China’s rapid economic growth over the past four decades has propelled it to upper-middle-income status and second-largest economy globally. With its massive population and significant Gross Domestic Product (GDP), China presents immense opportunities for export-oriented European companies, making it a key market despite its complexities. Entering the Chinese market presents an excellent growth opportunity for internationally oriented European Business-to-Business (B2B) companies, particularly in sectors like power generation, oil and gas, and chemicals. However, understanding the specific entry barriers in the Chinese market from a European perspective, especially with regard to cultural differences, is crucial for successful market entry.
The goal of this master thesis is to derive recommended actions for an international European B2B company targeting the Chinese market by investigating existing Chinese market entry barriers, their role in the marketing concept, and how these barriers can be overcome. The objective is to derive managerial implications by pinpointing success factors and best practices for entering the Chinese market.
Expert interviews were chosen as the research method to answer the three research questions. As part of the qualitative-empirical research, semi-structured interviews with eleven experts were conducted in the period from March 21 until April 14, 2024. The respondents were selected for their expertise in the Chinese market and, in most cases, their role in marketing/sales. The interview transcripts were analyzed by applying Mayring’s structuring qualitative content analysis and using the computer-assisted qualitative data analysis software MAXQDA Analytics Pro 24.
Table of Contents
- ACKNOWLEDGEMENTS
- TABLE OF CONTENTS
- TABLE OF FIGURES
- LIST OF TABLES
- LIST OF ABBREVIATIONS / GLOSSARY
- EXECUTIVE SUMMARY
- 1 INTRODUCTION
- 1.1 Problem Definition
- 1.2 Goal of Thesis
- 1.3 Structure of Thesis
- 1.4 Usage of AI-based Tools in the Thesis
- 2 THEORETICAL FRAMEWORK
- 2.1 Market Entry Barriers
- 2.1.1 Definition
- 2.1.2 Relevance
- 2.1.3 General Market Entry Barriers
- 2.1.4 Chinese Market Entry Barriers
- 2.2 Chinese Market
- 2.2.1 Environmental Factors
- 2.2.1.1 Political
- 2.2.1.2 Economic
- 2.2.1.3 Social
- 2.2.1.4 Technological
- 2.2.1.5 Environmental
- 2.2.1.6 Legal
- 2.2.1.7 Summary
- 2.2.2 Cultural Factors
- 2.2.2.1 Hall's Cultural Classifications
- 2.2.2.2 Hofstede's Six Cultural Dimensions
- 2.2.2.3 Summary
- 2.3 Elements of a Marketing Concept
- 2.3.1 Strategic Plan
- 2.3.1.1 Entry Strategy
- 2.3.1.2 Segmentation, Targeting, and Positioning
- 2.3.2 Marketing Plan
- 2.3.2.1 Product Strategy
- 2.3.2.2 Price Strategy
- 2.3.2.3 Distribution Strategy
- 2.3.2.4 Promotion/Communication Strategy
- 2.3.2.5 Summary
- 2.3.1 Strategic Plan
- 2.2.1 Environmental Factors
- 2.1 Market Entry Barriers
- 3 METHODOLOGY
- 3.1 Contextual Factors
- 3.1.1 Power Generation
- 3.1.2 Oil and Gas, and Chemical Industry
- 3.2 Development of Interview Guide
- 3.3 Selection of Interview Partners
- 3.4 Conducting the Interviews
- 3.5 Qualitative Content Analysis according to Mayring
- 3.1 Contextual Factors
- 4 FINDINGS AND DISCUSSION
- 4.1 Findings and Recommended Actions
- 4.1.1 Existing Chinese Market Entry Barriers
- 4.1.2 Role of Chinese Market Entry Barriers in the Marketing Concept
- 4.1.3 Best Practices to Overcome Chinese Market Entry Barriers
- 4.2 Discussion
- 4.2.1 Existing Chinese Market Entry Barriers
- 4.2.2 Role of Chinese Market Entry Barriers in the Marketing Concept
- 4.2.3 Best Practices to Overcome Chinese Market Entry Barriers
- 4.1 Findings and Recommended Actions
- 5 CONCLUSION AND OUTLOOK
- 5.1 Managerial Implications
- 5.2 Limitations
- 5.3 Future Research
- 6 LIST OF REFERENCES
- APPENDIX
Objective & Thematic Focus
This master thesis aims to derive recommended actions for an international European Business-to-Business (B2B) company targeting the Chinese market by thoroughly investigating existing Chinese market entry barriers, analyzing their role within the marketing concept, and identifying strategies to overcome them. The primary objective is to pinpoint success factors and best practices for European B2B companies entering this complex market.
