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Multinational Firms in ChinaEntry Strategies, Competition, and Firm Performance$
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Sea-Jin Chang

Print publication date: 2013

Print ISBN-13: 9780199687077

Published to Oxford Scholarship Online: January 2014

DOI: 10.1093/acprof:oso/9780199687077.001.0001

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Foreign Entry Strategies

Foreign Entry Strategies

(p.32) 2 Foreign Entry Strategies
Multinational Firms in China

Sea-Jin Chang

Oxford University Press

Chapter 2 examines multinational firms’ strategies in China. Multinational firms do not appreciate forced joint ventures. Thus, they refused to import their sophisticated technology and/or brands when entering China until competitive pressures became too intense. When the joint venture requirement policy relaxed, already entered multinational firms transformed their incumbent joint ventures into wholly owned subsidiaries. This enabled foreign firms to bring in more intangible resources and improve firm performance. This chapter also examines the sequential expansion of multinational firms upon entry. Multinational firms tended to expand from affluent and open coastal regions into inland areas in order to capture early mover advantages and avoid competition. More recent investments tend to be larger and favor greenfield investments over acquisitions. This chapter begins with a case study of the Chinese automobile industry in which multinational firms were required to form joint ventures to enter, which in turn posed great management challenges.

Keywords:   Foreign entry modes, joint ventures, wholly owned subsidiaries, location choices, sequential investment

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