A study of Internationalisation process and motives for multinationals.docx

1、A study of Internationalisation process and motives for multinationals1.0 INTRODUCTION1.1 IntroductionSince the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the worlds largest exporter (china ec

2、onomy). The foreign companies prefer Chinese market prospect, and the foreign companies want to enter the Chinese market, however, when the foreign companies to enter an unfamiliar market, the company will face many new problem and how t enter the Chinese market. Multinational companies how to contr

3、ol the information between Chinese market and government, and to adjust the strategy to realize the profit of the company structure. 1.2 BackgroundIn global market, WTO (World Trade Organisation) as an association has attracted a lot of members which provide a advantage environment to promote the in

4、ternationalization process and motives for multinationals (Cantwell, 1998). The background of internationalisation process and motives for China corporations has two aspects. Since 1990s, multinational corporations started to extend their market to China. Due to global economics development, every c

5、ountry can not develop simply by their own power. It has to open their market and become multinationals. Although the Chinese government after accession to the WTO on the regulation of the industry has continually relaxed, however, the restrictions in many industries is still evident, even in some a

6、lready opened industries, the instability of Chinas policy also have risk for multinational companies. Since the world economy is becoming global, that provides a lot of business opportunities. Every multinational wants to improve their profit through internationalisation. The internationalisation p

7、rocess of multinationals is in close connection with behavioral models. Therefore, internationalization must be understood in the process in which multinationals manage to achieve their current international status. A number of difficulties apply to foreign companies wishing to operate in China, as

8、follows (Roger 1999):1. There are shortages of people with business skill.2. Consumer incomer are very low3. Distribution systems are poor4. There are few ancillary business services. (advertising agencies, market research firm, etc)5. Commercial laws were only drafted in the 1980s, and are frequent

9、ly imprecise.6. There is little information on consumer tastes and preferences.1.3 Research question:This academic research primary aims to explore internationalisation process and motives for multinationals in China. Given the primary direction of this research, it has a series of research question

10、s involving relevant areas of the topic as the break-down of the study:1. What are the most common processes of international used by organization in China?2. What are the organizational motives for internationalization?1.4 Research objectives The objective of this study is to determine the process

11、of internationalization in China.To establish organization motives for internationalisation.1.5 structure of the reportBy literature reviews and analyzed case study, the motives of international, the internationalisation process, entry strategy and motives for multinational in China will be discusse

12、d in this dissertation. Through case study analysis and information obtained, hope the outcome can be helpful and provide the answer for multinational in China.2 Literature review It is important to notice the arrangement and choice of literature resource, which may be influence the scientificity of

13、 this research. First, this literature review focuses on these literatures from Chinese academic community, which is determinated by the theme of this topic that research on Multinational Corporation in China. Second, the voice and experience of China is important to sustainable development of Multi

14、national Corporation in China and world. Certainly, it is fact that more and more scholars outside China pay attention to the research on Chinese Multinational Corporation go to world and Multinational Corporation come from other countries enter into China market. So the body of literature review ma

15、inly includes literature come from the Chinese academic community and English-speaking academic community, but the literature come from the Chinese academic community occupy an important part for this literature review. WANG Gen-bei,ZHAO Jing, WANG Xin-yi (2010) in their research point out that Chin

16、as development path has been widely recognized as being unique, with gradual privatization and marketization, massive private capital inflows， and extensive exporting and an active involvement of government in business affairs. This uniqueness of Chinese institutional change challenges the capabilit

17、ies of present theory of international business， including research on the entry mode. The options available to a foreign firm only include joint venture and sole venture. Several factors that determine the choice of a Chinese market entry mode have been identified in this paper： These factors can b

18、e classified into four categories, Chinas progress of marketization, the productivity heterogeneity of multinational corporations, global competiveness of hosting country and bilateral political relationship between China and other countries. This study examines the independent influences of these f

19、actors on the choice of the multinational corporations entry mode in China. ML-Binary Logit regression model is employed to test the hypothesized effects. The empirical results are based on a sample of over 1400 foreign entry activities into China between 1980 to 2008. The findings provide supportiv

20、e evidence for eight hypotheses. Based on these empirical findings, this paper proposes the following suggestions: Firstly, central government should builds the differentiated micro -regulation mechanism on multinational company in China according to the firms productivity heterogeneity; Secondly, c

21、entral government should make such a policy with which MNC exchange their advanced technology for the sake of their national treatment and market entry in China; Thirdly, in order to provide mutual and equal national treatment and market entry for Chinese oversea firms, central government should tra

22、nsfer the political diplomacy into economic diplomacy.HUO Jie, JIANG Zhou-wen, and YANGHong-qing (2011) in their paper Using data on 65670 foreign investment enter prices, this paper studies the impact of psychic distance on the modes of entering Chinese market by multinational corporations. Using g

23、rouped logit models, regressions indicate that differences in languages and differences in industrial development are significantly negatively related to the odds ratio of wholly owned mode, differences in religions are significantly positively related to the odds ratio of wholly owned mode, whereas

24、 there is no statistically significant correlation between multinationals entry modes and differences in levels of education and differences in degree of democracy.Chen Zengsheng, Cui Geng (2011) given the rise of Chinese multinational corporations, how they make foreign market selection and entry m

25、ode decisions warrants systematic investigation. With a survey of manufacturing firms in China, we find that their foreign market selection and entry mode decisions vary significantly across the type of FDI operations. While both developed and less developed economies represent important export oppo

26、rtunities for Chinese firms, developed economies tend to attract more FDI from Chinese firms in marketing, production and R&D operations. The findings shed light on the distinctive motivations for foreign market selection and entry mode decisions by emerging market multinationals.GE Jing, JIN Rui-ru

27、i (2010) in their paper reviews the research on relationship between internationalization and firm performance, and concludes linear shaped, inverted-J shaped, U shaped, inverted-U shaped, and S shaped relationship. They analyzes influencing factors of the relationship and compares researches at Chi

28、na and abroad.Feng Peng-cheng (2009) considers that the allocation of resources in world wide is the substance of multinational corporations international R&D, but MNC s R&D centers in China are at the bottom of “R&D chain”. Thus if we want to accelerate development of High-tech industry, optimize t

29、he trade structure, build state innovation system, we should emphasis on independent innovation instead of merely international R&DDU De-bin(2005) According to the difference of their investment motivations and location choices, the author summaries MNEs overseas R&D labs as three categories. Produc

30、tion supporting R&D labs are aim at technological localization and supporting the overseas production in host countries, and are generally located near their overseas production affiliates in those host countries with a bigger market. Technology tailing R&D labs have a incentive tomonitor and acquir

31、e their competitors known-how and other technological information, so they prefer the location to close their competitors R&D facilities in more advanced countries. The motive of technology resource excavating R&D labs is to utilize the host countrys professional talents and other technological reso

32、urce so they are usually located in the science and technology centers, especially near famous universities and institutes, in those host counties with abundant professional labors and better research atmosphere.KANGWan-zhu (2007) thinks that In the course of Chinese enterprise internationalization,

33、 corresponding sense of culture should be established and developed in light of different stages. Reasonable cultural countermeasures should be put forward in enterprises. Meanwhile, managers should endeavor to cut down cultural conflicts, lower the international business costs so as to put into effect their managing strategie