...Entry Strategies for MNEs in China: The Case of Danone and DHL International Business Winter 2014/2015 Table of contents 1. Introduction 3 1.1. FDIs and Entry in China 3 1.2. Research Contribution 3 1.3. Research Method 3 2. Literature review 4 2.1. FDIs 4 2.2. Macro Environment 5 2.3. Timing of entry 6 3. Discussion 6 3.1. Introduction of Cases 6 3.2. Motives of Entering China 7 3.3. Joint Venture in China 8 4. Conclusion 9 4.1. Implications 9 4.2. Limitations 9 4.3. Research Outlook 9 5. References 9 1. Introduction 2.1. FDIs and Entry in China How should MNEs enter China? MNEs are usually presented with multiple entry choices, namely export, licensing agreements, franchising and FDIs. While each mode presents advantages and disadvantages, FDIs cause MNEs to make direct investments and be directly present in foreign countries, as opposed to indirect investments and presence through other modes of entry, hence the name “foreign direct investment”. But with direct presence in a foreign country MNEs are subject to both formal and informal institutions, and those institutions will directly influence a company’s decisions and it’s mode of entry (Ingram, Silverman 2002). MNEs have to decide whether to go as a first or late mover and due to what kind of motivation they decide to do FDIs in China. In countries with a weak institutional framework, Meyer et al. (2009) find that MNEs should choose the Joint Venture...
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...business in China you have to understand that the Chinese government sits at the center and holds all the “purse strings”. You may also classify the Chinese government as a special interest group. The government is strictly looking out for themselves collectively or as an individual within the government. Those individual companies wishing to enter into China to establish a business are finding they have to follow a myriad of constraints. The consumers ultimately are affected by one’s ability to do business in China. The context of this paper is cultural, political, economic, financial, historical and self-fulfilling. In the late 1970’s China realized it needed to be more global. Therefore it set out to open up its boarders but still maintain its sense of culture. Upon doing this the political leaders kept and still keep a tight reins on how a company has to do business inside China’s boarders. Economic growth exploded within a 9 year timeframe which has provided financial wealth to the government and its people. Historically before the 1970’s they felt that outside companies and influences would ruin the culture and its sovereignty. China has changed history and along with it the culture, politics, and its economy. Hundreds even thousands of years of culture still influence the Chinese government and the Chinese people on how they allow business to be conducted within China. One key issue that you must understand when negotiating with companies in China is the bureaucracy...
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...“First-mover advantages” is defined as the benefits that accrue to firms that enter the market first and that later entrants do not enjoy. The opposite of first-mover advantages is called “late-mover advantages.” (Peng, 2011) First movers enjoy many benefits. For example, they gain advantage through proprietary technology. First movers may also make preemptive investments. Japanese MNE’s picked South-East Asian distributors and suppliers as new members of Keiretsu, but blocked all the late movers. It is also possible for the first movers to erect significant entry barriers for late entrants, such as high switching costs due to brand loyalty. Another great advantage of a first mover is that, they can avoid clash with dominant firms at home. Intense domestic competition may drive some non-dominant firms abroad to avoid clashing with dominant firms head-on in their home market. For example, Toyota was dominant in Japan. But Honda took the opportunity and entered American market ahead of Toyota. Finally, first movers may build precious relationships with key stakeholders such as customers and governments. Motorola entered in China in 1980 and has benefited from its lengthy presence in China. China adopted Motorola’s technology as its national paging standard, which resulted in blocking of other firms. Late movers also enjoy many benefits. First of all, late movers many be able to free ride on the huge pioneering investments of first movers. Second, first movers face greater...
