Market Entry Methods for Western Firms in China

The UK continues to be one of Europe’s leading investors in China. Many companies have chosen the international joint venture option as their market entry method. However, in 2000, the growth of wholly foreign owned enterprises & WFOEs exceeded that of JVs for the first time. Could it be that IJVs are on their way out as a market entry method for British firms in China. This article reports on a qualitative study of business relationships between British and Chinese firms designed to examine the comparative advantages and disadvantages of IJVs and WFOEs. Case study companies came from a variety of industries and varied in terms of company size. The evidence from the case studies suggests that the preference for an IJV or a WFOE as a market entry method depends on a number of key factors including company size, experience in China, type of industry, and conditions in the macro environment.