1: Introduction

Context and Background

China's fast-growing economy has been acknowledged globally (Liang, Lu & Wang, 2012). One of the major factors contributing to the rapid economic growth is internationalisation of Chinese enterprises. As a result, this trend has drawn the attention of researchers in the past two decades (Liang, Lu & Wang, 2012). According to Yeung and Olds (2016), most scholars have conducted research to determine the factors driving internationalisation of Chinese enterprises. However, the challenges facing internationalisation of Chinese firms have received little scholarly interest (Liang, Lu & Wang, 2012).  According to Buckley (2016), the main challenges facing Chinese multinational enterprises include conflicting policy objectives, ineffective strategies, liability on foreign resources and inadequacy of managerial skills. Notably, Lu et al. (2015) argue that although most studies recognise the existence of conflicting policy goals, there is limited empirical research on internationalisation regulations of Chinese enterprises. According to Wei, Clegg and Ma (2015), the government of China has offered considerable support towards internationalisation of Chinese companies. However, this support has acted as an entry barrier to some countries, which have conflicting goals with the Chinese government. Besides, Zheng et al. (2016) observe that in China, the approval process of cross-border projects is still slow. According to Lu et al. (2015), bureaucratic procedures in approval of international projects can cause companies to lose investment opportunities. Accordingly, Ge and Wang (2013) argue that the existing laws and regulations for internationalisation of Chinese enterprises do not allow companies to meet the changing market demands.  Therefore, to enhance the competitiveness of Chinese firms in the international market, the government of China should review its policies.

Aim of the Study

As pointed out in the discussion above, Chinese enterprises face policy constraints when investing in foreign countries. To overcome these policy constraints, CEOs (Chief Executive Officers) of Chinese companies adopt various strategies. One of these strategies is the formation of alliances with foreign firms (Yeung & Olds, 2016). In spite of this strategy, Chinese firms continue to face challenges.  Accordingly, this research aims to explore the policy and strategy challenges facing internationalisation of Chinese enterprises. By studying these constraints, the research will contribute to the literature on internalisation of Chinese enterprises. Moreover, the study will offer valuable recommendations for improving internationalisation policies in China.  Furthermore, the research will reveal the deficiency of CEO strategies in forming international alliances and propose appropriate recommendations.

The objectives of the study are:

• To establish factors leading to internationalisation of Chinese enterprises
• To establish strategy and policy constraints that Chinese enterprises face locally and internationally
• To establish how Chinese government policies can be improved
• To recommend changes in  CEO strategies and government policies that can facilitate the internationalisation process of Chinese enterprises

Chapter 2: Literature Review

Factors Leading to Internationalisation of Chinese Enterprises

There are various factors driving the internalisation of Chinese firms. These factors are similar to those leading companies in developed countries to invest overseas, although there is a slight variation (Benn, Dunphy, & Griffiths, 2014). According to Zheng et al. (2016) and Wei, Clegg, & Ma (2015) one of the factors motivating enterprises from China to invest overseas is to secure international markets. Additionally, Chinese firms seek to expand their distribution networks and secure a competitive advantage in global supply chains. Moreover, Chinese enterprises aim to access cheap labour from developing countries and, therefore, reduce production costs. Besides, Lu et al. (2014) point out that stiff competition in the domestic markets drives Chinese multinationals to seek overseas market where they can obtain markets easily.  Furthermore, Lu et al. (2015) state that most state-owned Chinese companies internationalise to obtain a constant supply of natural resources such as minerals and oil.

While the objectives of securing markets, obtaining natural resources, reducing production and avoiding stiff competition from local competitors apply to other developed countries, China has unique motivating factors. One of these factors is to obtain modern technologies from developed countries. Moreover, Wei, Clegg and Ma (2015) state that Chinese firms purchase or form alliances with overseas companies to gain managerial skills and acquire established foreign brands. By acquiring these brands, Chinese enterprises aim to access the global market easily. In addition, Held and Berg (2014) state that Chinese companies participate in international trade to take advantage of preferential government policies. Unlike most Western firms, Chinese enterprises do not avoid risky foreign environments. According to Yuan, Qian and Pangarkar (2015), the Chinese government protects enterprises against political risk in host countries. Besides, Wei, Clegg and Ma (2015) note that the government of China offers various incentives to multinational corporations. These incentives include low-interest loans, tax deductions, insurance against risk and protection from double taxation.

