The Internationalization of Chinese Companies - Dissertation Example

Download file to see previous pages The range of sources available about the status of the economy of various countries in Trading Economics and Economy Watch has been useful in analyzing the background of the study. This analysis is significant because unlike MNEs in developed countries the performance of the domestic economy is very important and should form the basis for the performance of Chinese companies in the global markets. There are certain constraints in the internationalization of Chinese companies which could be inferred from the works like Ronconi’s about his observations on the fashion industry, Schlee in respect of country of origin, and Interbrand about international brands. This needs to be studied against the backdrop of the growth and development of international Chinese brands such as Lenovo and Huawei for a better understanding of the strategies used by Chinese companies in internationalization. For example, the country of origin argument can be successfully overcome by acquisition of the existing international brands through M&A strategies. Authors like Yang et al suggest that the companies have to develop the expertise required and establish quality standards, HRD, R&D facilities, supply chain, and manufacturing units overseas. Therefore, creating global brands cannot be achieved in the same proportion of the growth in exports.

2.1 Chinese exports, development of global brands, and economy

The intangible value of a brand depends upon several factors such as level of customer acceptance, popularity, the reach of products, customer profile, intellectual property rights involved, and profile of the products marketed. Bris et al. (2011, p. 5) stated “However, branding comes at a cost, and we expect these firms to have larger R&D expenditures and cost of sales... It is important to find the balance between meeting local demands, and capitalizing on worldwide capabilities and resources where activities are coordinated across countries in an attempt to build efficient operations networks and take maximum advantage of similarities across countries.” The nature of products exported should be amenable to branding. Value addition, quality, and competitiveness are important factors in exports. It could be observed from the following table 1 (major categories above 100) that branding the products in the global market would be difficult for the companies due to several factors. For example, in textiles and footwear, the country’s exports are not comparable to the fashion products of brands like Levis's and Calvin Klein. According to Giovannetti et al. (2010, p. 15) “despite the widespread Chinese competitive pressure across high and middle-income markets and sectors, there still seem to be a competitive advantage of high-quality Italian products, less affected by price competition.” Nevertheless, the economic developments in China would have an impact ct on the world economy. ...Download file to see next pages Read More