Navigating Chinese national strategically important sectors: A study of how - and if - the Chinese government strategically uses foreign companies to cultivate the home market and ultimately to promote the growth of the Chinese economy

Vanessa McGrail

Student thesis: Master thesis


Based on the hypothesis that from a western perspective doing business in China is either viewed as a pot of gold: a vast market with endless opportunities to earn big money, or viewed as a trap for the unwary: that doing business in China equals loosing know-how and core competencies to Chinese partners, suppliers or competitors, this thesis sets out to examine the Chinese government‘s possible agenda of strategically using foreign companies operating in national strategically important sectors to cultivate the domestic enterprises and thereby boost the Chinese economy. In acknowledgement of the importance of viewing the dilemma from an emic-etic approach, the thesis wears two pairs of glasses, examining the hypothesised dilemma from two perspectives: the Chinese government perspective and the foreign company perspective. The Chinese government perspective examines how, and if, the Chinese government takes the best from foreign companies operating Chinese national strategically important sectors in order to upgrade domestic companies and ultimately promote the growth of the Chinese economy. The Chinese government perspective is analysed with political and economic data from China as well as by an expert interview with a professor in Chinese political economy. The foreign company perspective examines how foreign companies face the Chinese institutional set-up of national strategically important sectors, and how foreign companies ensure staying in competition, despite transferring knowledge and technology to Chinese competitors and suppliers. The foreign company perspective is analysed through three case examples of Danish companies operating in sectors that have national strategic importance in China. In an analysis combining the two perspectives the thesis concludes that although the Chinese government is strategically using foreign companies to cultivate domestic enterprises, foreign companies are not necessarily pacified and crowded out. This thesis finds that there is momentum where the Chinese government‘s and the foreign company‘s goals can align and a win-win situation, so often proclaimed by the Chinese government, can be achieved. In conclusion, it is within this momentum that both players can navigate the Chinese national strategically important sectors successfully.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2010
Number of pages99