Government Policy

Held and Berg (2014) point out that the policies of home and host governments are critical to the success of internationalisation strategies. Furthermore, Held and Berg (2014) state that internationalisation strategies require consistency between local and host country's policies. According to Xiao et al. (2013), the Chinese government has made substantial efforts to support internationalisation of enterprises. Although China has experienced a policy evolution to support internationalisation of enterprises in the recent years, bureaucratic procedures continue to raise transaction costs and hinder globalisation (Cardoza et al., 2015). Similarly, Xiao et al. (2013) argue that rigid regulatory frameworks delay the entry and expansion of Chinese enterprises into international markets. Furthermore, Cardoza et al. (2015) hold that inconsistency in China's regulatory policies results in varying levels of legal protection across different industries and regions. For example, Held and Berg (2014) hold that state-owned enterprises receive better regulatory support from Chinese government than non-state enterprises. To overcome these policy challenges, firms are compelled to rely on international strategic alliances and create cross-border partnerships (Xiao et al., 2013). Moreover, to overcome regulatory failures, Chinese companies resolve to establish trust and create a functional relationship with the government (Held & Berg, 2014). Wei, Clegg and Ma (2015) also affirm that Chinese enterprises receive varying support from the Chinese government depending on the firm's size, economic significance, geographical location, and industrial sector. Therefore, government policies have a significant impact on internationalisation of Chinese firms.

CEO Strategies and International Strategic Alliances

Strategy in the business context is defined as the creation of a unique and advantageous position for an entity (Wittmann & Reuter, 2013). According to Benn, Dunphy and Griffiths (2014), internalisation requires effective firm strategies and government support. The process of strategy creation usually involves company CEOs. CEO strategies for internationalisation refer to firm managers' plans to access international markets. While internationalisation requires companies to have considerable resources, the process does not demand that the firms posses all the essential skills and expertise; rather enterprises can cooperate with suitable partners to realise their goals (Wittmann & Reuter, 2013). This cooperation is referred to as international strategic alliances (Ang et al., 2015).

According to Wittmann and Reuter (2013), companies are increasingly realising the role of international strategic alliances in enhancing their competitive advantage. Similarly, Grant (2015) observes that strategic alliances have been used extensively. By forming international alliances, firms aim to obtain various benefits. According to Benn, Dunphy and Griffiths (2014), there are three major motives for strategic alliances. One of these objectives is to access the skills and expertise possessed by another organisation. Additionally, the companies aim to access established distribution networks and obtain entry into new geographical markets.  Furthermore, by forming strategic alliances, organisations aim to spread financial risks (Held & Berg, 2014). In addition, Held and Berg (2014) observe that in most developing economies, governments may require global competitors to establish alliances with local companies as a prerequisite for allowing access to the host country's markets.

 Moreover, Ang et al. (2015) state that by forming strategic alliances, organisations seek to collaborate instead of competing with other companies. According to Yuan, Qian and Pangarkar (2015), the companies entering into alliances should have complementary resources to facilitate cooperation. Notably, there are three major types of alliances which include joint ventures, non-joint ventures, and consortium (Grant, 2015). Ang et al. (2015) define a joint venture as a separate legal entity in which partners are equal shareholders. Partners forming joint ventures must provide the necessary resources for the alliances to allow establishment and operation of businesses (Pangarkar, 2015). According to Wittmann and Reuter (2013), enterprises establish joint ventures to maintain independent legal rights. Another strategy employed by company managers is the non-joint venture in which companies collaborate and acquire cross-company shares, but the alliance does not lead to the creation of a separate legal entity. Ang et al. (2015) point out that non-joint ventures are advantageous because they are flexible and can be extended or developed in the long term if the partners' business relationship succeeds. Additionally, Buckley (2016) states that a consortium describes situations whereby various partners form an alliance to undertake a large-scale business activity. However, Wei, Clegg, and Ma (2015) hold that Chinese firms face policy constraints between home and host countries in the formation of strategic alliances. For example, Benn, Dunphy and Griffiths (2014) state that most Chinese companies cannot access markets in Europe and US directly because of conflicting regulations between China and Western countries. Therefore, to access Western markets, these enterprises invest in developing economies that have preferential trade privileges such as Mauritius (Held & Berg, 2014).

