Effects of Globalization on Shanghai - the Commercial and Financial Center of Mainland China

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For exports through online platforms, the sales revenue of Shanghai cross-border e-commerce exceeded 400 million RMB in 2015, with a year-on-year growth of 10.2 times.[8] The third party of electronic trading platforms enables small and medium-sized enterprises in Shanghai to broaden the market with low costs. Those small and medium-sized enterprises desiring to expand overseas used to be encumbered by low degree of informatization, which was manifested in the single function of websites, low communication efficiency with international customers, and lack of latest marketing dynamics. With the cooperation with e-commerce platforms, enterprises now can save a large part of the cost of marketing and building their own websites. In addition, some manufactures in Shanghai also benefited from the booming of cross-border e-commerce market. Through the electronic trading platforms, those manufactures expanded their retail exports, such as manufacturers of auto parts, which are one of the main developed industry in Shanghai. During the 2014 International Automobile spare parts, maintenance testing diagnostic equipment and services exhibition in Shanghai, eBay released a report which showed that auto parts had become the commodity category with largest volume of business on eBay.[9]

Adverse effects of globalization on Shanghai: great competition of foreign enterprises

Due to the introduction of foreign enterprises, the market of some industries was fleetly divided. Depending on rich capital and excellent management strategies, foreign enterprises soon grew to be the industry giants, while the market share occupied by local enterprises fell sharply, and some were even forced to withdraw from the market. Such conditions were particularly evident in the retail industry of Shanghai. With the opening of Chinese retail industry to foreign enterprises in 2005, the pace of those foreign enterprises entering Chinese market was accelerated.[10] Shanghai, one of the first batch of coastal open cities, was chosen as the city of trial operation by WAL-MART, Carrefour and other foreign retail giants. Because of congenitally deficient of local retail industry, which includes low market concentration, the lack of scale advantages, and great disadvantages in the aspect of operating modes and management methods, a large quantity of Shanghai local supermarkets failed in the competition and existed the market. To compete with those foreign enterprises, with the support of local government, there has been several retail groups built through mergers and acquisitions, such as Shanghai Bailian Group. However, a pronounced gap still existed between those retail groups, which can be regarded as Chinese local retail giants, and foreign competitors.

One of the main challenges faced by local enterprises especially state-owned enterprises (SOE), when competing with foreign firms is serious brain-drain. With the emergence of "high salary" recruitment in foreign enterprises, some employees in local enterprises who have not been in important positions or lack of self-realization choose to seek better development. Additionally, the harmonious interpersonal relationship, sound staff management system, such as reward mechanism in foreign firms are all factors which attract talented workers.

In summary, globalization has brought Shanghai great opportunities to play a greater role around the world, however, at the same time it also brought enormous pressure and challenges. Globalization is a complex process, which refers to economy, politics, technics, as well as culture. How to cater to positive effects, reply to challenges, plan the city, and promote the development of enterprise require more in-depth thinking and research.

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