Localization Theories In China

2.2. Chinese Theories

Compared to Western theories, Chinese theories are not so complete but they are more suitable for Chinese companies’ condition. In China, from the early nineties of last century, some Chinese economists began to study on the global enterprises management theories and application. For example: National Borderless Business Concept (Qiuzhi XUE, 1997); State-owned Multinational Enterprises Structure (Junjiang LI, 2001); Knowledge Flow Framework (Guoliang XUAN, 2003)... Due to the late start and a complex macroeconomic environment in China, international corporations face huge difficulties and challenges. Both the internationalization theories and applications remain to be improved.

2.2.1. Borderless Business Concept

Qiuzhi

It refers to the multinational companies considering the globe as a heterogeneous market, designing and producing products or services according to the different characteristics of marketing segmentation and consumer needs. The target of companies is to maximize profit, so they always establish series of creative activities which containing manufacturing, sales and development. The companies implementing local operation mode generally have a "holding company" structure, or their overseas business sector plays an important role in multinationals. And the difference between parent company and subsidiary is significant. The parent company doesn’t dominate culture status, but it can integrate culture. The suitable company for this strategy is whose activities are fit to the host customers’ activities, namely the value chain of transnational corporations operating in the downstream activities. For example: a goods industry, whose end consumer is an individual packaged brand, mostly is a personal emotional

Usually it refers to the multinational companies who invest abroad, integrating home culture with local culture, managing with a mutual cultural concept. The companies’ characteristic using this strategy is generally "an equity alliance enterprises" (such as joint venture companies, particularly the two sides’ common management type of joint venture). The condition of companies which suits this strategy is when the competitive advantage mainly comes from downstream activities and the corporations facing with high pressure of globalization, or its competitive advantage comes from the upstream business events and facing with high localized pressure. In addition, in the international companies’ development and operation process, the parent company and subsidiary’s culture should be in a "balanced" position. To achieve an optimal cultural integration, departments would learn from each other, making the whole internal company an organic entity.

(5) Borderless Management Strategy (borderless). "Borderless management strategy" is the advanced form and highest level strategy of "globalization strategy" for MNEs, not all multinationals can achieve that level. At that time, companies will enter a completely new era, in which companies could gain cost advantages and differentiation advantages simultaneously with global efficiency, operating flexibility and worldwide learning ability. The companies would create a value system shared with