Introduction

China is widely regarded as a ‘world factory’ with low manufacturing costs and a huge market. Thus, numerous multinational corporations have rushed to China and set up their manufacturing facilities there in order to achieve cost reduction and market expansion. Although ‘made-in-China’ products have flooded the world, indigenous Chinese firms contribute less than 50 per cent of the export volume, and they are often confined to the role of contractual manufacturers.

However, there is a group of Chinese manufacturing firms pursuing a reverse process, i.e. they aim to internationalise under their own brands, and even place production activities abroad. As late-movers to enter the global market, especially to enter the most sophisticated and competitive ‘Triad’ markets of the US, the EU and Japan, Chinese manufacturing firms are facing a number of big challenges. These challenges include the following:

• How can a firm survive, and even succeed, when there are limited competitive advantages to employ and many competitive disadvantages to offset?

• What kind of ownership advantages do Chinese manufacturing firms have? And how can they make the most use of them?

• How can we identify the difference between China and overseas countries in terms of consumer demand, marketing methods, manufacturing concepts and legal issues? And how can they adapt?

• How can they be profitable by operating production facilities in the Triad?

• How do they achieve an integration effect by running a global manufacturing network?