Chapter 3: Research Methods

Qualitative Research

This research proposes to use qualitative research. According to Silverman (2013), qualitative research is useful for an in-depth study of particular contexts. Furthermore, Gray (2013) state that qualitative research can be used to provide information about individual cases as well as cross-case comparison. The approach is also useful in gathering individual’s opinion about an issue. Furthermore, qualitative descriptions are rich in details because they are situated and rooted in local context (Collis & Hussey, 2013).  Furthermore, Gray (2013) propose that the approach is suitable for studying local circumstances, conditions and research participant's needs. Additionally, the approach allows researchers to exercise flexibility in data collection as the situation may command (Marshall & Rossman, 2014). For example, researchers can exercise flexibility by adding, excluding or adjusting wordings of interview questions to suit the situation of participants.  Silverman (2013) argues that this flexibility is lacking in quantitative research because the approach mostly uses close-ended questions.  However, the qualitative research has various weaknesses. One shortcoming of qualitative research is that data is usually collected from few cases and, therefore, the study results cannot be generalised to a wider context or population.  In addition, qualitative research requires more time for data collection and analysis in comparison to the quantitative approach. Creswell (2013) also states that the research participants may be influenced by the researcher's biases which can reduce the credibility of the results. Similarly, Collis and Hussey (2013), state that the inevitable presence of researchers during data collection can influence respondents and result in subjective findings. Furthermore, the credibility of qualitative research depends on researchers' data collection and interpretation abilities. As a result, the approach can provide misleading conclusions if these skills are lacking. Moreover, qualitative research can create confidentiality challenges during data collection and presentation. Qualitative research usually employs in-depth interviews, observations and focus groups in data collection a (Creswell, 2013). According to Seidman (2013), observation of research participants is suitable for collecting information on people and situations in their normal settings. In addition, interviews are optimal for collecting data on participants' history, opinions and experiences, especially when exploring insightful topics. For example, researchers can ask respondents to give further details on particular issues.  Stewart and Shamdasani (2014) also state that focus groups discussions are appropriate when gathering information on collective behaviours and practices in a community. Qualitative data is usually collected through field notes and audio or video recording.

According to Dillman, Smyth and Christian (2014), interviews can be conducted over the phone or face to face. This research proposes to use telephone interviews to collect data from managers of three Chinese companies selected for the study. According to Seidman (2013), telephone interviews are suitable for collecting information from people who cannot be reached easily because of long distance, busy schedules, financial constraints and so forth.  One advantage of this method is that it enables researchers to contact relevant populations worldwide. However, unlike face to face communication, telephone interviews do not allow researchers to obtain additional information from interviewee's body language. While non-verbal cues are lacking in this method, researchers can use voice and intonations to obtain extra information.

Primary Data Collection

This research proposes to collect information on the role of government policy and CEO strategies on internalisation of Chinese companies. To obtain this information, the study proposes to conduct telephone interviews with managers of three multinational Chinese enterprises (Lenovo, Haier and Huawei companies).

Secondary Data Collection

This study proposes to use private and government reports to obtain relevant information on internalisation strategies of Chinese enterprises. The use of secondary data sources presents various advantages. One benefit of secondary research is that information can be accessed and analysed faster when compared to primary data collection and evaluation process. Furthermore, secondary data sources can enable researchers to avoid duplication of efforts, particularly when the available information is adequate. Besides, secondary research is less costly in comparison to primary data collection and analysis. Additionally, secondary data complements primary data and provides valuable information that can be used to analyse trends over the years. However, Matthews and Ross (2014) argue while secondary research provides understanding of a wider scope, the method is less effective when conducting context-specific studies. Furthermore, secondary data sources may provide conflicting information. Besides, the credibility of secondary sources is difficult to determine (Matthews & Ross, 2014). In addition, Clark (2013) points out that secondary data is usually collected with a different purpose from the researcher, which requires a critical analysis to determine the appropriateness of the findings. Besides, the sources often lack some the required information. To overcome these problems, this study proposes to compare findings from primary and secondary data sources. Furthermore, the credibility of secondary data will be determined by comparing data from various sources.

