跨国公司的国际化进程和动机的研究-中国跨国公司的研究-A study of Internationalisation process and motives for multinationals—re

1.0 INTRODUCTION  引言

自20世纪70年代末以来，中国从一个封闭的中央计划体制转移到以市场为导向的全球化角色 - 在2010年中国成为世界最大的出口国（中国经济）。外企喜欢中国的市场前景，以及外国公司要进入中国市场，但是，当外国企业进入一个陌生的市场，公司将面临许多新的问题和t如何进入中国市场。跨国公司如何控制中国市场和政府之间的信息并调整策略，以实现公司结构的利润。

Since 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 world's largest exporter (china economy). 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 control the information between Chinese market and government, and to adjust the strategy to realize the profit of the company structure.

1.2 Background  背景

在全球市场上，WTO（世界贸易组织）作为协会已经吸引了不少成员，它提供了优势的环境，促进跨国公司的国际化进程（坎特维尔，1998）。国际化进程和动机对中国公司的背景有两个方面。 20世纪90年代以来，跨国公司开始自己的市场扩展到中国。

In global market, WTO (World Trade Organisation) as an association has attracted a lot of members which provide a advantage environment to promote the internationalization 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 country 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 already opened industries, the instability of China’s 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 process 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 follows (Roger 1999):#p#分页标题#e#

1.    There are shortages of people with business skill.

2.    Consumer incomer are very low

3.    Distribution systems are poor

4.    There are few ancillary business services. (advertising agencies, market research firm, etc)

5.    Commercial laws were only drafted in the 1980s, and are frequently 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 questions 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 of internationalization in China.

To establish organization motives for internationalisation.

1.5 structure of the report

By literature reviews and analyzed case study, the motives of international, the internationalisation process, entry strategy and motives for multinational in China will be discussed 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  文献综述
 

It is important to notice the arrangement and choice of literature resource, which may be influence the scientificity of 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 Multinational 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 mainly 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 China’s 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 capabilities 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 be classified into four categories, China’s 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 factors 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 supportive 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 firm’s productivity heterogeneity; Secondly, central 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 transfer the political diplomacy into economic diplomacy.#p#分页标题#e#

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 grouped 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 there is no statistically significant correlation between multinational’s 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 mode 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 opportunities 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-rui (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 China 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 the trade structure, build state innovation system, we should emphasis on independent innovation instead of merely international R&D.

DU De-bin(2005) According to the difference of their investment motivations and location choices, the author summaries MNE’s overseas R&D labs as three categories. Production 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 acquire their competitor’s known-how and other technological information, so they prefer the location to close their competitor’s R&D facilities in more advanced countries. The motive of technology resource excavating R&D labs is to utilize the host country’s professional talents and other technological resource 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.#p#分页标题#e#

KANGWan-zhu (2007) thinks that In the course of Chinese enterprise internationalization, 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 strategies more efficiently.

SongDian, Wu Xiangjing (2006) consider that the unmatch of organizational structure and strategy is one of the main reasons of Chinese enterprises’ poor international performance. Based on the fact that most Chinese enterprises choose the market exploiting strategy in international operation, this paper, adopting strategy and structure theory as analyzing tools, considers the international enterprises of China need to construct organizational structure and should choose the international business division structure which is on the basis of multidivisional structure. Only by this means, can they realize the goal of being geared to markets and integrating global resources of the enterprises.

WU Ci-sheng (2005) consider that in recent years, along with China joined the WTO and economic globalizations, the human resource management problem within the enterprise internationalization stages is value by the people. This paper analyzed the human resource management problem within enterprise internationalization stages and the influence factors put forward the method of choosing the right human resource management strategy to fit the organization structure change within the internationalization stages.

Is non-sequential internationalization process solely technology enabled or a product ofmutually interdependent forces? Aihie Osarenkhoe’s (2009) paper aims to show that even though the sequential approach in the process model is intuitively appealing, not all firms follow such a path. Hence, integrated framework to explain how the international market entry process has changed with respect to the sequential approach is presented.

