Japanese Multinational Corporation Has Been Chosen Management Essay

Toshiba, a successful Japanese multinational corporation has been chosen to be the topic in this research. This research is focus on how Toshiba develop in China which is a country with many competitors. The marketing strategies that Toshiba used in China have become the main focus in this research. As the research being conducted, the researcher tries to compare Toshiba with main competitors and analyze the development path that Toshiba go through. Besides that, the researcher also briefly discuss about the current state of Toshiba in China.

First of all, the researcher will discuss the performance of Toshiba compared to its main rivals. This is because it is the best way to find which company’s marketing strategies is better than the other.

Furthermore, the researcher will outlines and discuss about the development path of Toshiba in China market. In order to clearly determine the path, the researcher decides to outline Toshiba’s performance in China for the last ten years. This is the best way to determine that Toshiba is continuing growing in the last ten years.

Lastly, the researcher will state several suggestions and recommendations in term of applying the most suitable marketing strategies in the China market so that all other multinational company can benefit from the largest market.

As a conclusion, the researcher thinks that Toshiba is continue growing and the future of Toshiba in China is still remain bright as long as the Diaoyu Island is resolved.

Acknowledgement

First of foremost, the researcher would like to appreciate people who guided his to complete this task especially friends, and course mates who have been helped he and taught he in order to complete this study. Without their contributions and supports, the researcher will not able to complete this study on time. Therefore, the researcher decided to take this opportunity to acknowledge them.

Through this opportunity, the researcher also would like to thank his respected lecturer because his lecturer gave his a lot of valuable information and guidance throughout this research. The researcher’s lecturer spent precious time to explain the requirements and contents of this study. Also, the researcher’s lecturer is patient and willing to answer all of the questions and clear the researcher’s doubts. Once again, the researcher devotes his thanks to the lecturer as the lecturer is a very helpful and kind lecturer. The author cannot repay lecturer’s kindness unless he does the best in this study.

Lastly, the author has to admit that he learnt a lot from this study especially from the lecturer. From his point of view, this study is very useful. The author would like to thank the lecturer again for giving him an opportunity to discover the usefulness of marketing strategies.

1.0 Introduction

1.1Company Background

Toshiba was originally called Tokyo Shibaura Electric K. K, merged by Corporation Shibaura Seisakusho and Tokyo Electric Co. Ltd in 1939. Originally, Toshiba was only focus on household appliances and heavy electrical machinery. However, they started to involve in communications, electronics and electrics products since 1980s. In the 1990s, Toshiba started to involve in the field of digital technology, mobile communication technology and network technology. In the 2000s, Toshiba managed to secure the position of world number two in semiconductor’s sales which is only after INTEL.

When talk about business expansion in China, Toshiba had gone through three decades of ups and downs. Toshiba (China) Co. Ltd was established in order to strengthen the management functions and strategy formulations in China. Until now, Toshiba has invested over billion dollars in China. China’s local talents and strategic partners are the main driving force to the rapid development of Toshiba in China.

1.2 Research Purpose

Nowadays, China has become a magnet of international business. Many multinational corporations have taken an initiative to expand their business into China from manufacturing to services sectors. Therefore, it is important to learn about the development of Toshiba, a successful Japanese multinational corporation in China. To learn about how a corporation developed, it is necessary to look into their marketing strategies. This is because marketing strategies can drive a corporation to the top of world and it also can make a corporation comes to an end. Therefore, this research is to determine and understand the marketing strategies used by Toshiba in China and understand how they implement the marketing strategies correctly to meet local consumer’s demands.

1.3 Research Objectives

This research is aimed to enhance people’s understanding about the paths of become a successful multinational corporation in China so that it will help to generate marketing plans in the future. Therefore, this research try to discuss and understand the marketing strategies of Toshiba used in China and how these marketing strategies can drive Toshiba in China into a successful multinational corporation. A good marketing strategy is very important for a multinational corporation to develop in foreign market. This is because a corporation without a good marketing strategy will never move.

As such the research questions are as follow:

• What strategies Toshiba has applied to face the competition of local Chinese companies in the past decade?

• What are the advantages and disadvantages of all the strategies that Toshiba has applied in the past ten years?

• What do we learn from the Toshiba case and what strategy does the research suggests for the future development.

1.4 Significance of Study

The study of successful marketing strategies can be a learning paradigm for multinational company to enhance the strategy formulation and goal oriented as well. The research’s goal is designed to help multinational company to improve their skills in formulating marketing strategy as well as improve their competency. This goal can only be achieved if multinational companies learn from the mistake which made by Toshiba in China and make sure the same problem would not happen on their companies. The output of this research is a source of material that managers can refer and learn by reading and implementing the skills that is discussed.