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...Google in China Case Study 1. From a business perspective, what are the arguments for and against entering the market for Internet search in China in 2005? There were many arguments for and against Google going into China like legal, cultural, and ethical challenges facing Google when the decision was made to provide services to China. When Google entered China, locations and hosted servers were maintained by Chinese employees in addition to strict censorship regulations governed by the Chinese government. Google was faced with managing employees and a business that followed different laws and cultures compared to their American counterparts. Arguments For | Argument Against | Rapidly growing internet population | Strict Government regulation | Source of revenue and talent | Cultures | One of the fastest growing economies | Breaking own “Code of ethics” | | Violating Ethical Standards | 2. From an ethical perspective, what are the arguments for and against entering the market for Internet search in China in 2005? From the ethical perspective Google has an obligation as a Multinational corporation toward human rights, corruption, and freedom of speech. Google’s values are to make the world’s information “universally accessible and useful” and to its informal corporate motto, “Don’t Be Evil”? Going into China the Chinese government as a communist government did not want information made readily available to the public for any content pertaining to certain...
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...The contrasting strategies Analyst felt that FedEx and UPS established themselves in China till the late 1990s following different corporate styles. While FedEx believed tackling foreign competition head-on, UPS believed in partnering with them. UPS, was happy to enter into lease agreements with other companies already having its presence in China. While FedEx’s main thrust was on capturing the accounts of its multinational customers operating in China, UPS tried to build an image of a local company. Advertising and promotion However, during the late 1990’s, as the competition in the logistics business in china intensified, both FedEx and UPS started emphasizing on promotion to attract Chinese customers. Till the late 1990s there was a marked distinction in the approach of FedEx and UPS towards advertising and promotion in China. FedEx followed an approach which emphasized on heavily publicizing its services offering in China. It launched intimidating ad campaigns to attract customers. One of the ad’s showed the tail of a FedEx plane parked in front of a forbidden city saying, “ Call FedEx , it’s almost forbidden not to.” FedEx stressed on promoting its service offerings and enhancing brand awareness among the customers in China. For this purpose, it hired a popular media partner, OMD based in Hong Kong. On the other hand UPS emphasized less on advertising because it preferred to project itself as a local company, but still it held up a six-week T.V campaign...
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...Curran Dandurand, the senior vice president of Mary Kay Cosmetics Inc.’s (MKC) global marketing group is considering how to expand the company’s international operation. She is debating which elements of MKC’s culture, philosophy, product line, and marketing programs might be transferable both in general and in particular in respect the China and Japan, two major Asian markets in which MKC does not have a presence. Dandurand must decide whether to enter either or both of these markets (or neither) and, if so, what marketing entry strategy to pursue. This case gives your global marketing team the opportunity to: 1) explore why two companies (Avon and MKC) in the same business (the direct selling of cosmetics) differ so greatly in the percentages of their sales that are international 2) examine the transferability of a corporate value system developed in the United States to foreign subsidiaries 3) identify the criteria that should determine which country markets a multinational should enter and to assess two countries against these criteria 4) contrast the implications for marketing strategy and tactics of being a late entrant in a mature market versus a relatively early entrant in an emerging market The objective of the case is to focus on the following issues and dilemmas: 1. Why has MKC not been as successful as Avon in penetrating international markets? Answer in terms of the following: • Compare Avon’s international sale as a...
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...companies and governments of different nations, have effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. Among different nations, China is undoubtedly one of the important counties in the world. China is now not only the “World Factory” but also one of the largest and high growing markets for any kinds of products and services. In the old days when China was ONLY a factory we still have a choice to bypass it and go for alternatives if we do not like the country. Now, it China becomes a major consumer market that no one can afford to ignore. Even we choose not to export to China or sell to the Chinese, the Chinese enter every industry and market you are working in and compete with your business. Most companies nowadays are seeking ways to expand their business to China market. For Team 1 to Team 5 Project Presentation (15%) Length of the presentations will be 15 minutes. Softcopy of the presentation (only ppt or pdf file is accepted) should be submitted into Canvas 24 hours before the presentation and no change can be made after the submission. 10% of total presentation scores will be deducted for any late submission. For Team 6 to Team 10 Project Reports (15%) The report should be within 1500 words excluding student full name, ID, class section and appendix. Softcopy of the written report should be submitted into Canvas 24 hours before class...
