IDEAS home Printed from https://ideas.repec.org/a/pal/abaman/v18y2019i4d10.1057_s41291-019-00084-0.html
   My bibliography  Save this article

Challenges for foreign companies in China: implications for research and practice

Author

Listed:
  • Fabian Jintae Froese

    (Chongqing Technology and Business University
    University of Göttingen)

  • Dylan Sutherland

    (Durham University)

  • Jeoung Yul Lee

    (Chongqing Technology and Business University
    Hongik University)

  • Yipeng Liu

    (University of Reading)

  • Yuan Pan

    (University of Göttingen)

Abstract

As a large country with great development potential, China has been one of the most popular foreign direct investment destinations. However, foreign companies increasingly face a variety of challenges especially during the “soft-landing” of the Chinese economy and amidst anti-globalization tendency. Based on a comprehensive review of the extant literature, we provide a critical overview of some of the key challenges for foreign companies in China, focusing on two challenges related to the business environment, namely regulatory and cultural challenges, and two management challenges, namely innovation and human resource management. We provide managerial implications and outline directions for future research.

Suggested Citation

  • Fabian Jintae Froese & Dylan Sutherland & Jeoung Yul Lee & Yipeng Liu & Yuan Pan, 2019. "Challenges for foreign companies in China: implications for research and practice," Asian Business & Management, Palgrave Macmillan, vol. 18(4), pages 249-262, September.
    • Handle: RePEc:pal:abaman:v:18:y:2019:i:4:d:10.1057_s41291-019-00084-0
    DOI: 10.1057/s41291-019-00084-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41291-019-00084-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41291-019-00084-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yuzhe Miao & Yuping Zeng & Jeoung Yul Lee, 2016. "Headquarters Resource Allocation for Inter-Subsidiary Innovation Transfer: The Effect of Within-Country and Cross-Country Cultural Differences," Management International Review, Springer, vol. 56(5), pages 665-698, October.
    2. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    3. Yong Suhk Pak & Qinglu Sun & Yi Yang, 2019. "Influences of expatriate managerial styles on host-country nationals’ turnover intention," Asian Business & Management, Palgrave Macmillan, vol. 18(4), pages 263-280, September.
    4. Changhui Zhou & Jing Li, 2008. "Product innovation in emerging market-based international joint ventures: An organizational ecology perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(7), pages 1114-1132, October.
    5. Edward Glaeser & Wei Huang & Yueran Ma & Andrei Shleifer, 2017. "A Real Estate Boom with Chinese Characteristics," Journal of Economic Perspectives, American Economic Association, vol. 31(1), pages 93-116, Winter.
    6. Yuping Zeng & Oded Shenkar & Seung-Hyun Lee & Sangcheol Song, 2013. "Cultural differences, MNE learning abilities, and the effect of experience on subsidiary mortality in a dissimilar culture: Evidence from Korean MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(1), pages 42-65, January.
    7. Jonas F Puck & Dirk Holtbrügge & Alexander T Mohr, 2009. "Beyond entry mode choice: Explaining the conversion of joint ventures into wholly owned subsidiaries in the People's Republic of China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(3), pages 388-404, April.
    8. Liu, Yipeng & Almor, Tamar, 2016. "How culture influences the way entrepreneurs deal with uncertainty in inter-organizational relationships: The case of returnee versus local entrepreneurs in China," International Business Review, Elsevier, vol. 25(1), pages 4-14.
    9. Zhang, Dayong & Cai, Jing & Dickinson, David G. & Kutan, Ali M., 2016. "Non-performing loans, moral hazard and regulation of the Chinese commercial banking system," Journal of Banking & Finance, Elsevier, vol. 63(C), pages 48-60.
    10. Jingxun Li & Ruby P. Lee & Lian Zhang, 2018. "Managerial ties and knowledge transfer in business ecosystems: Evidence from Korean subsidiaries in China," Asian Business & Management, Palgrave Macmillan, vol. 17(3), pages 183-207, July.