1.5 Scope of Study

This research only focuses on Toshiba’s development in China rather than other multinational company in China or Toshiba’s development in other countries. This is because Toshiba’s development in China is one of the most successful among all other multinational companies invested in China. This can be proved by the semiconductor’s sales of Toshiba. It is ranking number two and only loses to INTEL, the giant of semiconductors producer in the world. Only Toshiba’s marketing strategies will be discussed in this research. This is because marketing development strategies can determine the direction and goal for a company to pursue on.

1.6 Definition of Terms

Database Marketing: Customer information is stored in electronic database and it is utilized for targeting marketing activities. The information can be a mixture of what is learned from previous interactions with customer and so on.

Export Marketing: The marketing of products or services to foreign markets.

Ethical Marketing: Marketing strategy that takes into account of moral aspects.

FAST Marketing: Focused Advertising Sampling Technique: an approach concentrating promotions into a short space of time to saturate the market.

Field Marketing: The step of sending representative to retail stores in order to build brand and support sales. The representatives may conduct in-store promotions, set up point of sale displays, and ensure that products are displayed to best advantage.

Marketing Strategy: The set of objectives which an organization allocates to its marketing function in order to support the overall corporate strategy, together with the broad methods chosen to achieve these objectives.

Niche Marketing: The marketing of a product to a small and well-defined segment of the market place.

Offensive Marketing: A competitive marketing strategy, the purpose of this strategy is to gain more market share from the rivals within the market.

Relationship Marketing: The strategy of establishing a good relationship with the customer so that they can come back in the future.

Source: http://www.mshmgi.com/index.html

1.7 Limitation of Study

This research only limited to Toshiba’s development in China which is an emerging market. Comparison from different country markets will provide a better picture about to what extent the particular marketing strategy works. In other words, marketing strategy that works and success in China would not guarantee the same outcome if it is implemented in other country. Besides that, Toshiba is only an electric and electronic appliances producer. More research on different multinational company from different sectors will also provide more evidence about the validity of the marketing strategy. For example, a marketing strategy that works flawlessly on Toshiba China may not works on other multinational company in China.

1.8 Chapter Outline

Chapter 1: Introduction

This chapter discuss about the company background (Toshiba). It also discuss about why this research is conducted and what the limitations of this research are. Besides that, it also explains some specific marketing terms and what the significance of this study is.

Chapter 2: Literature Review

This chapter has summarized thirty article and journal and tries to anticipate the fact that what finding will discuss in the later chapter.

Chapter 3: Research Methodology

This chapter explains about how this research is conducted. The details discussed such as research design, source of data, measures used, the variables, method of collect data, data analysis and so on. In other words, this chapter is a guideline for author to conduct the research from start to the end.

Chapter 4: Results

This chapter present the author’s finding. It is important to note that only result is presented but not analysis and discussion about the finding.

Chapter 5: Analysis and Discussion

This chapter presents the major finding. Besides that, it also analyzes and discusses about the major finding and tries to relate the finding with the fact in the literature review in chapter 2. Lastly, it makes a conclusion and recommendation according to the finding.

2.0 Literature Review

2.1 Foreign direct investment in China

Japan is one of the biggest foreign direct investments (FDI) in China. There are two extreme situations of Japanese investment that can be discussed. Firstly, it is in the mid-1990, the Japan’s electronics industry. Secondly, it happen after 2003, the Japan’s automotive industry. Cross-border production network used in the electronics industry is different from the conventional global productions industry networks (GPN) theory. Small and medium enterprise can dominate in building of production networks. For example, the know-how of SME to operate production bases in Southern China made them to lead the top tier firm such as Toshiba to build cross-border production networks.

Rare earth materials are the most important component in modern technology including green technology. China has growing into the main supplier of these materials in the world. However, in recent years, the Beijing government is planning to reduce its export of these materials. This is because the Beijing wants to control illegal mining which has driven up the price and causes environmental pollution. Because of reducing in China’s export, many green technology based firm has moved their R&D to China to take advantages of using those rare earth materials. On the other side, Japan which has no reserves of rare earth materials is looking for alternatives sources. The Japanese government announced a set of “comprehensive rare earth measures” to stabilize the supply. The government support japan companies which want to acquire rights to rare earth outside China. China’s action in reducing export of rare earth material has given India an opportunity to take advantages of these materials. This can be seen when Japan and India come to agreement on supply of this materials.

