Designing the Mode of Entry



As explained before1, the choice of basic entry mode is just one step in the market entry process. The specific and further design of the chosen institutional form of market entry is at least equally important to ensure that the market is served most adequately. The graph below summarizes the theoretical findings on market entry mode as discussed in Chapter 2 and serves as guidance for the analysis.


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  1. 1.
    Cf. section 2.3.Google Scholar
  2. 1.
    Paglee, 1996, p. 1.Google Scholar
  3. 1.
    Cf. Box 5–1.Google Scholar
  4. 2.
    Cf. Box 5–2.Google Scholar
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    Cf. Box 5–3.Google Scholar
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    Interview, P. Vaessen Google Scholar
  7. 1.
    Interview, F. Kraan.Google Scholar
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    Cf. section 6.4.Google Scholar
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    Paglee, 1996, p. 2.Google Scholar
  10. 1.
    Interview, R. Marijnen.Google Scholar
  11. 1.
    Interview, G. Lempert-Schwarz.Google Scholar
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    Arthur Andersen, 1997, p. 15.Google Scholar
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    An important recent development for international distribution companies is the promulgation of “provisional measures on the establishment of Sino-Foreign Joint-Venture Trading Companies” in September 1996. Within these measures foreign companies are allowed to take a minority share in a company that specializes in import and export trade. For the time being the pilot program only applies in the Pudong New Area in Shanghai and in the Shenzhen Special Economic Zone.Google Scholar
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    Interview, T. Wu.Google Scholar
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    Arthur Andersen, 1997, p. 15.Google Scholar
  16. 1.
    Arthur Andersen, 1997, p. 15.Google Scholar
  17. 1.
    Based on a number of interview partners who preferred to remain anonymous.Google Scholar
  18. 1.
    Fraser, 1997, p. 23.Google Scholar
  19. 1.
    Interview, P. Vaessen.Google Scholar
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    N.N., 1997d, extracted from Reuters.Google Scholar
  22. 1.
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  28. 1.
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  29. 1.
    Ehrlich, 1994, pp.1; Interview, F. Haferkamp and U. Franke.Google Scholar
  30. 1.
    Interview, F. Weigerstorfer.Google Scholar
  31. 1.
    Cf. Box 5–5.Google Scholar
  32. 2.
    Interview, J. Weber.Google Scholar
  33. 1.
    Something similar happened to the Anglo-Dutch consumer goods giant Unilever with its State joint venture partner. The State partner’s parent company started producing a washing detergent that had a similar formula to Omo, in a strikingly similar box. (Source: N.N., 1997a, extracted from Reuters)Google Scholar
  34. 2.
    Cf. Box 5–5.Google Scholar
  35. 3.
    The proper selection of a Chinese brand or trade name is given attention in section 6.1.3.Google Scholar
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    Interview, F. Weigerstorfer.Google Scholar
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    Contractor, 1985, p. 72.Google Scholar
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    Newland, 1996, p. 16.Google Scholar
  43. 1.
    Branding issues is given more importance in section 6.1.1.Google Scholar
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    When Gillette bought itself into a Shanghai based state company that held 75% of China’s razor market, it was appalled to learn that the sales division consisted of just 13 people. (Source: N.N., 1997a, extracted from Reuters)Google Scholar
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    N.N., 1997n, extracted from Reuters.Google Scholar
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    Cf. Vanhonacker, 1997, p. 134.Google Scholar
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    Cf. Box 5–9.Google Scholar
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  50. 1.
    Interview, S. Mason.Google Scholar
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    Arthur Andersen, 1993, p. 150.Google Scholar
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    Vanhonacker, 1997, p. 136.Google Scholar
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    For a detailed overview, see Table 5–6.Google Scholar
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    Based on own considerations.Google Scholar
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    N.N., 1997, extracted from Reuters.Google Scholar
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    Interview, C. Barrow.Google Scholar
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    Vanhonacker, 1997, pp. 135.Google Scholar
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    In July 1993, Anheuser-Busch took a 5% equity stake in Tsingtao, one of China’s largest domestic brewing companies. As it has no control at all over management, the stake is considered a portfolio investment rather than an active foreign direct investment.Google Scholar
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    HK/PRC is referred to when the company is listed at the Hong Kong Stock Exchange but when the parent company constitutes a Chinese State-owned company.Google Scholar
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    Cf. interviews, G. Chu and B. Kam; McLaughlin, 1996, pp. 16; N.N., 1996, extracted from Reuters.Google Scholar
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    Cf. section Scholar
  68. 3.
    The costs of expatriates are typically between US$ 200,000 – US$ 500,000.Google Scholar
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    This is in line with other companies that have wide-scale operations in China. Large multinationals like Procter & Gamble, Unilever and Motorola have all set up training facilities for their employees. See for example: N.N., 1995a, pp. 8; and MA, 1997, extracted from Reuters.Google Scholar
  70. 1.
    Interview, V. Gauthier.Google Scholar
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    MA, 1997, extracted from Reuters.Google Scholar
  72. 3.
    International hotel chains face annual turnover rates of up to an intolerable 89%.Google Scholar
  73. 4.
    MA, 1997, extracted from Reuters.Google Scholar
  74. 5.
    N.N., 19961, extracted from Reuters.Google Scholar
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    Cf. N.N., 1997j, extracted from Reuters; N.N., 1997u, extracted from Reuters.Google Scholar
  76. 1.
    N.N., 1997b, p. 1.Google Scholar
  77. 2.
    Interview, J. Chadwick.Google Scholar
  78. 3.
    Based on author’s own considerations.Google Scholar
  79. 1.
    Although no specific numbers could be obtained, the localization at the two soft drink companies is further advanced. Most of their plants are led by mainland Chinese or “returnees” from abroad.Google Scholar
  80. 2.
    Garrett, 1997, p. 63.Google Scholar
  81. 1.
    Cf. Lieberman/Montgomery, 1988, p. 47.Google Scholar

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© Springer Fachmedien Wiesbaden 1999

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