Global Players from Emerging Markets: Strengthening ... - Unctad
Global Players from Emerging Markets: Strengthening ... - Unctad
Global Players from Emerging Markets: Strengthening ... - Unctad
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Conventional<br />
Unconventional<br />
1-1. Cost reduction<br />
1-2. Natural resource<br />
• Samsung Electronics in 1995 bought a<br />
40 per cent interest in AST Research Inc.<br />
(United States).<br />
2. Demand conditions<br />
2-1. Local presence requirement<br />
FDI may be preferred to exporting when<br />
transaction costs are high in the external market. This<br />
includes requirements set by the host Government for<br />
foreign firms to access to the domestic market. An<br />
example of this is:<br />
• Samsung Electronics invested in Viet Nam to<br />
produce television sets, monitors and other<br />
home appliances to service the local market<br />
because Viet Nam requires foreign companies<br />
to establish production facilities in Viet Nam<br />
in order to sell their products to the Vietnamese<br />
market (KITA 2003).<br />
2-2. Product creation<br />
Firms may need to modify their products or improve<br />
qualities to access new markets. Examples include:<br />
Figure 6. Typology of OFDI motivations<br />
4-2. Catch-up<br />
4-3. Strategic location<br />
Factor<br />
Conditions<br />
Strategy<br />
Structure<br />
Rivalry<br />
1-3. Technology learning<br />
Related &<br />
Supporting<br />
Sectors<br />
2-3. Market learning<br />
3-1. Follow-the-customer<br />
3-2. Infrastructure<br />
3-3. Regulation bypassing<br />
Demand<br />
Conditions<br />
Source: Adapted <strong>from</strong> Moon, Rugman and Verbeke (1998) and Moon and Roehl (2001).<br />
CHAPTER VIII 99<br />
• LG Electronics introduced new products such as<br />
three-directional air-conditioners and stainlesssteel<br />
refrigerators in Taiwan Province of China.<br />
• Hyundai Motor introduced a new car, Santro, to<br />
the Indian market. It is a compact car (999cc)<br />
but equipped with high-tech and differentiated<br />
features. Hyundai Motor understood the unique<br />
characteristics of the Indian consumers and met<br />
their needs.<br />
2-3. Market learning<br />
2-1. Local presence requirement<br />
2-2. Product creating<br />
Operating near to overseas customers can be important<br />
to respond quickly to consumer tastes and to access to<br />
design facilities. Such examples include:<br />
• Samsung Electronics established a design<br />
centre in Italy to learn the advanced Italian<br />
design mechanism. Samsung has already built<br />
design centres in Los Angeles, San Francisco,<br />
Tokyo, London and Shanghai.<br />
• Amorepacific, the largest Korean cosmetics<br />
company, expanded its operations into France<br />
to sell its products and more importantly,<br />
to learn the sophisticated French cosmetics<br />
market.