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...turnaround speed for ships at ports. On 25 September 1969 they incorporate DHL. In 1998, Deutsche Post began to acquire shares in DHL. It finally reached majority in 2001 and completed the purchase in 2002. Finally, by 2003 this company status is under the business group of Deutsche Post World Net (DPWN) Germany. Deutsche Post then effectively absorbed DHL into its Express division, business units and subsidiaries. Currently they delivering to over 70,000 destinations in 227 countries with 6,500 offices around the world, the company had over 150,000 employees globally. Belgium-based DHL International (DHL), in collaboration with its Chinese partner; Sinotrans which was also known as the China National Foreign Trade Transportation (Group) Corporation, launched an international express service, in China. Its core business was transporting documents and packages, which was a door-to-door delivery service particularly targeting parcels and freight items. The service offered shorter delivery and pick-up times, besides providing better customer service and shipment visibility via DHL‟s “Track-and- Trace” technology. DHL also offered some other services like e-commerce and logistics solutions for industries like automotive and life sciences. With its innovative and customized solutions, DHL emerged as the world’s leading express and logistics company. It...
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...The life of the immigrant is rarely easy. Immigrants abandon their life in order to seek out a vague promise of a better one in a foreign land. Usually what immigrants find in their new land is not a rosy as the stories made them out to be. Both Hawaii and China Men are tales of immigration and hardship. In both novels the asian/polynesian community are exploited to build the infrastructure of the land they live in. As well, both novels show how hard it is to be accepted by the white community they are seeking to join. There are differences within the hardships though. The presence of white people within the lives of the asian/polynesian are starkly different in Hawaii and China Men. The parallels and dissonances between the two novels highlight...
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...TABLE OF CONTENT CONTENTS | PAGES | 1. Company Background 1.1 Introduction 1.2 Company Profile | 23 | 2. Country Competitiveness2.1 Firm Structure, Strategy and Rivalry2.2 Demand Condition2.3 Factor Condition | 44 – 55 – 6 | 3. International Entry Strategies3.1 Where to Enter3.2 When to Enter3.3 How to Enter | 88 – 99 | 4. Different Culture Environment4.1 Malaysia4.2 India4.3 China | | 5. Conclusion5.1 Strengths5.2 Weaknesses5.3 Opportunity5.4 Threat | | 6. Bibliography | | | | 1.0 Company Background 2.1 Introduction Pizza Restaurant was opened by two brothers Dan and Frank Carney in 1958 in Wichita, Kansas. Dan and Carney borrowed 600 Dollar from their mother to open Pizza Hut Restaurant. After borrowing 600 Dollar from their mother, they purchased second-hand equipment and rented small building in their home town. In 1959, the 3rd Pizza Hut restaurant was set up as a Franchise which they open in Topeka, Kansas. Their vision is to develop Franchise System which became a worldwide successful marketing model. Pizza Hut was first mover towards international market and set up first Pizza Hut outlets in Canada in 1968. Almost ten years later, Pizza Hut serving one million customers in a week in their 310 locations. In 1970, Pizza Hut was put on the New York Stock Exchange under ticker symbol PIZ. International Pizza Hut restaurant became 100 in number while the total number of Pizza Hut reached 2000 in 1976...
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...products include plastic fans and fan parts produced at its facilities in Hangzhou, China and custom plastic parts produced at its plant in Pontiac, Michigan. The company's major customers for its standard and customized fans are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, and appliance manufacturers. Recently, the company has experienced some issues with its. On-time deliveries in the China plant have averaged only 93% over the past year, which is inadequate for a Six Sigma company focused on exceeding ISO 9000 manufacturing standards. The senior management team must examine all steps in the material requirements planning, supply chain management, and production and inventory processes to look for potential areas to eliminate waste and redundancies, gain efficiencies through automation or other process changes, and improve the process design and supply chain for the manufacturing of its electric fans. Production and Inventory Processes Change Recommendations After reviewing the production process of the plant in Hangzhou, China, the team noted inefficiencies in several departments due to the manual procedures being utilized and redundancies in certain departments, including the inventory system. The importance of a good inventory control system cannot be overstated as it is tied directly to the financial performance of an organization (Chase, 2006). The China plant does not have an integrated inventory system with its...