    11. He, Yongxiu & Xu, Yang & Pang, Yuexia & Tian, Huiying & Wu, Rui, 2016. "A regulatory policy to promote renewable energy consumption in China: Review and future evolutionary path," Renewable Energy, Elsevier, vol. 89(C), pages 695-705.
    12. World Bank & the People’s Republic of China Development Research Center of the State Council, 2013. "China 2030 : Building a Modern, Harmonious, and Creative Society," World Bank Publications - Books, The World Bank Group, number 12925.
    13. Kemper, Lena Elisabeth & Bader, Anna Katharina & Froese, Fabian Jintae, 2016. "Diversity management in ageing societies: A comparative study of Germany and Japan," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 27(1-2), pages 29-49.
    14. Zhang, Han & Patton, Donald & Kenney, Martin, 2013. "Building global-class universities: Assessing the impact of the 985 Project," Research Policy, Elsevier, vol. 42(3), pages 765-775.
    15. Hitotsuyanagi-Hansel, Azusa & Froese, Fabian Jintae & Pak, Yong Suhk, 2016. "Lessening the divide in foreign subsidiaries: The influence of localization on the organizational commitment and turnover intention of host country nationals," International Business Review, Elsevier, vol. 25(2), pages 569-578.
    16. Rosalie L Tung, 2008. "The cross-cultural research imperative: the need to balance cross-national and intra-national diversity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(1), pages 41-46, January.
    17. Ambos, Tina C. & Ambos, Björn, 2009. "The impact of distance on knowledge transfer effectiveness in multinational corporations," Journal of International Management, Elsevier, vol. 15(1), pages 1-14, March.
    18. Liu, Yipeng & Huang, Qihai, 2018. "University capability as a micro-foundation for the Triple Helix model: The case of China," Technovation, Elsevier, vol. 76, pages 40-50.
    19. Xufei Ma & Tony W Tong & Markus Fitza, 2013. "How much does subnational region matter to foreign subsidiary performance? Evidence from Fortune Global 500 Corporations’ investment in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(1), pages 66-87, January.
    20. Jong-Wook Kwon, 2012. "Does China have more than one culture?," Asia Pacific Journal of Management, Springer, vol. 29(1), pages 79-102, March.
    21. Henrik Dellestrand & Philip Kappen, 2012. "The effects of spatial and contextual factors on headquarters resource allocation to MNE subsidiaries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(3), pages 219-243, April.
    22. Lutao Ning & Dylan Sutherland & Xiaolan Fu, 2017. "Local context and innovation in China," Asian Business & Management, Palgrave Macmillan, vol. 16(3), pages 117-129, July.
    23. Kemper, Lena Elisabeth & Bader, Anna Katharina & Froese, Fabian Jintae, 2016. "Diversity management in ageing societies: A comparative study of Germany and Japan," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 27(1-2), pages 29-49.
    24. Fabian Froese, 2013. "Work values of the next generation of business leaders in Shanghai, Tokyo, and Seoul," Asia Pacific Journal of Management, Springer, vol. 30(1), pages 297-315, March.
    25. Vesa Peltokorpi & Fabian Jintae Froese, 2009. "Organizational expatriates and self-initiated expatriates: Who adjust better to work and life in Japan ?," Post-Print hal-00491666, HAL.
    26. Xufei Ma & Andrew Delios & Chung-Ming Lau, 2013. "Beijing or Shanghai? The strategic location choice of large MNEs’ host-country headquarters in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(9), pages 953-961, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Linan Lei & Xiaobo Wu, 2022. "Thinking like a specialist or a generalist? Evidence from hidden champions in China," Asian Business & Management, Palgrave Macmillan, vol. 21(1), pages 25-57, February.
    2. Irina Ervits, 2023. "CSR reporting in China’s private and state-owned enterprises: A mixed methods comparative analysis," Asian Business & Management, Palgrave Macmillan, vol. 22(1), pages 55-83, February.
    3. Yijun Xing & Yipeng Liu & Fabian Jintae Froese & Manli Huang, 2023. "Advancing Chinese leadership research: review and future directions," Asian Business & Management, Palgrave Macmillan, vol. 22(2), pages 493-508, April.
