definition of a Small and Medium Businesses(SMBs)is most commonly based on the number of employees that usually with fewer than 500 employees;In the Philippines they have two operational definitions of small and medium sized businesses.Based on employment,which is the most commonly used definition in the country,the different size categories are classified as follows: Micro enterprises: 1-9 employees,Small enterprises: 10-99 employees,Medium: 100-199 employees,Large: 200 or more employees.In terms of the assets,Small and medium sized businesses are defined as follows: Micro enterprises: P3 million or less,Small enterprises: P3-15 million,Medium: P15-100 million,Large: P100 or more.In China,the definition of small and medium business is complex,which depends on the industry category and based on the number of employees,annual revenue and total assets,and these criteria on small and medium-sized enterprises are based on the SME Promotion Law of China(2003).The significance of small and medium sized businesses sprawls in their function in growth at various phases of economic development,not only they contribute to output,fulfill social objectives,attract considerable foreign reserves into a country but play a role in providing employment and is the backbone of the private sector throughout the world.Thus,some big and multinational company was once a small or medium sized company striving to gain a market share in the economy.Therefore,it is important to know the effects of globalization towards small and medium sized businesses as they play an essential role in the economy.They are also a source of entrepreneurship abilities,innovation and creation of jobs as they represent over 95% of the total enterprises in most economies and the foundation of the private sector.Moreover,there are several ways to measure globalization and its effects.Most often,we can measure globalization by liberation of trade,which can be measured as exports and imports as a percentage of the GDP to the economy and the other is to measure the impact of globalization in terms of Foreign Direct Investment(FDI).In this regard,we will study the effects of globalization to small and medium businesses in China and Philippines in the macroeconomic perspective using secondary data particularly after China and Philippines joined the World Trade Organization(WTO)to know the advantage and disadvantage,explain the general effects of globalization to small and medium sized businesses governed by the policies involved and have a comparative analysis between China and Philippines.Especially it focuses only on the impact of liberation of trade,and Foreign Direct Investment.Hence,one of the theoretical implications of this project is that it examines most of the relevant literature on the SMBs in China and Philippines after they joined the WTO,which will help us better understand FDI's role in shaping the environment of SMBs in China and Philippines.However,the researcher will only use secondary set of data to conduct a research about the effects of globalization in terms of FDI to SMBs for both countries and have a comparative analysis on the last part.