Interviews

According to Seidman (2013), interviews can be unstructured or semi-structured. Unstructured interviews allow research participants to describe situations in their preferred way, with the aid of promptings from researchers. Gray (2013) points out that the main objective of unstructured interviews is to obtain detailed information that can enhance qualitative analysis. Notably, Silverman (2013) argues that the method allows researchers to learn about emerging trends rather than depend on the researcher's knowledge of past occurrences.  In this methodology, researchers compile a list of relevant topics that they would like to discuss with interviewees. Therefore, questions are phrased differently for each interview depending on the responses of the interviewee. Unlike, the structured approach, semi-structured interviews include key questions that are used for every interview, although the sequence and level of probing by researchers may vary. This approach is appropriate when researchers have some understanding of the research topic. However, Seidman (2013) suggests researchers using the method may impose their understanding on interviewees. To avoid this shortcoming, Marshall and Rossman (2014) propose that researchers should conduct pilot interviews using broad topics and a few key questions before the actual data collection. This study proposes to use the semi-structured approach in collecting data. To avoid the weaknesses of this method, the study proposes to use a few major questions for the three selected Chinese enterprises and to conduct a pilot study before the conducting the interviews. In addition, Fowler (2013) advocates that interview questions should majorly be open-ended to avoid rehearsed responses. Furthermore, open-ended questions enable researchers to obtain additional information from interviewees (Seidman (2013). Gray (2013) also proposes that interviewing techniques should encourage respondents to communicate their attitudes and values. To realise this objective, the study proposes to establish a rapport with interviewees and assure them their identity will not be disclosed.

 

Case Study

This research proposes to use the case study approach of three international Chinese enterprises. According to Yin (2013), the case study method is used to allow detailed examination of contextual situations. Furthermore, Stake (2013) points out that the case study approach employs several data collection methods such as interviews, observation, and literature review of relevant documents. Furthermore, Stake (2013) points out that this approach used in particular contexts to explore situations and generate hypotheses. Therefore, to allow in-depth analysis of the study's context which entails internationalisation of Chinese enterprises, the case study method will be used. However, Yin (2013) argues that the findings of a single case study cannot be applied to the wider business environment. Consequently, this study proposes to employ multiple case studies to allow generalisation of findings.

Data Analysis and Presentation

The research proposes to use quantitative content analysis to interpret the data obtained from unstructured interviews. Creswell (2013) define content analysis as the process of examining verbal or written communications in a systematic manner to quantify variables and identify emerging trends. Exceptions, regularities, and sequences will be closely tracked to generate meaning in the drawing of conclusions. However, Gray (2013) argues that this approach to data analysis relies on coding decisions of a single researcher and is, therefore, subjective. To overcome this challenge, the analysis will be supported by evidence such as quotations from interviewees. Additionally, to ensure the credibility of the findings, the study will use the triangulation method. According to Marshall and Rossman (2014), triangulation allows a combination of methods and thereby offsets the weaknesses of a single technique. Therefore, by comparing primary and secondary data, the research will ensure credibility. The findings will be presented as categorical or continuous. Continuous data was presented using line graphs while categorical data was presented through pie charts and bar graphs.  In each case, narratives will be used to describe the findings to enhance clarity of information.

Ethical Considerations in Qualitative Research

As discussed above, qualitative research entails collecting data from individuals. Accordingly, the process requires researchers to maintain ethical standards. According to Gray (2013), researchers must obtain the consent of interviewees before interviewing them. To obtain this consent, Fowler (2013) states that researchers must disclose the purpose of the research, anticipated risks and advantages of participation as well as the amount of time needed. This research proposes to send a written request for participation to the managers of the selected companies and make follow-up phone calls to establish whether they agreed to participate. Furthermore, Gray (2013) suggests that participation consent should not only be sought at the beginning of the research process but also throughout the interview session. Accordingly, this research proposes to reaffirm the consent of interviewees throughout the interview session. This reaffirmation allows interviewees to withdraw their consent at any time.  Another ethical consideration according to Collis and Hussey (2013), is that researchers should maintain confidentiality and anonymity in the research process. Accordingly, this research proposes to assure respondents that their personal information such as name and contact details will not be disclosed. Furthermore, telephone interviews require additional ethical consideration. According to Dillman, Smyth and Christian (2014), researchers can lose concentration easily when interviewing people through the telephone. Therefore, to remain focused study proposes to conduct the interviews from a silent and conducive environment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Key Tasks

 

Key Tasks	Specific Activities	Potential Problems	Proposed Solutions
Data Collection	Secondary Research	Difficulty in determining the credibility of data source	Compare findings from various secondary sources
	Formulation of interview questions	Danger of imposing the researcher’s opinion on interviewees	Identify topics and formulate major rather than detailed questions Use open-ended questions
Data Analysis	Analyse data using the qualitative content analysis method	Danger of analysing data subjectively	Use triangulation to ensure credibility Provide evidence
Data Presentation	Use graphical presentation to enhance understanding	Potential challenge of losing clarity	Include descriptions for each presentation technique used

 

 

 

 

 

 

 

 

 

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