Internationalization processes of automotive suppliers to China

China has developed into a very promising business location, whether as a local consumer market, or as a global production and supply base. Having decided to internationalize to China, it is important for managers of foreign companies to chose the right path to do so. The author examines the paths that have been and will be taken by international automotive suppliers in China. China is especially attractive for automotive suppliers, which are under continuous price pressure by car manufacturers in their stagnant home markets. The country simultaneously offers both top and bottom-line improvement potential. However, many suppliers who have relocated operations to China are not successful. Competition has increased and weaknesses of early movers have been uncovered. Suppliers are now forced to rethink and potentially adjust their chosen internationalization processes. China is especially attractive for automotive suppliers, which are under continuous price pressure by car manufacturers in their stagnant home markets. The country simultaneously offers both top and bottom-line improvement potential. However, many suppliers who have relocated operations to China are not successful. Competition has increased and weaknesses of early movers have been uncovered. Suppliers are now forced to rethink and potentially adjust their chosen internationalization processes. This book presents the results of a research project conducted by the WHU Asia Center that involved numerous international suppliers and their Chinese affiliates. The objectives of the research project are: i) to provide a framework for internationalization processes combining strategies and modes. Strategies lead to geographic distributions of value-creation activities. The question here is what to internationalize. Modes represent varying degrees of resource commitment, risk exposure, and control. The question in this case is how to internationalize, ii) to identify specific parameters that influence the choice of strategies and modes. 33 parameters have been discovered to be relevant for the selection of strategy/mode combination, iii) to analyze dynamic evolution paths of strategy/mode combinations. Four evolution paths representing different supplier categories have been found, and iv) to give insights from theory and multinationals’ best practices for executives who make market entry and expansion decisions.