Many experts have analyzed the positive impact of the localization of multinational companies on China, so when PepsiCo introduced the localization of PepsiCo China in the morning, we could also feel the various benefits it brought to China. For example, the employment in China has increased, with the number of direct employees exceeding 1 10,000 and the indirect employment effect exceeding150,000, which has increased China's tax revenue, changed people's consumption concept, and fostered the market of carbonated drinks, thus promoting economic growth. In addition, in the process of promoting the localization strategy, the localization of raw materials has also been implemented. Then in the process of localization of raw materials, there is a very prominent example, that is, the establishment of potato production base. The potato production base originally served for the localization of raw materials, but later it was exported, not completely limited to localization. Then, this, in turn, increases foreign exchange earned by exports. Therefore, from the perspective of employment, taxation, economic growth and foreign exchange earning through export, the localization of multinational corporations has a direct and good impact on China's economic development and macroeconomic interests. Then, what I want to add here is that speaking of good externalities, the localization of multinational corporations is also related to the specific economic development of China. It not only promotes the economic progress of China on these macroeconomic indicators, but also faces many contradictions in the development of China. One of the most prominent contradictions is institutional contradiction, which we usually call institutional contradiction, and the other is structural contradiction. China must break through the double contradiction of system and structure, and China's economy can achieve sustained and efficient development. However, when multinational corporations promote localization, their role in institutional change is indispensable.
For example, we have said a lot that in the process of multinational companies entering the China market to promote localization, there may be some conflicts with some laws and regulations that China is now adapting to. Then, this forces our government to think about how to adapt to the requirements of the localization of multinational corporations, modify the original rules, and promote the change of our policies and the improvement of our laws. In addition, when multinational companies enter the China market and promote localization, they often fully compete with domestic enterprises in China. Take carbonated beverage industry as an example. In the morning, the Secretary General of China Industrial Beverage Association gave a lot of materials. From those materials, we can clearly judge that there has been an oligopoly competition pattern in the carbonated beverage industry in China. Several large companies occupy most of the market share, and oligopoly competition itself is more effective than complete competition. Then, people are concerned about whether oligopoly competition will develop further and form a market monopoly, which forces our government to create a level playing field and fight against monopoly. Of course, I am not saying that PepsiCo has monopolized the China market or formed a market monopoly. In addition, in order to promote the localization of multinational companies, the government must also change its functions, especially strengthen supervision and services. Twenty years ago, maybe the China government didn't think about it carefully, but today we can clearly see that the functions of the China government are also undergoing some changes. In addition, in the process of localization, the competition with domestic enterprises, through some mergers and acquisitions, joint ventures and other ways, has also promoted the development of domestic enterprises and promoted the reform of state-owned enterprises. Therefore, from these perspectives, the localization of multinational corporations has comprehensively promoted the reform of policies, regulations and systems in China, and the effect of institutional changes is very obvious. In addition, China's economic structure is unreasonable. We say that the economic and technological structure of China is unreasonable, and the product structure, industrial structure and regional economic structure of enterprises are all flawed. If we don't speed up the adjustment of China's economic structure, even if our economic system reform has established a mature socialist market economic system, China's economic development will encounter many obstacles. Therefore, we must speed up economic restructuring. However, when the economic structure is adjusted, we first face the problems of capital, talents and technology. In my opinion, when multinational corporations promote localization, they have effectively promoted capital accumulation in China. Then, due to the intensified competition in the China market in the process of localization, many domestic-funded enterprises are at a disadvantage in the competition process, which also leads to unstable employment of many employees, so they expect the risks to rise.
When the expected risk rises, it is very important to guard against savings risk. Therefore, the savings rate is among the best in the world, which is also related to the intensified competition in China market and some behaviors of multinational companies in the process of promoting localization. In addition, in the process of promoting localization, multinational corporations produce products suitable for the China market, replacing a large number of imports, saving our foreign exchange, and in turn increasing China's foreign exchange reserves. Therefore, in the process of growth, our foreign exchange savings can form a source of capital accumulation to a certain extent, which has made great contributions to alleviating the capital shortage in China. In addition, in the process of promoting localization, multinational companies including Pepsi have an important content, which is the localization of talents, including managers and employees, and all-round localization. Then, in this process, they spent a lot of money on the training of managers and laborers, which contributed to the formation of qualified laborers and the training of human resources in China. In addition, while promoting localization, multinational corporations will also have more or less external effects in technology and management. All these have played a corresponding role in promoting the adjustment of China's economic structure and eased some difficulties in structural adjustment. Therefore, I would like to add that, judging from the good influence of the localization of multinational corporations on China's economy, besides some well-known contents, we should also consider the specific transition period, economic restructuring and increasing contradictions, which is the influence of such a specific economic environment. Of course, the localization of multinational corporations is also a double-edged sword, and we often talk about its benefits. In fact, it has many bad phenomena, or introverted effects.
Here, I want to briefly say a few points, that is, for the good aspects just now, in fact, it has also produced some other introverted effects accordingly. For example, it is difficult for us to make an accurate quantitative analysis of how big these spillover effects are for multinational companies. Because the spillover effect brought by the localization of multinational corporations is not only influenced by our policies and regulations, but also by the level of Chinese-funded enterprises. If the level of Chinese-funded enterprises can't match the localization requirements of multinational companies, it is difficult for us to absorb the spillover effects of their technology, knowledge and management even if they localize raw materials. In addition, it is also related to the strategy of foreign-funded enterprises and the characteristics of current technology research and development. For example, in today's technology research and development process, a very obvious trend is that the core coefficient in the core competitiveness of enterprises is holistic, indivisible, indivisible and transferable, and it is difficult to master it comprehensively by simple learning. Therefore, even if you know the formula of Pepsi, you can't completely apply the Pepsi model to rebuild a Chinese-funded enterprise like Pepsi. These all affect the technology spillover effect in the process of localization of multinational corporations. In addition, there will be an inward effect of talents. For example, in the process of promoting the localization of talents, multinational companies rely on advanced distribution system, strong financial strength, good training system and more development opportunities to attract a large number of outstanding employees to join. It also makes many excellent labor and talents of domestic enterprises switch to multinational companies, which will have a corresponding impact on the position of domestic enterprises in the competition. Another is the inward effect of knowledge. Multinational companies have not forgotten internalization strategies, including franchising, when promoting localization, which is actually a manifestation of internalization strategies. In the process of realizing the internationalization strategy, we attach great importance to the protection of intellectual property rights and the dissemination of knowledge and management models.
Intellectual property protection is also a double-edged sword, which is conducive to the creation of intellectual property enterprises, enhance their enthusiasm, but also hinder the spread of technology. Of course, this problem cannot be simply attributed to the enterprise itself, it is a question of competitive strategy. In addition, more and more multinational companies are now willing to set up wholly-owned enterprises rather than joint ventures in China, which also makes China absorb the management experience and technical support of multinational companies through joint ventures, which has been affected. In a word, the inward effect, or crowding-out effect, of multinational corporations entering localization actually exists. Then, in the face of this dual influence, I think all our measures to block the localization process of multinational corporations naturally cannot make China effectively use the spillover effect brought by the localization of multinational corporations. Then, it is unrealistic to completely rely on the localization of multinational companies to complete the creation of independent intellectual property rights in China. Then, the best way is to actively promote the localization of multinational companies from the perspective of the government, and at the same time create the necessary institutional environment and conditions for cultivating independent intellectual property rights. On the other hand, from the perspective of enterprises, we should fully join the industrial chain of multinational companies in the process of localization, so as to obtain the greatest benefits in this process.