Multinational Corporation (MNC)

A multinational corporation (MNC) or worldwide enterprise is a corporate organization that owns

or controls production of goods or services in at least one country other than its home

country.[10][11] Black's Law Dictionary suggests that a company or group should be considered

a multinational corporation if it derives 25% or more of its revenue from out-of-home-country

operations.[12] A multinational corporation can also be referred to as a multinational enterprise

(MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international

corporation, or a stateless corporation.[13] There are subtle but real differences between these

three labels, as well as multinational corporation and worldwide enterprise.

Introduction: The role of multinational corporations in the conduct of foreign trade has grown over

time and has reached very large proportions. In the United States, for example, at the all-manufacturing

level, multi- national corporations accounted in 1970 for 62 percent of its exports ($22 billion out of $35

billion) and 34 percent of its imports ($10.5 billion out of $31 billion). It is therefore not surprising that

the ramifications of their existence are of major concern to international trade experts.

FUNCTION OF MNC.

MNCs are the companies that have thier head office in one country and regional branches all

over the world. Thier presence can be found in every country and their function is for providing

access of different products to different countries and "Globalization

IMPORTANCE:

MNCs are the companies that have thier head office in one country and regional branches all

over the world. Multinational firms arise because capital is much more mobile than labor, since

cheap labor and raw material are located in other countries, multinational firms establish there.
Their presence can be found in every country and their function is for providing access

of different products to different countries and "Globalization

The advantages of multinational companies including, create jobs, wealth and improved

technology in countries that are in need of such development, benefit from economies of scale,

and lower output by purchasing automated equipment.

Regulation and taxation

Multinational corporations may be subject to the laws and regulations of both their domicile and

the additional jurisdictions where they are engaged in business.[29] In some cases, the

jurisdiction can help to avoid burdensome laws, but regulatory statutes often target the

"enterprise" with statutory language around "control".[29]

As of 1992, the United States and most OECD countries have legal authority to tax a domiciled

parent corporation on its worldwide revenue, including subsidiaries;[28]:117 as of 2019, the US

applies its corporate taxation "extraterritorially",[30] which has motivated tax inversions to

change the home state. By 2019, most OECD nations, with the notable exception of the US,

had moved to territorial tax in which only revenue inside the border was taxed; however, these

nations typically scrutinize foreign income with controlled foreign corporation (CFC) rules to

avoid base erosion and profit shifting.[30]

In practice, even under an extraterritorial system taxes may be deferred until remittance, with

possible repatriation tax holidays, and subject to foreign tax credits.[28]:117 Countries generally

cannot tax the worldwide revenue of a foreign subsidiary, and taxation is complicated by

transfer pricing arrangements with parent corporations.[28]:117

Impact on developing countries

they can have influence on other countries economic entire environment. The controversies whether

MNCs help or harm development especially of developing countries have been examined in this

paper. To attain this purpose, a brief definition of MNCs has been given. Thereafter, some of the

positive impacts as well as negative impacts of MNCs' operation particularly in developing countries

have been examined. Accordingly, three case studies are presented that make evident the positive,

negative, and mixed impacts of multinational corporations on developing countries.

Huawei Technologies Co., Ltd.
A Chinese multinational technology company that provides telecommunications equipment and sells

consumer electronics, including smartphones [3] and is headquartered in Shenzhen, Guangdong

province.

The company was founded in 1987 by Ren Zhengfei. Initially focused on manufacturing phone switches,

Huawei has expanded its business to include building telecommunications networks, providing

operational and consulting services and equipment to enterprises inside and outside of China, and

manufacturing communications devices for the consumer market.[4][5] Huawei had over 188,000

employees as of September 2018, around 76,000 of them engaged in Research & Development

(R&D).[6][7] It has 21 R&D institutes around the world,[8][9] and in April 2019, opened the dedicated Ox

Horn Campus in Dongguan.[10] As of 2017, the company invested US$13.8 billion in R&D.[11][12]

History Early years

During the 1980s, the Chinese government tried to modernize the country's underdeveloped

telecommunications infrastructure. A core component of the telecommunications network was

telephone exchange switches, and in the late 1980s, several Chinese research groups endeavored to

acquire and develop the technology, usually through joint ventures with foreign companies.

Ren Zhengfei, a former deputy director of the People's Liberation Army engineering corps, founded

Huawei in 1987 in Shenzhen. The company reports that it had RMB 21,000 in registered capital at the

time of its founding.