    4. Peixu He & Rui Sun & Hongdan Zhao & Linlin Zheng & Chuangang Shen, 2022. "Linking work-related and non-work-related supervisor–subordinate relationships to knowledge hiding: a psychological safety lens," Asian Business & Management, Palgrave Macmillan, vol. 21(4), pages 525-546, September.
    5. Alvaro Cuervo-Cazurra & C. Annique Un, 2023. "Beauty in the Eyes of the Beholders: How Government- and Consumer-Based Country-of-Origin Advantages and Disadvantages Drive Host Country Investment Dynamics," Management International Review, Springer, vol. 63(2), pages 285-312, April.
    6. Hai-Trung Nguyen & Hao-Chieh Lin & Shao-Chi Chang, 2023. "The emergence of TMT learning goal orientation: contextual effects of TMT demographic diversity on TMT cognitive processes," Asian Business & Management, Palgrave Macmillan, vol. 22(1), pages 26-54, February.
    7. Long Zhang & John A. Parnell & Chuanhui Xiong, 2021. "Market and Nonmarket Strategies (NMS) in China: Performance Payoffs in Turbulent Environments," Asian Business & Management, Palgrave Macmillan, vol. 20(5), pages 644-665, November.
    8. Wang, Lei & Ramsey, Thomas Stephen, 2024. "Digital divide and environmental pressure: A countermeasure on the embodied carbon emissions in FDI," Technological Forecasting and Social Change, Elsevier, vol. 204(C).
    9. Yipeng Liu & Fabian Jintae Froese, 2020. "Crisis management, global challenges, and sustainable development from an Asian perspective," Asian Business & Management, Palgrave Macmillan, vol. 19(3), pages 271-276, July.
    10. Yipeng Liu & Fabian Jintae Froese, 0. "Crisis management, global challenges, and sustainable development from an Asian perspective," Asian Business & Management, Palgrave Macmillan, vol. 0, pages 1-6.
    11. Justine Kyove & Katerina Streltsova & Ufuoma Odibo & Giuseppe T. Cirella, 2021. "Globalization Impact on Multinational Enterprises," World, MDPI, vol. 2(2), pages 1-15, April.
    12. Hyo Eun Cho & Jon Jungbien Moon & Insik Jeong, 0. "Equal ownership split in international joint ventures: performance implications in an emerging market," Asian Business & Management, Palgrave Macmillan, vol. 0, pages 1-26.
    13. Yipeng Liu & Ralf Bebenroth & Yi Yang, 2022. "East-Meets-West: Mergers and Acquisitions challenges and opportunities in and out of Asia," Asian Business & Management, Palgrave Macmillan, vol. 21(5), pages 715-744, November.
    14. Yipeng Liu & Jong Min Lee & Celia Lee, 2020. "The challenges and opportunities of a global health crisis: the management and business implications of COVID-19 from an Asian perspective," Asian Business & Management, Palgrave Macmillan, vol. 19(3), pages 277-297, July.
    15. Ashish Malik & Vijay Pereira & Pawan Budhwar & Fabian Jintae Froese & Dana Minbaeva & James Sun & Anh Tuan Nguyen & Shanzi Xue, 2022. "Multilevel relational influences on HRM practices: a cross-country comparative reflective review of HRM practices in Asia," Asian Business & Management, Palgrave Macmillan, vol. 21(5), pages 745-779, November.
    16. Gain Park & Hyun Soon Park, 2020. "Communicating Sustainability to Ethnocentric Consumers in China: Focusing on Social Distance from Foreign Corporations," Sustainability, MDPI, vol. 13(1), pages 1-15, December.
    17. Hyo Eun Cho & Jon Jungbien Moon & Insik Jeong, 2022. "Equal ownership split in international joint ventures: performance implications in an emerging market," Asian Business & Management, Palgrave Macmillan, vol. 21(2), pages 205-230, April.
    18. Zhang, Xiaotao & Liu, Yipeng & Tarba, Shlomo Y. & Giudice, Manlio Del, 2020. "The micro-foundations of strategic ambidexterity: Chinese cross-border M&As, Mid-View thinking and integration management," International Business Review, Elsevier, vol. 29(6).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuzhe Miao & Yuping Zeng & Jeoung Yul Lee, 2016. "Headquarters Resource Allocation for Inter-Subsidiary Innovation Transfer: The Effect of Within-Country and Cross-Country Cultural Differences," Management International Review, Springer, vol. 56(5), pages 665-698, October.
    2. Srivastava, Saurabh & Singh, Shiwangi & Dhir, Sanjay, 2020. "Culture and International business research: A review and research agenda," International Business Review, Elsevier, vol. 29(4).