Nicholas Alexander, Hayley Myers (2000) consider the development of international retail thought and the need for an integrated conceptual approach to the process of retail internationalisation. The paper considers the development of international retail thought within the context of international retail activity and subject development and suggests the intellectual influences on the development of retail thought have, at times, constrained the development of a better understanding of the internationalisation process. Having established the parameters of debate, the paper considers the search for a synthesised approach to the understanding of the internationalisation process and integration of retail international theory within broader economic and international business frameworks. In the context of this theoretical material, the paper presents a framework within which international activity may be considered.#p#分页标题#e#

In recent years the scale and scope of retailer internationalisation activity has grown markedly, mainly through increasing levels of cross-border merger and acquisition activity. This has been particularly prevalent among companies operating in the food retail sector. During this time, and within the context of increased merger and acquisition activity in international markets, the financial institutions have taken an increasingly prominent role in the retail internationalisation process. Mark Palmer, Barry Quinn (2003) explores the nature of the financial institutions’ role in the retailer internationalisation process and, specifically, the extent to which the financial institutions actually inhibit and/or promote retail international activity. A key purpose of this study is to examine some of the drivers and inhibitors of the retailer internationalisation process. Their reports the findings from 30 in-depth interviews with food retail analysts of the leading investment banks in the City of London. The findings from this study should help to provide further insights into the nature of the retailer internationalisation process.

Andrew McAuley (1999) in his paper reviews several facets of the state of play of current research into the internationalisation process. In particular, the author considers origin, geographical coverage, methodology and the theoretical impact of this research domain. The paper concludes by suggesting future directions for colleagues researching in this area and argues that interdisciplinary initiatives by colleagues are likely to be the most productive.

Nelson Oly Ndubisi (2009) consider the outward-inward growth link has been enabled by the growth in reciprocal trade, which has resulted to an increasing number of small and medium enterprises (SMEs) venturing into foreign markets that were initially thought to be impossible due to their financial and foreign market knowledge constraints. As shown by Matanda and Ndubisi, and Shamsuddoha et al. in this issue, this, combined with government support initiatives in some cases, has culminated in a number of SMEs internationalising their activities. SMEs are gaining more and more inroads into overseas markets through different modes of entry and market oriented strategies. As demonstrated by Matanda and Ndubisi, market orientation is associated with high value creation and business performance of these SMEs.

3 Research methodology  研究方法
 

The qualitative research method play an important role in the social science research filed and it is widely used in all kind of research objects. This research method is adopted mainly by humanities and social sciences such as sociology, economics, polities, ethnology, and anthology and so on. It is fact that there are all kinds of factors to influence the change of social phenomenon that is research object of social science. And this article is belonging to the research range of social science, in which the impact factors are beyond the man-made controlling. So the qualitative research paradigm can gain the nature of research object from wider scope and fully mobilize the creative thinking. For the topic in this article, to effectively finish the research on Internationalisation process and motives for multinationals should wholly and creatively deal with different issues in theory and practice. Besides, China as an important developing century in world and it has complex national condition, so Multinational Corporation in China also is carried with these complex features. Besides, there is a main research methodology in this article: empirical research methodology that is used in the data resource analysis to explore the all kinds of factors impact on internationalization process and motive for multinationals. In general, the qualitative research method combines with empirical research method is beneficial to development of validity and reliability of research process and results.#p#分页标题#e#

Specifically speaking, the arrangement of research methodology including the qualitative research and empirical research as the following: the rang of qualitative research mainly including literature review and theory analysis, and the empirical research is used in the data collection and quantitative analysis on these data. In this arrangement process, the Internationalisation process and motives for multinationals is analyzed in different steps by the corresponding research method. For example, the qualitative research used in the literature review can expand the research idea scope and can critically analyze the related research status. And the theory analysis can proved theory tools to the development basic status of Multinational Corporation in China and it make for the rethink of adjustment and change of these pre-existing theories on the new environment and China, which is help to archive theoretical innovation.

In this dissertation, writer proposes to carry out qualitative research as the major methods. Review the research topic, writer thinks that it is valuable to investigate of internationalisation process and motives. Writer prepares to use interview to investigate results of research questions. But it has a lot of limitation if only using small ranges interview. Meanwhile, this approach will use small case studies and company internal data as a secondary data resource to assist data analysis of strategy alliance.

Procedure

l Preparing interview questions which focus on research topic

l Telephone or email ask for an interview

l Future, the interview will be recorded and explain the usage of interview is for academic research only

l Interview findings collection

l Data analysis 
 

4. Analysis of internationalization process and motives for Multinationals Corporation in China  中国跨国公司的国际化进程和动机的研究
 

4.1 The development status of Multinational Corporation in China

With the rapid development of China economy and China has become an important part of emerging market economy, more and more multinational corporation are absorbed into China market which play an key role in the internationalization process of multinational corporation. So it is important to analyze the development status of Multinational Corporation in China.

