MIT Sloan Management Review

Corporate Strategy, International Business

 

Strategies for Competing in a Changed China

By Peter Williamson and Ming Zeng

July 15, 2004

The success of local companies is threatening multinationals’ plans to conquer the China market. Global companies must build new competencies in several areas if they are to regain the upper hand.

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The night before China’s entry into the World Trade Organization in December 2001, Motorola Inc. held its global board meeting in Beijing for the second time and announced an ambitious plan to increase investment, revenue and sourcing by $10 billion each in China over the next five years. Other companies have had similarly grand visions. Telefon AB L.M. Ericsson announced that it would more than double its investment in China to $5.1 billion, also over a five-year period. General Motors Corp.’s plans call for Chinese operations to generate more than $3 billion of revenue by 2008. By that same year, Bayer AG intends to have the second phase of its $3.1 billion production facility up and running to meet forecasted growth in its China sales. These represent just a handful of the thousands of multinationals that have ambitious growth in revenues from China etched into their strategic plans. As China’s accession to the WTO gradually opens new markets and as its growth continues at better than 9% per year, even those that have long resisted China’s temptations are jumping in.

Experienced multinationals are aware of the many challenges they must overcome, summed up by the old adage that in China “everything is possible, but nothing is easy.” Learning from the experience of pioneering companies, savvy investors know they have to contend with a minefield of... To read the complete article, login or sign-up using the form below.

 
 

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