Literature Review
As have been mentioned before most of the Internalization Theories are based on developed countries, while it is hard to apply them for developing countries like China without apparent discrepancies. There is a lot of literature, describing the process of entry modes to foreign countries broadly. However, there is not specific theories and literature explaining process of entry mode decision by MNEs especially to China. All foreign automotive enterprises have chosen the same entry mode to Chinese market. It can be explained in formal way by such literature as “The law and regulations prohibit or restrict the establishment of WHOEs in certain Industries”. Chinese government implemented policies and regulations regarding certain
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It states that there is constant pressure from different aspects on foreign firms in the host country. Scot (1995) suggests firms have to obey to the local rules and belief systems prevailing in the environment. In this way, in different countries there are varying institutional environments and MNEs will face diverse pressures. Some of those pressures in the host countries can influence different aspects. For instance, it can affect competitive strategy (Martinsons, 1993; Porter, 1990) and human resource management (HRM) practices ( Rosenzweig and Singh, 1991, Zaheer, 1995). Every host country has it is own individual institutional system, which contains specific characteristics. When a firm first entrants to host country, the most important thing is to pursue a differentiation strategy to distinguish itself from the rest of the competitors. There is a possibility that a firm will not be able to make the unique attributes of its products to be noticed by audience, if a firm remains as …show more content…
There are so many articles and information is presented about “Doing business in China”. Even some MNEs, which successfully operated in numerous foreign countries, failed in Chinese market, just because of misunderstanding Chinese perceived environment (The case with Barbie). It is definitely hard to penetrate in the nature of the host country business environment. The one way to solve this challenge is to joint with local company, a local partner can help the entrant to make understand local way of doing the business. This approach suits even more in countries with developing economy such as China. Since most MNEs are originated in the developed countries, usually they lack the necessary experience and knowledge about local market, political or economic challenges and uncertainties of host country. If MNE has some experience in the host countries through other projects, then it possible to handle local challenges. Whereas, if MNE entrants the host country for the first time, the conditions will not be very beneficial.
Hypothesis 1: Joint venture with local automobile company can help to handle with different kind of Institutional pressures in China.
Institutional environment in China
The main indicators of Institutional environment in China are: governmental system, non-governmental organizations and Chinese culture. The governmental system uses coercive pressure on MNEs. It means that government tends to require
The act also required that any Chinese person who left the U.S. after already entering must have certifications from the Chinese government in order to re-enter. This
The Chinese civilization from 100 C.E. to 600 C.E. rose as one of the major unified empires. While this society grew, there were aspects of culture and politics stayed the same but many changes also occurred. As the empire developed, family units and social classes remained stagnant. Despite these continuities, changes such as the popularity of Buddhism within society due to Indian missionaries and a shift in political rule occurred. During the time period 100 C.E. to 600 C.E. the family unit system remained intact despite the intellectual advances.
Since the late 1970's china under communist rule was under the "One Child Policy." This law was put in place to in hopes raise the economy and improve the living conditions for people. They wanted to curb the population and have a spurt in the economy. The Chinese government began enforcing this policy with propaganda through radio commercials and posters. Once they began to realize that propaganda was not enough to stunt the population they took larger measures. They resorted to abortions, large fines, and demolishing homes.
Over time, China seeks to monitor and control how its citizens use it. “The Great Firewall” blocks websites and pages of certain topics that the government does not want its citizens to see. They do not want its people to look at the way the country is actually runs. The censorship of websites in China characterizes the lack of trust that the government has with the people (James Chinese Internet Censorship). China’s government does not want any video or audio content that will go against their culture and traditions.