Because Multinational Corporation is the main power those plays the investment bodies in the China investment structure, so the increase of the number of Chinese foreign investment by the aid of the investment of Multinational Corporation. So the development status of Multinational Corporation has been seen from this perspective, which can be divided into three stages. From 1979-1991 as the first phase, from 1992 to 2001 is the second stage, and the third stage was began to 2002. From 1979 to 1991, foreign number is small, which is $ 2-3 billion per year. The number of foreign investment from 1992 to 2001 has reached the first peak that reaching more than 400 billion U.S. dollars. From 2001 to 2008, foreign investment number has rapidly risen year by year. In 2008, foreign investment in China exceeded $ 90 billion. From this change of the number of foreign investment, it is easy to see the multinational corporation in China has success in internationalization process.#p#分页标题#e#

Nokia comes from Finland tycoon and it is headship in the global correspondence industry, in 2008 its amount of investment was 56 Hundred Million Dollar and it enters into China in 1985. And Motorola reached 64 Hundred Million Dollar in2009 and it entered into China market in 1992. Ericsson is the primary and second suppliers it brings have invested more than CNY 5,000,000,000 in R.O.C. Samsung is Korean mainland invests an object country outside the maximum and invest the biggest Korean business and it’s amount of investment was 75 Hundred Million Dollar in 2009. SONY’s amount of investment was 21 Hundred Million Dollar in 2009 and its sales takes up 5% of the easy to traffic and make a quota to have global 1/4.

Since the 1990s, multinationals invest in China is the most intensive, the investment layout is more rational, and they more comprehensive considerate its global strategy and management structure. At this stage, almost all the multinational corporation of various industries in China set their stages for R & D center, in which manufacturing base, local training centers, and procurement centers have been up and running. For the integrated management of business in China, multinational companies have established their headquarters building in China, which has become an important symbol of its development in China and has also become a landmark of foreign investment in China's booming.

4.2 The cased study on the internationalization process and motives for multinationals in china

4.2.1 Sanofi–Aventis

In recent years, as China's economy continues to rise, the deepening of reform and opening-up continues to expand, especially after China's accession to the WTO, multinational pharmaceutical companies under the guidance of the global strategy according to local conditions to implement research plan and development, human resources, investment philosophy, management style, and marketing strategies.

Sanofi–Aventis’s internationalization process and motives in China market are finished from these approaches including market localization, human resource localization, and research and development localization. Sanofi - Aventis through a series of public relations activities constantly to establish a good corporate image and visibility in order to obtain the support of the Chinese Government. At the same time, it continues to integrate into the Chinese national culture, which in order to reduce disparities and promote the development of the company. Such as the localization of public relations, in 2006 it in cooperation with the Chinese Ministry of Health to implement a four-year Diabetes Prevention Project, including medical personnel training projects in 18 provinces in China. Public health and liver disease in China have its own particularity, so Sanofi- Aventis also did product portfolio program in China. So Internal medicine medicine for the treatment of various liver diseases and influenza vaccine are produced in production plant in China. Implementation of business localization in China able to take full advantage of the Chinese market, production costs, the cost of human resources and the advantages of low manufacturing costs, which reduce overall costs and improve overall efficiency, so that it can always occupies an important market share in the increasingly fierce market competition.#p#分页标题#e#

Localization of human resources strategy in the localization strategy of Sanofi-Aventis played infrastructure and security role. Sanofi - Aventis from the perspective of localization to manage localization strategy, which is to solve people's problems when operating in China: to establish a management team that has the characteristics of local culture; develop a local management team. Localization characteristics of the management team laid the basis for Sanofi - Aventis in China to implement the localization business strategy. It first enter into the Chinese did not had the clear idea and did known implement what kind of strategic thinking and the concept of localization is not clear. After 1995, Sanofi - Aventis began a massive investment in China market; the same year it set up its first joint venture; began from 1995 it speed up the localization of management training. Therefore, training the local management staff is an integral part of manages localization strategy and Local managers can reduce operating costs. Training is the important part of training of local managers, in which Sanofi - Aventis in order to achieve the management localization strategy to manage localization, and it achieved good results. Through various forms of training, the percent of Sanofi - Aventis local managers is more than 90%. Sanofi - Aventis pay attention to the diversity of localized management training methods, such as: the company's internal training programs and overseas training programs, training programs inviting foreign experts, job technical upgrading programs, and Sanofi-Aventis custom course plans.

4.2.2 Wal-Mart

Wal-Mart has been vigorously pursuing globalization and it since 1991 from the United States expand to overseas. In 1993, the number of overseas stores in Wal-Mart accounts for only 1% for all stores and this percent has grown to 25% in 2000, and after two years it grow to 27%. From 1996 to 2000, Wal-Mart's sales growth of 27% came from overseas operations.

