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Old Dominion University ODU Digital Commons Graduate Program in International Studies Theses & Graduate Program in International Studies Dissertations Winter 2014 What Constitutes the Success or Failure of Multinational Corporations (MNCs) in Foreign Markets? A Case Study of Chinese and American MNCs Shiwei Jiang Old Dominion University Follow this and additional works at: https://digitalcommons.odu.edu/gpis_etds Part of the International Business Commons, International Economics Commons, and the International Relations Commons Recommended Citation Jiang, Shiwei. "What Constitutes the Success or Failure of Multinational Corporations (MNCs) in Foreign Markets? A Case Study of Chinese and American MNCs" (2014). Doctor of Philosophy (PhD), dissertation, International Studies, Old Dominion University, DOI: 10.25777/e9ta-r119 https://digitalcommons.odu.edu/gpis_etds/63 This Dissertation is brought to you for free and open access by the Graduate Program in International Studies at ODU Digital Commons. It has been accepted for inclusion in Graduate Program in International Studies Theses & Dissertations by an authorized administrator of ODU Digital Commons. For more information, please contact [email protected]. WHAT CONSTITUTES THE SUCCESS OR FAILURE OF MULTINATIONAL CORPORATIONS (MNCS) IN FOREIGN MARKETS? A CASE STUDY OF CHINESE AND AMERICAN MNCS by Shiwei Jiang B.A. July 2009, Beijing Normal University M.A. December 2011, Old Dominion University A Dissertation Submitted to the Faculty of Old Dominion University in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY INTERNATIONAL STUDIES OLD DOMINION UNIVERSITY December 2014 T5avid Earnest (Director) Brandon Yoder (Member) Shaomin Li (Member) ABSTRACT WHAT CONSTITUTES THE SUCCESS OR FAILURE OF MULTINATIONAL CORPORATIONS (MNCS) IN FOREIGN MARKETS? A CASE STUDY OF CHINESE AND AMERICAN MNCS Shiwei Jiang Old Dominion University, 2014 Director: Dr. David C. Earnest Scholars have identified multinational corporations (MNCs) as increasingly important and influential actors in international politics. However, mainstream international studies scholarship has failed to explain why MNCs succeed or fail in entering foreign markets. Market entry is a particularly vexing question for U.S. and Chinese firms seeking to compete for each other's consumers. As this study shows, surprising differences in success among U.S. firms in China, as well as Chinese firms in the U.S., suggest that statist and market factors interact with corporate strategies in confounding ways. Through case studies in the internet, automobile and fast food industries, this dissertation builds a theoretical framework that better explains why some MNCs succeed in foreign markets while others fail. Empirical studies show that two contrasting cultures (universalism vs. particularism, individualism vs. collectivism, and rule-based vs. relation-based governance) make it more difficult for Chinese MNCs and American MNCs to adapt to their counterpart's market. Although the study finds some support for the cultural dissimilarity argument, it finds that culture alone is an insufficient explanation. The results suggest that statist and market factors like ownership, sector industry, interest groups, entry mode and choice of location are also determinants of a MNC's success in a foreign market. Based on those findings, the study provides suggestions for both Chinese MNCs and American MNCs seeking to compete in each other's markets. This dissertation is dedicated to my family for their love and support ACKNOWLEDGMENTS First of all, I would like to thank all my dissertation committee members: Dr. Earnest, Dr. Li and Dr. Yoder. Without their guidance, encouragement, criticism and invaluable input, I would never have been able to accomplish my dissertation. Second, I would like to express my deepest gratitude to my dissertation director, Dr. Earnest. During the long process of writing my dissertation, I was not only inspired by his insightful thoughts and academic excellence, but also by his patience, caring, and friendliness. Third, my special thanks go to the Graduate Program of International Studies, Office of Institutional Research and Assessment, Office of Distance Learning, Office of Graduate Studies, Linda Hyatt Wilson, Tabernacle Church of Norfolk, First Chinese Baptist Church, and Christ the Redeemer Anglican Church of Norfolk. Without their financial and spiritual support, 1 would never have been able to complete my Ph.D. coursework, publish papers and attend conferences. Finally, I would like to express my heartfelt thanks to my family and friends who accompanied and comforted me during my Ph.D. program. TABLE OF CONTENTS Page LIST OF TABLES......................................................................................... ix LIST OF FIGURES............................................................................................................. x Chapter I. INTRODUCTION AND LITERATURE REVIEW.............................................................1 THE RESEARCH QUESTION: WHY DO SOME SUCCEED WHILE OTHERS FAIL?.....................................................................................................................1 DEFINE MNCS AND THEIR SUCCESSES OR FAILURES...................................... 5 CULTURE............................................................................................................ 11 STATISM.............................................................................................................24 MARKET ENTRY................................................................................................. 37 SUMMARY OF CHAPTER ONE............................................................................43 AN OVERVIEW OF DISSERTATION ORGANIZATION....................................... 46 II. CASE STUDY 1: AMERICAN INTERNET AND MEDIA COMPANIES FAILED IN CHINA............................................................................................................................ 48 INTRODUCTION................................................................................................. 48 GOOGLE’S DEVELOPMENT IN CHINA...............................................................53 WHY DID GOOGLE FINALLY EXIT FROM CHINA?............................................60 EBAY CHINA........................................................................................................67 WHAT MOTIVATED EBAY TO ENTER CHINA?.................................................67 HOW DID EBAY EXIT FROM CHINA: CULTURAL, STATIST AND MARKET CAUSES OF EBAY'S FAILURE............................................................................. 69 FACEBOOKAND SOCIAL NETWORK SITES (SNS) IN CHINA........................... 75 SUMMARY AND SUGGESTIONS FOR AMERICAN INTERNET FIRMS...............81 III. CASE STUDY 2: AMERICAN COMPANIES THAT HAVE SUCCEEDED IN CHINA 86 INTRODUCTION................................................................................................. 86 AN OVERVIEW OF AMERICAN FAST FOOD FIRMS IN CHINA.........................88 KFC AND MCDONALD'S IN CHINA.................................................................... 91 AN OVERVIEW OF AMERICAN AUTO MAKERS IN CHINA............................. 102 GENERAL MOTORS IN CHINA..........................................................................105 FORD IN CHINA................................................................................................I l l SUMMARY......................................................................................................... 116 IV. CASE STUDY 3: CHINA'S STATE-OWNED OIL COMPANIES IN THE U.S.............. 119 INTRODUCTION............................................................................................... 119 AN OVERVIEW OF CHINESE STATE-OWNED OIL COMPANIES.................... 120 viii Page PETROCHINA................................................................................................... 124 SINOPEC...........................................................................................................128 CNOOC..............................................................................................................134 BARRIERS FOR CHINESE STATE-OWNED OIL COMPANIES TO ENTER THE U.S. MARKET............................................................................................138 SUMMARY........................................................................................................ 156 V. CASE STUDY 4: PRIVATE CHINESE COMPANIES IN THE U.S................................160 INTRODUCTION............................................................................................... 160 RECENT TRENDS OF CHINESE FDI IN THE U.S.: PRIVATE FIRMS HAVE OVERTAKEN THE STATE-OWNED..................................................................161 MAJOR U.S. REGULATIONS REGARDING FOREIGN INVESTMENT................166 HUAWEI............................................................................................................ 170 SANY HEAVY.....................................................................................................176 THE SHUANGHUI-SMITHFIELD ACQUISITION...............................................180 VI. CONCLUSION...........................................................................................................187 SUMMARY OF MAJOR FINDINGS.....................................................................187 IMPLICATIONS FOR AMERICAN MNCS IN CHINA..........................................199

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