How suppliers penetrate overseas market: Internationalization of Chinese firms from the value chain perspective

Discussion Papers

No.727

by Mai Fujita

October 2018

ABSTRACT

This paper examines how Chinese firms serving the low-end domestic market internationalize into developing country markets abroad. It adopts a value-chain-focused approach to analyze the internationalization of Chinese firms into the Vietnamese motorcycle industry. The analysis shows that it was Chinese component suppliers rather than Chinese motorcycle manufacturers that successfully penetrated low-end market at the destination. Chinese suppliers did so by focusing on production-related expertise to provide key components to many locally-owned firms that undertook end-product assembly and distribution. The findings suggest that the research on the internationalization of Chinese firms needs to be embedded in the context of industrial organization in Chinese industries and its transformation.

Keywords: internationalization, suppliers, China, Vietnam, motorcycle industry

JEL classification:F1, F2, L10, L20, L62

Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.