- Analysis of specific market entry barriers in China from a European B2B perspective.
- Investigation of the influence of these barriers on the marketing concept (e.g., product, price, place, promotion).
- Development of best practices and recommended actions for successful market entry.
- Detailed examination of environmental (PESTEL) and cultural factors in the Chinese market.
- Qualitative-empirical research methodology using expert interviews.
- Focus on specific industries: power generation, oil and gas, and chemical sectors.
Excerpt from the Book
Market Entry Barriers
First of all, it must be mentioned that several different definitions of market entry barriers can be found in the literature (McAfee, Mialon, and Williams 2004). For instance, a market entry barrier can be described as “... anything that prevents an entrepreneur from instantaneously creating a new firm in a market” (Carlton and Perloff 2016, p. 100). However, due to controversial definitions, economists have not yet achieved a general consensus on the definition of a barrier to market entry. After McAfee, Mialon, and Williams (2004) reviewed seven primary definitions from relevant literature, they concluded the following definition: "An economic barrier to entry is a cost that must be incurred by a new entrant and that incumbents do not or have not had to incur” (McAfee, Mialon, and Williams 2004, p. 463). Incumbents are hereby understood as established players. This definition of market entry barriers is used in the framework of this master thesis. In addition, the impact of purported entry barriers on market entry timing as well as the influence of interactions between various alleged entry barriers on market entry timing are significant factors that should not be overlooked (McAfee, Mialon, and Williams 2004).
Market entry barriers represent critical environmental factors that impact the market share and profitability of existing firms within the market. For established players, maintaining or constructing high barriers will pose challenges for potential newcomers attempting to enter the market. Conversely, for new entrants, the existence of either high or low barriers serves as guidance in selecting markets (Karakaya and Stahl 1989). Successfully addressing market entry barriers and surpassing early movers are crucial aspects of competitive strategy (Yaprak 2012).
Although exit barriers are regarded as counterparts to entry barriers, analyzing an industry often involves considering the significance of their combined level. Figure 1 demonstrates the relation between entry barriers, exit barriers, and profitability.
From the perspective of industry profits, the optimal scenario occurs when entry barriers are high yet exit barriers are low. In such cases, entry is discouraged, and unsuccessful competitors are likely to exit the industry. In contrast, the worst scenario arises with low entry barriers and high exit barriers. In such cases, easy entry is encouraged by economic upturns or temporary gains. However, despite deteriorating results, capacity remains in the industry, leading to a buildup and typically poor profitability (Porter 1998, pp. 22–23).
In general, both strategic and structural market entry barriers are of high importance whereby the efficacy of strategic barriers relies on the characteristics of market structure. The seven most relevant factors regarding market entry are (Lutz, Kemp, and Gerhard Dijkstra 2010): (1) Capital (2) Access to distribution channels (3) Strategic action (4) Research and Development (R&D) (5) Advertising (6) Government regulation (7) Product differentiation.
Summary of Chapters
Chapter 1: Introduction: This chapter provides the background for the master thesis, defining the problem of market entry barriers for European B2B companies in China, outlining the thesis's goal and research questions, and detailing its structure and the limited use of AI tools.