    3. Teng, Lefa & Huang, Dan & Pan, Yigang, 2017. "The Performance of MNE Subsidiaries in China: Does It Matter to Be Close to the Political or Business Hub?," Journal of International Management, Elsevier, vol. 23(3), pages 292-305.
    4. Hutzschenreuter, Thomas & Matt, Tanja & Kleindienst, Ingo, 2020. "Going subnational: A literature review and research agenda," Journal of World Business, Elsevier, vol. 55(4).
    5. Chen, Stephen & Lin, Nidthida, 2019. "The effect of inter- and intra-organizational distances on success of offshored outsourced innovation: A configurational approach," Journal of Business Research, Elsevier, vol. 103(C), pages 519-529.
    6. Weber, Clarissa E. & Chahabadi, Dominik & Maurer, Indre, 2020. "Antecedents and performance effect of managerial misperception of institutional differences," Journal of World Business, Elsevier, vol. 55(1).
    7. René Belderbos & Helen S. Du & Anthony Goerzen, 2017. "Global Cities, Connectivity, and the Location Choice of MNC Regional Headquarters," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1271-1302, December.
    8. Jeoung Yul Lee & Shufeng (Simon) Xiao & Surender Munjal, 2023. "How business groups build globally relevant knowledge from local contexts? Exploring the double-edged sword effect of cultural diversity," Asian Business & Management, Palgrave Macmillan, vol. 22(5), pages 2189-2224, November.
    9. Jeoung Yul Lee & Vasyl Taras & Alfredo Jiménez & Byungchul Choi & Chinmay Pattnaik, 2020. "Ambidextrous Knowledge Sharing within R&D Teams and Multinational Enterprise Performance: The Moderating Effects of Cultural Distance in Uncertainty Avoidance," Management International Review, Springer, vol. 60(3), pages 387-425, June.
    10. Gorgijevski, Alexander N. & Andrews, Daniel S., 2022. "Getting the seal of approval: Pathways to subsidiary initiative acceptance," Journal of International Management, Elsevier, vol. 28(2).
    11. Mallon, Mark R. & Guldiken, Orhun & Benischke, Mirko H. & Dong, Feng & Nguyen, Trung, 2022. "Is there an advantage of emergingness? A politico-regulatory perspective," International Business Review, Elsevier, vol. 31(2).
    12. Christine Holmström Lind & Olivia H. Kang, 2017. "The Value-Adding Role of the Corporate Headquarters in Innovation Transfer Processes: The Issue of Headquarters Knowledge Situation," Management International Review, Springer, vol. 57(4), pages 571-602, August.
    13. Xu, Kai & Hitt, Michael A. & Brock, David & Pisano, Vincenzo & Huang, Lulu S.R., 2021. "Country institutional environments and international strategy: A review and analysis of the research," Journal of International Management, Elsevier, vol. 27(1).
    14. Hutzschenreuter, Thomas & Harhoff, Philippa-Luisa, 2021. "The accelerating effect of institutional environment unfamiliarity on subsidiary portfolio expansion in a new host country," International Business Review, Elsevier, vol. 30(3).
    15. Caleb H. Tse & Klaus E. Meyer & Yigang Pan & Tailan Chi, 2024. "Evolution of MNE strategies amid China’s changing institutions: a thematic review," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(6), pages 657-675, August.
    16. Liu, Yipeng, 2020. "The micro-foundations of global business incubation: Stakeholder engagement and strategic entrepreneurial partnerships," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    17. Sewak, Mayank & Sharma, Anurag, 2020. "Performance implications of MNE subsidiary federation: Evidence from India," Journal of International Management, Elsevier, vol. 26(1).
    18. Ilhan-Nas, Tulay & Okan, Tarhan & Tatoglu, Ekrem & Demirbag, Mehmet & Wood, Geoffrey & Glaister, Keith W., 2018. "Board composition, family ownership, institutional distance and the foreign equity ownership strategies of Turkish MNEs," Journal of World Business, Elsevier, vol. 53(6), pages 862-879.
    19. Gregory Wegmann & Ivan Ruviditch, 2015. "Management in China: Cultural, institutional roots and pragmatism. An inquiry in Shanghai," Working Papers hal-01104551, HAL.
    20. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:abaman:v:18:y:2019:i:4:d:10.1057_s41291-019-00084-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.