“The risk of missing out on China is greater than the risk of doing business in this country” (Heinrich von Pierer, former Siemens CEO and chairman of the supervisory board).
The primary objective of every financial, industrial or commercial business enterprise on the globe is to strive for profit maximisation. To realise this particular goal, corporations have to extend their operations across international borders. After the death of Mao Zedong and since the enforcement of an “open door” policy in 1978, the People’s Republic of China has developed into an attractive investment destination with an enormous economic potential. Since the economic liberalisation of the country, and the transition from a centrally planned economy into a market economy, China has become a popular business partner for national and international business enterprises.
Those companies which decided at an early stage to diversify trade and investments into emerging markets such as China have benefited from generating high sales volumes and impressive profit rates on a long-term scale. The uniqueness of the People’s Republic of China lies in the combination of economic growth, the size of the country, a thirst for knowledge and the maintenance of its political stability. Many western corporations are aware of the strategic opportunities that open up when doing business in China, the Middle Kingdom. However, a large number of national and internationally operating companies from different industrial sectors are facing major challenges, when it comes to making foreign investments in China.
Table of Contents
1 Introduction
1.1 Research problem
1.2 Course of investigation
2 Internationalisation strategies
2.1 Motives for business enterprises when operating abroad
2.2 The process of internationalisation
2.2.1 Time of market entry
2.2.2 Market area selection
2.2.3 Market entry modes
3 German multinational corporations in modern China
3.1 German enterprises in the global economy
3.2 The economic development of China
3.2.1 China country profile
3.2.2 Historical background
3.2.3 Economic framework data
3.3 Chances and risks for German companies in China
3.3.1 German business in China
3.3.2 Chances
3.3.3 Risks and challenges
4 Industry analysis of the healthcare sector in China
4.1 Global key drivers of the healthcare branch
4.2 Development and modernisation of the Chinese healthcare sector
5 Empirical study: German enterprises in the healthcare sector operating in the People’s Republic of China
5.1 Design and implementation of the survey
5.1.1 Objective of the study
5.1.2 Structure of the questionnaire
5.1.3 Execution of the survey
5.2 Evaluation and interpretation of the results
5.2.1 General response to the online survey
5.2.2 Analysis of first section
5.2.3 Analysis of second section
5.2.4 Analysis of third section
6 Conclusion
6.1 Summary
6.2 Critical acclaim
6.3 Outlook
Objectives and Research Themes
The primary objective of this thesis is to provide an impression of the situation of German multinational corporations operating within the People's Republic of China, with a specific focus on those active in the healthcare sector. The research aims to evaluate whether the Chinese healthcare industry represents a significant key market for future German business activities by assessing the potential opportunities and risks involved.
- Internationalisation strategies for foreign market entry
- Historical and economic development of the People's Republic of China
- Analysis of the Chinese healthcare sector and its modernisation
- Empirical study of German enterprises in the Chinese healthcare market
- Evaluation of market entry chances and operational risks
Excerpt from the Book
3.3.1 German business in China
For German multinational enterprises extending business operations to China has had a long tradition. Since the end of the 19th century (with the first opening of China), German enterprises have been considering the possibility of carrying out business activities on the Chinese market (Bode, 2009, p. 126). A well-known example of the early settlement of the Chinese market by German enterprises is the “Tsingtao Brewery”. This company has a 15 per cent share of the market and exports its beer to more than 50 nations world-wide (Holtbrügge & Puck, 2008, p. 64).
The German Chamber of Commerce in China estimates a total number of 5,000 German enterprises are actively present in China (German Chamber of Commerce, 2014). For a large number of companies from Germany, China represents one of the most important and attractive markets on the globe. This consideration has been illustrated in the form of a major study executed by the German Chamber of Commerce in China/Shanghai.
The German Chamber of Commerce in China (GCCC) has been conducting ‘business confidence surveys’ since 2011, measuring the economic situation of German enterprises operating in China. Within the scope of the latest comprehensive study from 2014 the GCCC questioned 2,400 member corporations from all economic industries, which represented almost 50 per cent of all German business enterprises located in China (German Chamber of Commerce, 2014, p. 2). Within a specified period of time, the member companies were asked 24 questions regarding market climate, investment programmes as well as general commercial planning. Therefore, the aim of this highly regarded survey was to provide an assessment regarding the business situation of German companies in China for the year 2014. In the course of this survey, it was found that the clear majority of German firms (75 per cent) located their business activities in and around the metropolitan regions of Shanghai, Beijing, Guangzhou and Shenzhen. Moreover, as far as the geographical distribution of German foreign investments are concerned, it can be stated that almost 82 per cent of those investments are to be found in coastal regions (German Chamber of Commerce, 2014, p. 2).
Summary of Chapters
1 Introduction: This chapter introduces the research problem regarding internationalisation strategies and defines the focus on the healthcare sector in China.
2 Internationalisation strategies: This section details the motives for international expansion and provides a theoretical framework for market entry processes, including pioneer and follower strategies.
3 German multinational corporations in modern China: This chapter reviews the economic behaviour of German firms in China, the nation's economic history, and the specific opportunities and risks inherent in the Chinese market.
4 Industry analysis of the healthcare sector in China: This chapter analyses the growth drivers of the healthcare industry and outlines the recent modernisation reforms implemented by the Chinese government.
5 Empirical study: German enterprises in the healthcare sector operating in the People’s Republic of China: This chapter outlines the design, implementation, and analysis of a quantitative survey conducted among German companies in the healthcare sector.
6 Conclusion: The final chapter summarises the key findings, provides a critical reflection on the study's limitations, and offers an outlook on future prospects for the industry.
Keywords
Internationalisation, China, Healthcare Sector, German Corporations, Market Entry, Export, Joint Venture, FDI, Economic Reform, Business Strategy, Risk Management, Guanxi, Healthcare Modernisation, Market Growth, Empirical Study
Frequently Asked Questions
What is the core subject of this thesis?
The thesis focuses on the internationalisation of German multinational corporations into the People's Republic of China, specifically examining the opportunities and challenges within the healthcare industry.
What are the primary thematic areas covered?
The work covers internationalisation theory, China’s economic and historical transformation, the structure of the Chinese healthcare sector, and an empirical analysis of German company experiences in China.
What is the main research objective?
The primary goal is to determine if the Chinese healthcare market is a significant key market for future German business activities by assessing relevant chances and risks.
Which scientific methods are employed?
The author uses a literature-based theoretical analysis combined with a quantitative primary empirical study conducted via an online survey of German healthcare enterprises.
What is discussed in the main body of the work?
The main body discusses internationalisation strategies, China's economic background, the specific dynamics of the Chinese healthcare system including recent reforms, and detailed results from the survey on market entry practices.
How would you describe the work with key terms?
The study is characterized by terms such as internationalisation, China, healthcare sector, market entry strategies, and economic reform.
How do cultural factors influence business success in China?
The author highlights the importance of the concept of 'guanxi' (personal relationships and networks) and the shift from individualistic to collectivistic cultural norms as crucial elements for long-term business success.
What role do SMEs play in this analysis?
The study emphasizes that not only large corporations but also many small and medium-sized enterprises (SMEs) are actively involved in the Chinese market and rely on successful market penetration for their competitive survival.
- Quote paper
- Till Schaumann (Author), 2015, Internationalisation to China. Chances and risks for German multinational corporations, operating in the healthcare sector, Munich, GRIN Verlag, https://www.grin.com/document/296247