Ren sought to reverse engineer foreign technologies with local researchers. At a time when all of China's

telecommunications technology was imported from abroad, Ren hoped to build a domestic Chinese

telecommunication company that could compete with, and ultimately replace, foreign competitors.[29]

During its first several years the company's business model consisted mainly of reselling private branch

exchange (PBX) switches imported from Hong Kong. Meanwhile, it was reverse-engineering imported

switches and investing heavily in research and development to manufacture its own technologies.[4] By

1990 the company had approximately 600 R&D staff and began its own independent commercialization

of PBX switches targeting hotels and small enterprises.[30]

The company's first major breakthrough came in 1993 when it launched its C&C08 program controlled

telephone switch. It was by far the most powerful switch available in China at the time. By initially

deploying in small cities and rural areas and placing emphasis on service and customizability, the

company gained market share and made its way into the mainstream market.[31]

Huawei also won a key contract to build the first national telecommunications network for the People's

Liberation Army, a deal one employee described as "small in terms of our overall business, but large in

terms of our relationships".[32] In 1994, founder Ren Zhengfei had a meeting with Party general

secretary Jiang Zemin, telling him that "switching equipment technology was related to national

security, and that a nation that did not have its own switching equipment was like one that lacked its

own military." Jiang reportedly agreed with this assessment.[4]

In the 1990s Canadian telecom giant Nortel outsourced production of their entire product line to
Huawei.[33] They subsequently outsourced much of their product engineering to Huawei as well.[34]

Another major turning point for the company came in 1996 when the government in Beijing adopted an

explicit policy of supporting domestic telecommunications manufacturers and restricting access to

foreign competitors. Huawei was promoted by both the government and the military as a national

champion, and established new research and development offices.[4]

Offices of Huawei

In Voorburg, Netherlands

In Markham, Ontario,

Canada

Foreign expansion
In 1997, Huawei won a contract to provide fixed-line network products to Hong Kong company

Hutchison Whampoa.[31] Later that year, Huawei launched its wireless GSM-based products and

eventually expanded to offer CDMA and UMTS. In 1999, the company opened a research and

development (R&D) center in Bangalore, India to develop a wide range of telecom software.[30] In May

2003, Huawei partnered with 3Com on a joint venture known as H3C, which was focused on enterprise

networking equipment. It marked 3Com's re-entrance into the high-end core routers and switch market,

after having abandoned it in 2000 to focus on other businesses. 3Com bought out Huawei's share of the

venture in 2006 for US$882 million.[35][36]

In 2005, Huawei's foreign contract orders exceeded its domestic sales for the first time. Huawei signed a

Global Framework Agreement with Vodafone. This agreement marked the first time a

telecommunications equipment supplier from China had received Approved Supplier status from

Vodafone Global Supply Chain.[37][non-primary source needed] Huawei also signed a contract with

British Telecom (BT) for the deployment of its multi-service access network (MSAN) and Transmission

equipment for BT's 21st Century Network (21CN).[citation needed]

In 2007, Huawei began a joint venture with U.S. security software vendor Symantec Corporation, known

as Huawei Symantec, which aimed to provide end-to-end solutions for network data storage and

security. Huawei bought out Symantec's share in the venture in 2012, with The New York Times noting

that Symantec had fears that the partnership "would prevent it from obtaining United States

government classified information about cyber threats".[38]

In May 2008, Australian carrier Optus announced that it would establish a technology research facility

with Huawei in Sydney.[39] In October 2008, Huawei reached an agreement to contribute to a new

GSM-based HSPA+ network being deployed jointly by Canadian carriers Bell Mobility and TELUS

Mobility, joined by Nokia Siemens Networks.[40] Huawei delivered one of the world's first LTE/EPC

commercial networks for TeliaSonera in Oslo, Norway in 2009.[30]

In July 2010, Huawei was included in the Global Fortune 500 2010 list published by the U.S. magazine

Fortune for the first time, on the strength of annual sales of US$21.8 billion and net profit of US$2.67

billion.[41][42]

In October 2012, it was announced that Huawei would move its UK headquarters to Green Park,

Reading, Berkshire.[43]
In September 2017, Huawei created a Narrowband IOT city-aware network using a "one network, one

platform, N applications" construction model utilizing IoT, cloud computing, big data, and other

nextgeneration information and communications technology, it also aims to be one of the world's five

largest cloud players in the near future.[44][45]

In April 2019, Huawei established Huawei Malaysia Global Training Centre (MGTC) at Cyberjaya,

Malaysia,[46] which is Huawei’s first training center outside of China.

Recent performance

Huawei expo at IFA 2018 in Berlin

As of the end of 2018, Huawei sold 200 million smartphones.[47] They reported that strong consumer

demand for premium range smart phones helped the company reach consumer sales in excess of $52

billion in 2018.[48]

Huawei announced worldwide revenues of $105.1 billion for 2018, with a net profit of $8.7 billion.[49]

Huawei's Q1 2019 revenues were up 39% year-over-year, at US$26.76 billion.[50]

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