During the last years the globalisation has increased the competition amongst the companies and made them more willing to enter foreign markets. Developing a market entry strategy is very complex and has long-term consequences for a company. Thus, choosing an adequate market entry strategy has an enormous importance.
The present term paper is concerned with international market entry strategies especially for the Chinese market on the example of Volkswagen.
In chapter two some theoretical basics of international market entry strategies are provided. In this sense, the term of international market entry strategy is defined and the motives for companies to enter foreign markets are analyzed.
In chapter three the development of a market entry strategy for the Chinese market is examined. Therefore, the significance of the Chinese market will be shown at the beginning. Afterwards, the timing and the location of market entry will be explained. Finally, three forms of market entry will be presented.
The fourth chapter creates a practical connection of the topic by explaining the market entry strategy of Volkswagen.
Table of Contents
1 Introduction
2 Theoretical basics of international market entry strategies
2.1 The term of international market entry strategy
2.2 Motives for companies to go international
3 Strategies to enter the Chinese market
3.1 Significance of the Chinese market
3.2 Timing of market entry: When to enter?
3.3 Location of market entry: Which market to enter?
3.4 Form of market entry: How to enter?
3.4.1 Representative Office in China
3.4.2 Chinese Joint Venture
3.4.3 Wholly owned subsidiary
4 Case study Volkswagen
4.1 Short profile of Volkswagen
4.2 Market entry strategy of Volkswagen
5 Conclusion
Objectives & Core Themes
This paper examines the complexities of international market entry strategies, specifically focusing on the Chinese market through the practical example of Volkswagen. It investigates the theoretical foundations of entry modes and analyzes how foreign companies navigate the Chinese economic landscape to achieve sustainable growth and competitive advantage.
- Theoretical framework of market entry and corporate internationalization motives.
- Strategic analysis of the Chinese market significance and entry timing.
- Evaluation of various market entry forms including Representative Offices, Joint Ventures, and Wholly Owned Subsidiaries.
- In-depth case study of Volkswagen’s entry into China and its long-term strategic partnership with SAIC.
Excerpt from the Book
3.1 Significance of the Chinese market
“Nobody can afford stay out of China – the business world is sinocizing.” (Jörg Wuttke, Chief Representative BASF China)
After the beginning of economic reforms in 1979, which led to an opening up of the Chinese market, China has become one of the most interesting and attracting international markets for foreign companies.
China is characterized by a sustaining high rate of economic growth and political stability and distinguishes itself from other emerging markets like Eastern Europe, Brazil, or Indian by its high market potential, low labour costs, and ample business opportunities.
Considering the size of the Chinese market with its 1.3 inhabitants and the tremendous rise of the purchasing power and the enormous increase of consumer spending, it becomes clear why many companies assign China a strategic importance for their future sales performance. Hence, Marketing in China offers companies increasing profits and expanding global market share.
Similarly, as a consequence of its low labour costs, manufacturing in China helps companies to reduce their costs and to increase their competitiveness. This means that China offers not only opportunities on the sales market, but also opportunities on the factor market.
China’s high potential for foreign companies becomes also clear in the World Investment Prospects to 2011 of the Economist Intelligence Unit. China is viewed as the most important country in the companies’ investment plans. Fully 85 % of respondents consider China to be important (see figure 1).
Summary of Chapters
1 Introduction: This chapter provides an overview of the rising importance of market entry strategies due to globalization and outlines the structure of the study.
2 Theoretical basics of international market entry strategies: This section defines the terminology of market entry and explores the fundamental motives for companies to expand internationally.
3 Strategies to enter the Chinese market: This chapter analyzes the specific conditions of the Chinese market, including entry timing, location, and the various available forms of entry.
4 Case study Volkswagen: This section applies the previously discussed theories to the practical example of Volkswagen’s market entry and development in China.
5 Conclusion: The final chapter synthesizes the findings, highlighting the necessity of careful strategic planning for successful market entry in China.
Keywords
Market entry strategy, China, Volkswagen, Joint Venture, Internationalization, Globalization, Economic growth, Manufacturing, Business expansion, Representative Office, Wholly Foreign-owned Enterprises, SAIC, Competitive advantage, Market potential, Foreign investment.
Frequently Asked Questions
What is the primary objective of this paper?
The paper aims to evaluate how companies develop and implement successful market entry strategies, using the Chinese market and Volkswagen as a primary case study.
What are the main thematic areas covered?
The study covers internationalization theories, the significance of the Chinese economy, timing and location strategies for entry, and specific legal entry forms like Joint Ventures and WFOEs.
What research methodology does the author use?
The work utilizes a combination of literature analysis for theoretical grounding and a qualitative case study approach, supported by a personal interview with a Volkswagen employee.
What is discussed in the main body of the text?
The main body contrasts different entry modes, analyzes the PESTEL framework in the context of market evaluation, and details the historical and strategic evolution of Volkswagen’s partnership in China.
What are the fundamental motives for global expansion discussed?
The author identifies market opportunities, Economies of Scale, Economies of Scope, and location-specific advantages as the four primary drivers for internationalization.
Which keywords best characterize this work?
Key terms include market entry strategy, Joint Venture, China, Volkswagen, and international business management.
Why was a Joint Venture the preferred strategy for Volkswagen?
A Joint Venture allowed Volkswagen to navigate legal and political restrictions while gaining essential local knowledge and established networks through their partner, SAIC.
What is the main challenge identified in the Volkswagen-SAIC partnership?
The core challenge stems from diverging strategic objectives; while Volkswagen sought quick market entry and barrier creation, SAIC primarily aimed to acquire Western technology and managerial know-how.
- Quote paper
- Laura Parlabene (Author), 2012, Market entry strategy for the Chinese market on the example of Volkswagen, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/204369
