Wages were relatively low in Asian countries like China. Thus, they became lucrative destinations for investment by foreign MNCs competing to dominate world markets. The relocation of industry to low-wage countries stimulated world trade and capital flow.

Impact of MNC’s decision to relocate production in Asian Countries was as follows:

a. It provided a cheap source of labour for MNCs

b. It stimulated world trade and increased capital inflow in the Asian Countries

c. The local population now had a greater choice of goods and services along with prospects of greater employment opportunities for them.