International Expansion and Doing Business in China: A case study

Abstract

ABSTRACT

Entering the Chinese market can be challenging, but it is difficult to ignore the opportunity that China offers. The main objective of this study is to investigate a Norwegian large-scale machinery and equipment production potential international expansion and which entry mode they choose to China. The choice of entry mode to China is pre-eminent on the success of the company's expansion operation. a qualitative research methodology was applied in this study where semi-structured interviews were conducted to collect data from four different companies. The findings of this study described the Norwegian large-scale machinery and equipment enterprise (LSE) have the potential to do business in China due to the increasing influences on the company's internal and external factors. In addition, the hierarchical entry mode Greenfield operation best suited the company due to three main reasons: (1) the company's production logistics is its vital competitive advantage, (2) the technical nature of the company has high complexity that may require service both and after-sale, and (3) the tacit component of firm-specific know-how is difficult and expensive to transfer.

Also, the cultural differences between the home and the host country affect business relationships. The study also probes the business practices based on the hands-on experiences of the companies in Møre of Romsdal in doing business with the Chinese. In other words, tips on what to do and not to do in doing business in China. Moreover, this study finds that there are five key success factors that a company must consider succeeding in doing business in China.

The global mitigation and lockdown caused by the Covid-19 pandemic have a negative impact on international expansion. Therefore, this study suggests that the company should wait for its plans for expansion to China until the pandemic is manageable.

KEYWORDS: Internationalization, market entry modes, international risk and barriers, host culture, network, "loosing face", psychic distance, SWOT analysis, PESTEL analysis, Covid-19 pandemic