International Business

Table of Contents

Differences Between Asian And Non-Asian MNEs3

Internationalisation Models7

Chosen Companies19

European Company: KRÖNLEINS19

Asian Company: ORIGINAL EQUIPMENT MANUFACTURE (OEM)22

Comparison of companies' Internationalisation Process26

References29

International Business

Differences Between Asian And Non-Asian MNEs

Despite the utmost importance of Asian MNE activities in China's economic reform, relatively little is known about their competencies and capabilities relative to Western MNEs. A few efforts have been made to investigate the impact of such distinctive knowledge on international expansion performance (Yeung 1994). It has been concluded in the literature that organizational competence, or ownership-specific knowledge, of Asian MNEs differs from that of Western MNEs. MNEs from developing countries invested abroad based on their knowledge of product and process technologies that were appropriate to the factor costs, input characteristics, and demand conditions of the host countries in which they invest (Wells 1983). They usually utilized smaller scale, more labour-intensive, and less sophisticated technologies than did Western MNEs (Lecraw 1993).

They often competed with Western MNEs based more on lower prices than on product differentiation (Lecraw 1984). Yeung (1997) argued that Asian MNEs, such as those from Singapore, Taiwan, and Hong Kong, also produce technology-intensive products largely confined to those which use the initial technology already developed in high-income countries. On the other hand, Asian MNEs face fewer liabilities of foreignness in their neighbouring countries than Western MNEs. This is because they have accumulated more country-specific knowledge about their neighbouring markets (Yeung 1997). Such knowledge manifests not only in their familiarity with a neighbouring country's macro-economic, political, socio-cultural environments but also in their industrial and collaborative experience with local firms (Luo 1997).

A fundamental driving force of cross-border cooperation lies in economic self-interest, which seeks to exploit market potential or complementary resources, abilities and skills (Ghoshal 1987; Hamel 1991). Asian MNEs benefit by pooling complementary capabilities and manufacturing products in China's investment sites, either through a technology push or a market-pull process (Chen and Wong 1994). In a market-pull process, starting from the downstream market end, Hong Kong and Taiwanese firms, after identifying a particular market need, design a product demanded by the market, raise the necessary capital and produce it in the mainland. The finished goods are shipped through Hong Kong into international markets. China's researchers provide technical input on product design and production. In a technology-push process, researchers in China discover ideas for numerous potential products and processes. Taiwan's experts utilize their Western education and experience to guide the development and design processes, transforming the most promising findings from China's research into products capable of meeting market needs. With relatively low labour and production costs, China's business enterprises then take the product specifications and produce technology-based, market-oriented goods in a cost-competitive manner. These products are then marketed, distributed, and sold mainly by businesses in Hong Kong and Singapore. The entire process is fuelled by capital from Hong Kong and technological expertise from Taiwan.

Market demand similarity and industry Lye cycle distinction Apart from complementary competencies, the dominance of Asian MNEs in China's FDI is also attributable to the similarities in demand conditions, ...