One of the many results of the Chinese experience was the Chinese Exclusion Act, which
Additionally, the Chinese government conducted the Hundred Days Reforms under Kang Youwei and Liang Qichao. Previously fearing that industrialization
In April of 2010, China’s government revised a previously existing amendment to increase their control of information flows. This law deals with the endangerment of
This eventually led to the decision of Chinese leaders to implement anther reform to eliminate the instability and return a comprehensive healthcare system to the people of China, leading to it’s healthcare system today (Blumenthal,
As shown, media censorship is a major aspect of Chinese government since it is forcing Legalist ethics to continue to remain prevalent in the country because the government does not wish to accept controversial opposing viewpoints, the nation does not want to undergo another period of chaos, and citizens are being punished for expressing “freedom of speech.” After this, it can be determined that China has always been based off of parts of Legalism. For instance, after the explosion in Tianjin, few citizens were accepting what the government was telling them due to previous incidents (Rauhala). Therefore, media censorship must have been existing for a long period of time if this issue has recurred multiple times. It can also be concluded that this issue will continue to remain prevalent in China ideologies because the government is different from Western countries, meaning there will always be opposition.
The process of globalization, and its impact on economic growth have become the defining influence on the development of modern China. China 's integration into the global economic system has been a multifaceted and complex process, and one that China appears exceptionally eager to embrace. Encompassing domestic policy shifts, engagement with both global and regional institutions, as well as bilateral agreements with various countries, globalization has been an impressively orchestrated process initiated by the very top of the CCP. While advocates of globalization tout the growth of China as proof of its merits, analyzing the actual effects on the ground reveals a much more nuanced reality. Globalization has undoubtedly brought China more wealth and power, but it has also generated a host of other effects, both positive and negative.
In general, it is hard for foreign companies to establish themselves in the Asian market, especially in China, because of the strong cultural background. It will not work out well for a foreign company to adapt its marketing model to the Chinese market. Marketing models such as direct marketing of the brand, which works well in the American market, is likely to fail in the Chinese market. Although Groupon has spent millions into marketing its brand on the Chinese market, the Chinese customers were not ready to see the brand’s products being better as the one of its competitors. Chinese customers are less likely to be loyal to any brand due to their low levels of indulgence.
In this essay, I will speak about the International HRM Case Study - Brunt Hotels by Fiona L. Robson, complete the activities A, C, E, and G, and answer to the questions provided in the assignment. First off, let's see what is about this case and his purpose. The case provided is done with the purpose of understanding the issues involved in domestic and international recruitment and selection in different types of industries. In hotel industry for example, as we have the Brunt Hotels case that helps us to understand and learn how to logically apply the theory to the practical situation in other industries too. Industries that prepare to expand their markets internationally, industries that need to evaluate well and analyze the implications
These are the key aspects that can affect the organisation and management structure of a firm, all these interpersonal communication, management attitude, and social norms have yet been taken into consideration for Porter’s diamond framework. Moreover, Porter’s diamond framework does not cover how national culture will then affect the competitiveness in the national business system (Bosch & Man, 1997). Porter also mentioned that in firm structure and strategy, Japan business system prefers to maintain long-term relationship with their suppliers in the automobile industry is not based on their cultural perspective but rather it is due to pressure under those economic circumstances. This sentence is proven wrong by Whitley (1991), Japanese culture is well known for close connection and long-term employment in order to make their business system unique. Businesses in Japan have strong bonding with their partners to create strategies in reducing uncertainties, likewise these cultural factors is the action that leads to keiretsu being formed in Japan business system (Earley & Singh,
1.0 Introduction The main objectives of this report is to identify and critically evaluate the strategies used by a chosen Multinational Company (MNC) to internationalize. Firstly, this report will clearly analyzed the current internalization strategies that being used by the chosen Multinational Company (MNC) which is Lenovo Group Limited and its relationship with the theory of internalization. Secondly, a relevant of internalization strategies will be proposed in this report which is suitable for the internalization of Lenovo Group Limited.
State-owned enterprises are difficult to penetrate for a foreign company like JPM. Employees with guanxi can minimize JPM’s costs, especially for government procedures, requirements and taxes. Connections add a significant measure of flexibility and freedom inside an authoritarian political system and is critical to JPM’s market access. Hiring the sons and daughter of these ruling elite give JPM immediate access to not just their connections but the connections of their parents as well. This is reflected in the hiring practices and the resultant connections with China Everbright and China Railway Group.