STRATEGY AND POLICY CHALLENGES FACING INTERNALISATION OF CHINESE FIRMS

Abstract

The present research is about internationalisation of Chinese firms. Its main focus is on strategy and policy constraints which are faced by the Chinese firms when they become international. This research establishes the factors which lead towards the internationalisation of Chinese enterprises. It analyses the strategy and policy constraints which are faced by the Chinese enterprises at local and international level. Then it analyses how the CEO of companies could adopt the appropriate strategies for dealing with the internationalisation process. This research has used the case study method where both primary and secondary data has been used. This research has relied on multiple case studies where Haier Group, Huawei and Lenovo are selected. The sample of 9 managers is interviewed while secondary data is used to supplement the primary data. At the end of this research, research limitations and future research directions are provided.

Part 1

1.Introduction

1.1.Background

China’s fast growing economy contributed to the rapid economic growth of many Chinese enterprises. Therefore, many research studies are conducted on the internationalisation of Chinese enterprises (Liang, Lu and Wang, 2012). Previously, the emphasis of majority of research studies was on finding the factors that has driven the internationalisation of Chinese enterprises (Yeung and Olds, 2016). Unfortunately, little attention has been paid to the challenges which are faced when Chinese firms opt for the internationalisation strategy (Liang, Lu and Wang, 2012). As Buckley (2016) has highlighted, the most common challenges which are faced while internationalisation of Chinese firms are ineffective strategies, conflicting policy objectives along with insufficient managerial skills. Likewise, it is highlighted by Lu et al., (2015) that though it is known that there exists challenges of conflicting policy goals, we still have little empirical evidence that how the internationalisation regulations are influencing Chinese enterprises. Wei, Clegg and Ma (2015) stated that few of policies of Chinese government become a source of entry barrier for enterprises to some countries. Zheng et al., (2016) has reported that China has slow process for approving the cross-border projects. There exists bureaucratic procedures in China which slows down the approval of international projects and many of investment opportunities are lost (Lu et al., 2015). Similarly, Ge and Wang (2013) has reported that current laws and regulations are not effective to allow Chinese enterprises of meet the changing market demands. Therefore, there is an need to review the policies of Chinese government such that competitiveness of Chinese firms could be enhanced. From this, it can be observed that there are policy constraints which are faced by Chinese enterprises when they take the decision to invest in foreign countries. CEOs often has to adopt various strategies for dealing with these constraints; example is formation of foreign alliances (Yeung and Olds, 2016). Though such strategies are being adopted, but still there are various challenges which are faced by the Chinese enterprises. This research contributes in the existing literature by examining these challenges.  Moreover, this research will offer recommendations which will be beneficial for improving the internationalisation policies of China. In a similar manner, it is analysed what are deficiencies of CEO strategies which are faced by them while dealing with these challenges. Moreover, recommendations for CEO strategies are also provided.  The aim is fulfilled through certain objective and the objectives of the study are:

• To establish factors leading to internationalisation of Chinese enterprises
• To establish strategy and policy constraints that Chinese enterprises face locally and internationally
• To analyse how CEO facilitate the internationalisation process of Chinese enterprises.
• To recommend changes in  CEO strategies and government policies that can facilitate the internationalisation process of Chinese enterprises

1.2.Research Questions

• What are the factors that lead towards the internationalisation of Chinese enterprises?
• What are the strategy and policy constraints for Chinese enterprises, both locally and internationally?
• What strategies are used by CEO’s to facilitate the internationalisation process of Chinese enterprises?
• How Chinese government policies could be improved?

1.3.Research Significance

There exists many studies which has explored different aspects of the policy, however, it is found that there exists literature gap regarding the exploration of strategy