Chapter 2: Theoretical Framework: This section establishes the theoretical foundations by exploring general and Chinese-specific market entry barriers, examining China's environmental (PESTEL) and cultural factors (Hall's and Hofstede's models), and detailing the elements of a marketing concept, including strategic and marketing plans.
Chapter 3: Methodology: This chapter describes the qualitative-empirical research approach, focusing on expert interviews with eleven specialists, outlining the development of the interview guide, selection of interview partners, interview execution, and the qualitative content analysis method used for evaluation.
Chapter 4: Findings and Discussion: This chapter presents the empirical findings from expert interviews regarding Chinese market entry barriers, their role in the marketing concept, and best practices for overcoming them, followed by a discussion comparing these findings to the theoretical framework.
Chapter 5: Conclusion and Outlook: This concluding chapter summarizes the managerial implications derived from the research, highlighting key recommendations for European B2B companies entering the Chinese market, discussing the limitations of the study, and suggesting avenues for future research.
Keywords
Market Entry Barriers, China, European B2B Companies, Marketing Concept, Cultural Differences, Government Regulations, Strategic Planning, PESTEL Analysis, Hofstede's Cultural Dimensions, Qualitative Content Analysis, Joint Ventures (JVs), Product Differentiation, Supply Chain, Social Media Marketing, Power Generation
Frequently Asked Questions
What is the main topic of this work?
This master thesis investigates market entry barriers for an international European B2B company targeting the Chinese market and proposes recommended actions to overcome them.
What are the central thematic areas?
The central thematic areas include understanding Chinese market entry barriers, their impact on the marketing concept, cultural differences between Europe and China, and best practices for successful market penetration, with a focus on power generation, oil & gas, and chemical industries.
What is the primary goal or research question?
The primary goal is to derive recommended actions for an international European B2B company by analyzing existing Chinese market entry barriers, their role in the marketing concept, and effective strategies for overcoming them.
Which scientific method is used?
The research primarily uses a qualitative-empirical approach, conducting semi-structured expert interviews and analyzing the transcripts using Mayring's structuring qualitative content analysis.
What is covered in the main part?
The main part of the thesis covers the theoretical framework, detailing market entry barriers, the Chinese market environment (PESTEL and cultural factors), and elements of a marketing concept, followed by empirical findings, recommended actions, and a discussion of these results.
Which keywords characterize the work?
The work is characterized by keywords such as Market Entry Barriers, China, European B2B Companies, Marketing Concept, Cultural Differences, Government Regulations, Strategic Planning, and Best Practices.
How do Hall's and Hofstede's cultural dimensions apply to China and Germany in the context of business?
Hall's classification highlights China as a high-context, polychronic culture prioritizing relationships, contrasting with Germany's low-context, monochronic, task-oriented approach. Hofstede's dimensions show China with a large Power Distance and collectivist nature, while Germany is individualist with a small Power Distance, though both share high scores in Motivation towards Achievement and Success.
What are the most significant market entry barriers for European B2B companies targeting China?
The most significant barriers include intangible resources (especially cultural and language barriers), policy and sunk costs (government regulations), and the highly competitive environment, often characterized by rapid innovation and local preferences.
Why is local production in China considered vital for long-term success for European B2B companies?
Local production in China is crucial because Chinese companies prefer locally manufactured products to avoid long shipping times, and it helps overcome competition in a market where speed and agility are highly valued, allowing for quicker responses to demand changes.
How do Chinese government policies and the competitive environment influence market entry for European firms?
Chinese government policies, characterized by rapid changes and protectionist measures, create unpredictability and complex regulatory hurdles. The competitive environment is fiercely intense, with local firms demonstrating high speed, agility, and technological advancement, making it challenging for European newcomers to gain market share without significant adaptation and investment.
- Citation du texte
- Laura Hins (Auteur), 2024, Market Entry Barriers for an International European B2B Company Targeting the Chinese Market, Munich, GRIN Verlag, https://www.grin.com/document/1670982
