HOW LARGE CHINESE CORPORATIONS ESTABLISH INTERNATIONAL COMPETITIVENESS IN OTHER BRICS- THE CASE OF BRAZIL Hans Jansson Linnaeus Baltic Business Research Center; Linnaeus University; e-mail:
[email protected] Sten Söderman School of Business, Stockholm University; e-mail:
[email protected] Abstract: A major feature of some large Chinese companies is the massive investments in the emerging markets of Asia, Latin-America, and Africa. One main driver behind the Government´s support of the firms, who invest in the emerging markets, is to strengthen and develop a global competitiveness: going from cost advantages in low and medium-tech industries to differentiation advantages in hi-tech industries. This has enabled Chinese firms to challenge the incumbents of many global industries, in particular Western firms. The main purpose of this paper is to describe and explain how two large Chinese firms have gained competitiveness in China for the global market (exit strategy) and transfer and adapt it to another BRICS country, the Brazilian market (entry strategy). The research is limited to the construction equipment industry which has been globalized for many years with a few major global firms dominating the industry. A theory on initial internationalization strategies is developed through an abductive research methodology. It was found that Chinese firms do not yet compete directly with major global firms such as Caterpillar, Komatsu and Volvo CE since the Chinese firms have mainly built their international competitive strength in the low- price segment, while major competitors focused on obtaining the higher-end of the market by relying on their perceived superior technologies, customer service and branding, which differentiates themselves from Chinese construction equipment firms, thereby justifying premium prices for their products and services in the high price segment.