In 1996, Wal-Mart had ready to enter into the Asian market and the development direction locked the Chinese market. This choice is very wise, because of the relatively low purchasing power of Chinese consumers proved a huge space for development to cheap discount retailers such as Wal-Mart offers. The same time, taking into account the obstacles to China's culture, language, and geographical distance, Wal-Mart has decided reargued two markets as a beachhead fortress, gradually entering the Asian market including China market. Wal-Mart in Shenzhen continuous set up 5 shops, but five consecutive years it does not expand to other cities in China, but it did localization of the construction of up to five years. China's policy and market environment are not suitable for large-scale mergers and acquisitions or expansion. Tolerance of Wal-Mart is completely understandable. But this is five years, precisely as it won a team of localization and the localization of the operating experience. Wal-Mart (China) in no hurries to profitable, and it pay the more vision on the Wal-Mart's global procurement to fully familiar with the procurement Chinese goods. In 2002, Wal-Mart's scale of procurement has reached $ 13 billion. Its procurement profitable is enough to open 100 stores in China. Until 2001, it was let go the pace of off-site shop. Under the support of the full localization of human resources and global procurement resources, we can say that Wal-Mart is more terrible than any other foreign retailers. Because of its huge purchasing power is enough to support it maintain the level of long-term profitability and eventually dominate the market in any Chinese city.#p#分页标题#e#

In China, Wal-Mart regard Shenzhen in southern China as the center, in southwest Kunming is regarded as the center, Beijing is regarded as the center in north China, and in northeast of China Dalian is the center. This pattern of regional development has been initially formed. In 2001, Wal-Mart global procurement headquarters from Hong Kong moved to Guangdong and Shenzhen is base, and in the world it extends 20 purchasing locations. Wal-Mart distribution had set up stores in the Northeast and the Pearl River Delta, and in eastern China set up shops. Walk out the Pearl River Delta, and speed up the pace and scope of distribution in China is undoubtedly the focus of Wal-Mart China in the future.

4.3 Total analysis

From the above analysis including case study such as Sanofi-Aventis and Wal-Mart, it is easy to summarize the basic mode of internationalization process and the characteristic of motives for Multinational Corporation in China.

4.3.1 Mode decision of internationalization process

1. International strategy

Parent company develops existing core competencies and delivers valuable skills and product to overseas subsidiaries. The leading countries with technology advantage absorb the headquarters of enterprises that often adopt this strategy. In this mode, the parent company transfer technology and knowledge to subsidiaries around the world, such as IBM, Xerox, and Eastman Kodak Company all put the core technology move to overseas market including China. But Coca-Cola Company and Procter & Gamble are more based marketing skills.

2. Multi-country strategy

Parent companies establish subsidiaries in various countries and give the decision-making power to subsidiary strategic, in which subsidiaries under the guidance of parent company’s overall strategy to provide products and services according to local circumstances. In this mode, each subsidiary is an autonomous unit with all the functions in the local market. Advantages: strong ability to adapt the market. Disadvantages: high operating costs and less knowledge transfer between subsidiaries.

3. Global strategy

The parent company does centralized decision-making and implements strict control to overseas operations and regarded over the world as a single market.  In this mode, the companies in order to seek low-cost usually selected a few several low-cost place to establish a global scale processing in order to achieve economies of scale. For example Sony’s globalization strategy and local management is this type.

Advantages: lower costs. Production, marketing, R & D activities are concentrated in a few of the most favorable locations to obtain economies of scale, which is tend to concentrate production. U.S. Gillette sells the same products in all countries of operation, use the same production methods, adopt the same marketing strategies, and publish the same ad. So this company is currently in control of the shaving products market share of 70 percent of the world. Disadvantages: (1) The increase in management costs; a large number of cross-border coordination work including human and financial resources; (2) weak ability to adapt to the host country; (3) an activity is concentrated in a single region that will make the enterprise activity depends on the region, which not conducive to long-term improvement of the competitiveness; (4) parent company’s over-the decision will discourage subsidiary autonomy and morale.#p#分页标题#e#

4. Transnational strategy

The parent company seeks the unity between globalization more efficient and nimble responsive of local, which in order to gain a competitive advantage. This mode makes certain functions concentrated in the most cost-place, and some other functions are submitted to the subsidiary in order to adapt to local conditions, which promote exchanges between the subsidiaries. Such as CaterPillar Tractors company that establish large-scale parts processing factory. Local characteristics in the assembly process will be melted into the product. Advantages: to achieve economies of scale; to adapt to the local market of the host country (global); activities are located in the best areas; promote the flow of knowledge and learning (multinational).