Internationalisation strategies for small and medium-sized enterprises: a study of UK and German joint ventures in the people’s republic of China

Abstract

This thesis studies internationalisation strategies for small and medium-sized enterprises (SMEs). For most SMEs internationalisation means, predominantly, exporting. Only a few SMEs are involved in foreign direct investment. However, growing pressure from globalisation increasingly means that SMEs must extend their business activities beyond sole export strategies. Internationalisation imposes an above-the-average financial and managerial resource burden upon SMEs. This is particularly true in the case of foreign direct investment which requires the highest resource commitment of all market entry strategies. Frequently, thus, SMEs cannot commit the resources necessary for success in international markets. Not without reason internationalisation, in the form of foreign direct investment, is often considered the domain of large multinational enterprises. This thesis regards the joint venture strategy as a means to overcome the resource scarcity of SMEs and so make foreign market entry in the form of a direct investment commitment feasible for these firms. Joint ventures can open doors to markets that otherwise would not be open to SMEs. The joint venture strategy can be a vehicle for SMEs to penetrate a foreign market with only a reduced financial and managerial resource commitment. The results of this investigation suggest that joint ventures are a feasible strategy for UK and German SMEs to enter the vast market of the People's Republic of China. The joint venture strategy permits SMEs to establish a market presence in the Chinese market and so better reap the benefits of the impressive economic development of the country. The UK and German joint venture entrepreneurs studied expressed overall satisfaction with their joint investment projects in China. However, the study has also detected various size-related resource scarcities which restrict the SMEs in their joint venturing efforts. Short cut planning procedures and partner selection processes are resultant from that, as well as a weak bargaining position in negotiations and less influence in the control and management ofthe investment project.