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...China – entry into WTO * Reduction of trade barriers, and limits to import. * Reduction of goverment subsidies and other form of support. * Equal treatment for foreign and domestic firms. * Trade barriers between provinces removed. * Market size up, opportunity to export. * Opportunity to offshoring and outsourcing. Steel – before 2000 * Many low quality steel mills; subsidies * Overemployment * Only 8 mills reached min efficiency to win profits. * World’s biggest production of steel and iron. * Productivity – 10% of other countries productivity. * China demand for high-end steel: undersupplied, but supply off low-end stell: oversupply. After 2000: Reduce subsidies – small steel mills exit * Acquisitions mergers * Ricardian model: China specializes in low-end steel. * Krugman: small firms should exit * large firms grow * medium firms: characterize supply PC: Before 2000 * China produces low-end products * High growth of the market, focus on education * Price wars in the late 90’s * Competitive with HP, Dell etc. * Profit seekers. After 2000: * Market experience * Competitive with western firms Monopolistic competition. AC falls. Offshoring to China: Hardware and low skilled labor – wage difference TV: Before 2000: Oversupply, saturated market. * Unused capacity * Financial support from the government * Foreign tv producers target high-end...
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...The reason why these movie star become so popular because they produce a lot of martial art film during that time. And then these martial art film brought to the western audiences. In fact, A lot of english speaking country or european start to aware of Asian movie in that time. Back to Hong Kong cinema, The cinema of Hong Kong is one of the major movie industry in the Chinese language speaking cinema. Before 1997, Hong Kong was a colony of Britain and therefore Hong Kong had a greater freedom on economic and political than mainland China. Even in film industry, The censorship system in Mainland China have a very strict rule. " Hong Kong filmmakers either steered away from criticzing China or did so in oblique ways ". Therefore, the Hong Kong film maker can barely sell their film or have to re-produce another verison to adapt the market in China. On the other hand, the America or other Euro country censorship system are vary widely than China. And a lot of Hong Kong film producers try to sell their films to some western country. But I think it was not that easy for the very beginning because the western...
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...1 Introduction China as the country with largest population in the world alongside by the fact that that is also second biggest economy in the world is considered in last years as one of the most interesting market in the world to enter. Aim of this paper is describe Chinese wine market and answer the research question “Is it China still attractive from the wine market perspective and what has been changed since wine became present in Chinese supermarkets?” In 2001 China’s wine production sales revenues, profits and taxes exceed those of spirits for the 1st time. Comparing the periods 2002- 2006 with 2007-2011 wine import grew ten times in value and four times in the volume. Despite of long history of grape wine in China, this country is usually...
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...Republic of China (PRC) to attract tourists, but most have evolved into quiet and organized walkways, like the one above. This is partly because the acceptance of a market economy transformed roadside markets into convenient supermarkets. No more haggling for prices over the noise of 20 others doing the same, or dodging children when settling your mobile market. Instead, responsible citizens, like the man in the picture to the right, can spend time recycling household waste in an effort to care for their neighborhood (Nuo). This coordinated and desirable lifestyle is made possible by domestic and foreign businesses that enter the market with permission of the government. Wal-Mart (WMT), an American business, abides by national and international law to assist those in China with their own development goals. WMT claims to conduct more annual internal audits than any other company, at 13,600 reviews. When violations are detected WMT does not hesitate to take harsh measures (Sweatshops). WMT seams its corporate policy with international regulations to ensure their workers the rights they bear as participants in a market economy. WMT labor practices in China promote free market-enterprise. In order to understand how WMT promotes free market-enterprise through its labor practices, first I will define the key terms, such as labor practices and free market-enterprise or free enterprise. Then, I will provide the criteria to evaluate the existence of a free market in China and how its...
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