Competition and Cooperation among Asian Enterprises in China
Interim Report
Edited by SATO Yukihito / KAWAKAMI Momoko
Published in March 2007
Contents, Contributors (91KB)
Preface (46KB)
Chapter 1
An increase can be seen in cases of Japanese investments in China, conducted together with Taiwanese companies and Japanese affiliates in Taiwan, since the end of the 1980s. Most of the cases are JVs (joint ventures) in China between Japanese and Taiwanese firms. However, a previous paper has suggested that performance of trinational international JVs (IJVs), which are JVs with third-country based firms, is the lowest among all types of JVs. The reasons attributed are that this type of JV format lacks local access through a local partner and requires higher organizational costs. Here arises a question: Why have more than a few Japanese companies been setting up JVs in China with Taiwanese firms?
This paper preliminarily shows that the termination rate of Japan-Taiwan JVs in China is not high compared to average termination rate for overall Japanese investments in China. In terms of local access, JVs with Taiwanese companies improve local access for Japanese partners by making it easier (i) to access Taiwanese affiliates with a large economic presence in China, (ii) to smooth entry to the local market by utilizing distribution networks that Taiwanese parties possess in China, and (iii) to get local information from Taiwanese partners whose language and culture are similar to those of China. In addition, it is suggested that organizational costs are generally decreased because of the mutual trust built by the long history of collaboration between Japanese and Taiwanese partners. Finally, the theoretical implications and several remaining points are mentioned with reference to current developments in JVs between Japanese and Taiwanese companies in China.
This paper preliminarily shows that the termination rate of Japan-Taiwan JVs in China is not high compared to average termination rate for overall Japanese investments in China. In terms of local access, JVs with Taiwanese companies improve local access for Japanese partners by making it easier (i) to access Taiwanese affiliates with a large economic presence in China, (ii) to smooth entry to the local market by utilizing distribution networks that Taiwanese parties possess in China, and (iii) to get local information from Taiwanese partners whose language and culture are similar to those of China. In addition, it is suggested that organizational costs are generally decreased because of the mutual trust built by the long history of collaboration between Japanese and Taiwanese partners. Finally, the theoretical implications and several remaining points are mentioned with reference to current developments in JVs between Japanese and Taiwanese companies in China.
Chapter 2
Two large Japanese convenience store chain (CVS) companies, namely Seven-Eleven Japan and FamilyMart, began to set up businesses in China in 2004, both companies following entirely different strategies. FamilyMart chose a team management strategy which has two outstanding characteristics. First, it has been fully utilizing the resources of FamilyMart’s Taiwan subsidiary and second, FamilyMart invited the Ting Hsin International Group (of Taiwan) to act as its partner in the subsidiary company. By contrast,
Seven-Eleven Japan built up its China subsidiary almost wholly by itself, a policy that can be described as a managing-alone strategy. The paper argues that the differences in strategy stem fundamentally from differences in the two companies’ experience of international management and from the knowledge derived from that experience. FamilyMart has considerable experience of building up joint ventures in Asian countries and has accumulated resources in its Taiwan subsidiary. Seven-Eleven Japan has strong confidence in its business model because of its remarkable performance in Japan and its success in rehabilitating the chain in the United States. The paper also illustrates that the choices of strategy have been shaped by the companies’ interactions with two Taiwanese business groups, namely the Ting Hsin International Group and the President Group. Furthermore the evidence discovered by the research indicates that FamilyMart’s strategy enabled the company to build up its operations more quickly than the policy adopted by Seven Eleven Japan. Although Seven-Eleven Japan’s strategy is a more time-consuming way of setting up a CVS business, the approach offers a stronger possibility of establishing a more efficient and more transparent business model than do the approaches followed by the other CVS chains.
Seven-Eleven Japan built up its China subsidiary almost wholly by itself, a policy that can be described as a managing-alone strategy. The paper argues that the differences in strategy stem fundamentally from differences in the two companies’ experience of international management and from the knowledge derived from that experience. FamilyMart has considerable experience of building up joint ventures in Asian countries and has accumulated resources in its Taiwan subsidiary. Seven-Eleven Japan has strong confidence in its business model because of its remarkable performance in Japan and its success in rehabilitating the chain in the United States. The paper also illustrates that the choices of strategy have been shaped by the companies’ interactions with two Taiwanese business groups, namely the Ting Hsin International Group and the President Group. Furthermore the evidence discovered by the research indicates that FamilyMart’s strategy enabled the company to build up its operations more quickly than the policy adopted by Seven Eleven Japan. Although Seven-Eleven Japan’s strategy is a more time-consuming way of setting up a CVS business, the approach offers a stronger possibility of establishing a more efficient and more transparent business model than do the approaches followed by the other CVS chains.
Chapter 3
Surviving in the Middle: Embedded Learning and Managed Dependency among Taiwanese Automakers (213KB) / Lu-lin Cheng
This paper studies the shifting position of Taiwanese car makers in the international production networks of the auto industry in order to reveal the complexities involved in the competition and cooperation among sources of capital in a regional economy. Akamatsu’s flying geese model is a suitable starting point for this broadly-defined area of research. The research on the one hand intends to unveil the contemporary complexities that Akamatsu naturally was not able to foresee when he was writing many years ago, and on the other hand, it inherits one important assumption of Akamatsu’s model that competition and cooperation are potentially in conflict and therefore require careful management to be kept in balance. More importantly, in order to grasp the dynamic processes of the regional division of labor at the present time, I suggest focusing on the level of the firm (instead of on the macro level) so as to investigate how firms (instead of policy makers) manage economic dependency and cultivate learning in their network environments. The cases of Taiwanese car makers are selected for demonstrating the merits of this research approach.
Chapter 4
Competing for Complementarity: Growth of Taiwanese Notebook PC Manufacturers as ODM Suppliers (188KB) / Momoko Kawakami
This paper explores the firm-level competitive edge that underlies the dominance of Taiwanese manufacturers in the world production of notebook PCs. By analyzing the evolution of the ODM(own design manufacturing) business model, the paper argues that Taiwanese manufacturers’ multifaceted capabilities in R&D, mass production, logistics, and after-service have successfully attracted brand companies from developed countries. The paper also examines the mechanism by which this competitiveness has been acquired. It shows that the present achievement of the Taiwanese notebook PC industry is the result of competition among the manufacturers to learn effectively from American and Japanese customers, so as to improve complementarity with these customers. It is this strategic learning that has enabled Taiwanese ODM makers to successfully rise into the world’s most important producers of notebook PCs.
Chapter 5
The purpose of this paper is to examine the development process of marketing-resources based competition in the Chinese market, using the South Korean firms Samsung, LG, and Hyundai as case studies. This study first asks how Korean firms were able to develop a strong market position in China despite their inferiority relative to Japanese firms in technologies. The second question is how Korean firms were able to overcome the challenges of fierce price competition in China, and in particular, how firms were able to evade confrontation with the Chinese firms. In this paper, the strategies of latecomers in the global competitive market will be examined. A detailed description is presented of the process of market entry and market position establishment by Korean firms in China. This paper also shows how the firms develop branding and marketing communication strategies. Product development capabilities with speed and differentiation are the basis of Korean firms’ competitiveness in the Chinese and global markets. The conclusion offers the major findings from the theoretical perspective of marketing-resources based competition and discusses the implications and limitations.