FU, JIAHUI (2008) Mr. [Dissertation (University of Nottingham only)] (Unpublished)

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China has become one of the most popular foreign direct investment

(FDI) destinations since 1980s, and its automotive industry always an

attractive playing field for the global automakers. As there was a gap

in the passenger car market in before the 1980s, all the domestic

manufacturers mainly at that time only produced trucks and buses for

transportation, tractors for agriculture, and jeeps for military. Thus,

the entry seems very necessary to supply this gap in the market; the

early entry will help them to win the first move advantage. For

European and U.S. automakers, the entry into China has become part

of their global strategy. They strive to build up a business base in the

Far East that will limit the dominance of Japanese firms.

From a global strategy point of view, the step of entry into China

seems very necessary; however, Chinas unstable institutional

environment and different kinds of regulation limit the speed of entry.

What the Chinese government wants to achieve through publishing

the regulations to foreign funds, is to foster its own automotive

industry and is not interested in turning China into an expansion base

for European, American and Japanese auto industries. Simply, the

government does not want to lose the control on this pillar industry

while it opens to the world. Till the mid-1990s, the auto industry was

still highly protected in China; high tariff and non-tariff trade barriers,

screening, foreign equity limits and local content requirements are

several common obstacles to the entry of foreigners.

In the past, many researchers have studied the policies in Chinas

automotive industry, but most of them mainly focus on two questions:


how does the protection environment in the auto industry affect the

utility of domestic consumer by limiting their access to the cheaper

import car?; and, how does the protected environment limit the

development of the industry? Most of articles argued that the policy

environment in China provides too much protection and is not good

for the growth of domestic manufacturers. However, there are few

studies focused on the foreign perspective; this paper would change

the angle from the domestic side to foreign side. This paper looks to

explore the link between policy regulations and entry model selection.

In order to analyse this link, two famous joint ventures in the China

automotive industry has been selected for study, the Shanghai

Volkswagen and Guangzhou Peugeot. In the case, three dimensions

about the entry strategy of these two companies will be analyzed.

Finally, this paper is going to answer the question of whether the

regulation is the main factor affect foreigners entry model selection

and whether the limited availability of the entry model would be the

important factor that affects the performance of joint ventures.

In this paper, there are four main sections: Literature review,

Methodology, Research analysis, and Conclusion. In the literature

review section (Chapter 2), all the related theories and models about

the entry model selection and entry strategies will be presented. The

methodology (Chapter 3) will explain the research method of this

research applied, the way to access the data, and the limitation of this

research as well. Research analysis is a large section. All economic

factors and regulations related to how foreign funds get in Chinas

automotive industry will be analyzed in Chapter 4. The case studies of

Shanghai Volkswagen and Guangzhou Peugeot will be shown in

Chapter 5 and Chapter 6 respectively; the three dimensions of entry

strategy of each joint venture: partner selection, control over alliance,


and conflict management will be fully analyzed here. Finally, this

paper is going to present some implications through the comparison

of Shanghai Volkswagen and Guangzhou Peugeot cases, and end with

a conclusion: Regulation and Policy, in some degree, limit the number

of available entry model choices to the foreigner, but any limitation on

the entry model selection should not fully be responsible to the

performance of the foreign funds in this industry. By implementing

and designing a right entry strategy based on the assumption of limit

entry model choice, the foreign funds can still perform very well.

Item Type: Dissertation (University of Nottingham only)
Keywords: entry model, policy regulation, automotive
Depositing User: EP, Services
Date Deposited: 26 Sep 2008
Last Modified: 21 Mar 2022 16:05

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