Multinational Firms in China

As a consequence of aggressive competition, Chinese industries have become increasingly consolidated. While the extent to which emerging local firms can challenge well-established multinational firms varies by industry, there are common characteristics of 'winners' within each firm type. A handful of multinational and local firms emerged victorious by acquiring small, weak, and regional players to become truly national players. During this process, weaker multinational firms were crowded out of the market by stronger multinationals as well as by emerging local powerhouses. The successful local firms that survive competition in China have global ambitions and venture into international markets, challenging foreign multinational firms in the global marketplace. This book examines how multinational firms grew their operations in China and how successful local firms emerged from the restructuring process, as well the competition between them, in the fierce marketplace of China's economic reform. While anecdotal evidence on this topic is widespread, there exists no comprehensive research. This book seeks to address this gap by rooting its discussion in the author's extensive and rigorous statistical analyses and detailed case studies across five industries: consumer products, beer, telecom, automobile, and steel. Professor Sea-Jin Changs book is a must-read for scholars and analytically minded practitioners seeking deep insight into competition in the worlds most hotly contested market: China. Multinational Firms in China seamlessly blends rigorous academic research with informative case studies, distilling the complex competitive dynamics that exist between local Chinese enterprises and Western multinational firms. As such, it provides an inspiring model for studying managerial and competitive practices from an ambicultural perspective. Ming-Jer Chen, Leslie E. Grayson Professor of Business Administration, the Darden School, University of Virginia, and Fellow and Past President, the Academy of Management Professor Sea-Jin Changs book is a continuation of his stellar research on foreign direct investments in China. This book is data-driven and rich in empirical details and conceptual frameworks. The standard work on FDI in general and FDI in China in particular typically focuses on dynamics at the country, regional, or industry levels. Professor Changs contribution is that he has marshaled impressive firm-level data that allowed him to examine FDI dynamics in far greater details than others have done. I recommend this book highly and enthusiastically. Yasheng Huang, Professor of International Management, MIT Sloan School of Management Sea-Jin Chang brings his masterful academic sleuthing and deep knowledge of East Asia to bear on a topic of great salience to academics, managers, and policymakers around the world, how competition in China has unfolded. Like India, China means different things to different people; it is complex enough to encompass many perspectives. Changs embrace of the analytical challenge of dealing with this complexity, through statistical analyses and fieldwork, is what makes Changs analysis relevant and riveting. Tarun Khanna, Author of Billions of Entrepreneurs and Winning in Emerging Markets1. Introduction ; 2. Foreign Entry Strategies ; 3. Emerging Local Competitors ; 4. Competition between and among Foreign and Local Firms ; 5. Performance of Foreign Firms ; 6. Competing for the Future ; Appendix 1. Annual Industrial Survey and Definition of Firm Ownership Types ; Appendix 2. Entry Mode Decision ; Appendix 3. Location Decision ; Appendix 4. Performance Implication of Conversion of Joint Ventures to Wholly Owned Subsidiaries. ; Appendix 5. The Privatization and Firm Performance ; Appendix 6. Calculating Productivity ; Appendix 7. Determinants of Foreign Firms Market Share ; Appendix 8. Survival Analysis of Foreign and Local Firms. ; Appendix 9. Profitability Analysis of Foreign and Local Firms ; Appendix 10. Income Shifting in China