A widely respected consultancy firm predicts that the amount of FDI (Foreign Direct Investment) into the petrochemical sector in China will reach USD 30 billion between 2000 and 2005. If we consider the huge investments in China announced by several renowned petrochemical MNCs (multinationals) such as BP, Exxon Mobil and Shell, we can quickly conclude that the chemical market in China has become one of the most attractive for investments.
In a similar way, Company X has also followed this trend and increased its investment more than 250 Million USD in China. An interesting question arises, namely, why is China able to attract such huge investments from so many well-known MNCs including Company X ? What kind of operation risks are entailed when entering this attractive market still under communist rule? Further, why by contrast, is there so much less investment by this multinational company X in Taiwan ?
My research has two objectives which can be summarized as follows :
• To verify if the entry mode chosen by Company X accords with the academic theory about which I have learned in the IEMBA course.
• To provide some clues about the entry modes for new entrants who are interested in investing in the chemical market either in Taiwan or in China.
In principle, companies who want to go international can choose from a wide range of alternatives when deciding how to participate markets in the world. Firms use basically six different modes to enter foreign markets: (1) exporting, (2) turnkey projects, (3) licensing, (4) franchising, (5) establishing joint ventures with a host country firm and (6) setting up a whole owned subsidiary in the host country. Each entry mode is accompanied with respective advantages and disadvantages of which has to be evaluated by the concerned company to meet its needs in a specific business/ market environment. Traditionally, it has been usually the core competence and the extent of market openness for MNCs to drive the choices of entry mode into a new market.
Key words: Entry Modes, Multinationals, Foreign Direct Investment
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0826104-112018 |
| Date | 26 August 2004 |
| Creators | Liang, Chi-Tsong |
| Contributors | Stephen D. Tsai, ¤f¸Õ©eû, Jason H. Huang |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0826104-112018 |
| Rights | campus_withheld, Copyright information available at source archive |
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