In recent years, the rapid growth of China has caught much attention from all over the world. Some scholars claim that East Asia is rising especially for China. In the financial crisis of 2008 in the US, knowledge-based-economy (KBE) still characterizes the global economy. China does not lead the game in term of research and development activities when it is compared with Japan, South Korea, and Taiwan. In contrast, they are moved away from China. So, it is hard to say that China is the new twenty-first-century economy at the center of the East Asian interstate system. After the economic reformation in 1978, China has gained many foreign exchange reserves. This is mainly from exporting manufacturing goods while intellectual properties are still controlled by the West. Therefore, locating China as twenty-first-century knowledge-based economy, the answer is remaining positive in term of gross domestic product, foreign direct investment and total manufacturing output.

Based on the study, it can conclude that global R&D network is hard to manage and challenging. There are three type of barrier in China for foreign R&D operations. Among the barrier are relational distance (both institutional and cultural distance) between the parent company and China, the overall power, strength and experience of a company and lastly the ethnicity of site manager. All of these barriers will lead to problems in foreign R&D operations in China. For example, issues related to labor management like increasing labor cost and mobility, lack of experience and creativity and cultural differences among staff. In contrast, China’s institution and infrastructure do not raise any serious issues for foreign companies to conduct R&D operations.

After economic reformation, China has become a must-win market for many multinational corporations. However, things begin to change when many local brands starts gaining market shares. Therefore, multinational corporations need to imply new strategies for continuous growth in China. In order to search for new strategies, a large scale survey was conducted. The result shows that Chinese consumer’s purchase behavior differs across local market and product categories. Firstly, the level of economic development and local cultures affects the purchase behavior. For example, first tier cities like Shanghai and Beijing have more purchase power and larger market. However, these cities are less likely to buy foreign brand compare to second tier cities like Xi’an and Chengdu. Besides that, in term of durable goods like televisions, Chinese consumer prefer local brand. Therefore, local brand has relatively larger market share. In addition, the result also shows that dominance of foreign brands in China remain an urban legend. There are few factors that made China’s domestic brand to rise. Most importantly, recent years, local companies have improved the quality of their products. Moreover, as economic continue to grow, there are consumers can now afford quality goods and became less infatuated with foreign brands. Furthermore, domestic firm targeted value-conscious consumer rather than small minority of wealthy consumer which usually targeted by foreign brands. Therefore, many Chinese consumers begin to realize that domestic goods are “good enough” as an alternative for foreign brand’s goods.

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2.2 The economic situation of China

In recent years, the rapid growth of China has caught much attention from all over the world. Some scholars claim that East Asia is rising especially for China. In the financial crisis of 2008 in the US, knowledge-based-economy (KBE) still characterizes the global economy. China does not lead the game in term of research and development activities when it is compared with Japan, South Korea, and Taiwan. In contrast, they are moved away from China. So, it is hard to say that China is the new twenty-first-century economy at the center of the East Asian interstate system. After the economic reformation in 1978, China has gained many foreign exchange reserves. This is mainly from exporting manufacturing goods while intellectual properties are still controlled by the West. Therefore, locating China as twenty-first-century knowledge-based economy, the answer is remaining positive in term of gross domestic product, foreign direct investment and total manufacturing output.

In the past four decades, the economic reform of China has dramatically reduces poverty. However, the unified social stratum is not managed to materialize, therefore it is remain uncertain that the reform system is able to accommodate middle class demands. The imbalance of growth and reform brings many implications for economic prospects, energy consumption, education system, housing plan, and so on. In the year of 2015, Asian middle class will be similar to those in Europe and North America. Therefore, scholars can forecast China can be at the front place of transformation of world economy.

Recently, there has a lot of management localization in multinational companies established in China. There are few reasons that many multinational companies to pursue this practice. Firstly, management localization can help to cut management cost. Secondly, it also can help the companies to gain an in depth knowledge of local market. Thirdly, it helps the companies to avoid of expatriation drawbacks. Fourthly, management localization also helps the companies to develop and retain local managerial talents. Finally, it helps the MNC to maintain good relationship with China government. This is because management localization is required by local government regulations.

During recent years, China has become a major economic player in international business. Although China is not completely immune from the global economic crisis, China is still managed to contribute to world economic growth. The Beijing government is continued to focus on rising living standard and foreign policy that is economically driven. These have made the Chinese benefited from foreign direct investment. In order to remain its competitiveness, China has to move up its value chain, process that requires innovation leading to independent product development. The technology transfer and managerial expertise from foreign companies will eventually enhance the position of China as a global economic player. Lastly, as the increasing of outward investment, a Chinese management style may eventually emerge.

There are important impacts on China’s admission into World Trade Organization (WTO). First of all, China’s independent foreign policy of peace was launched in order to achieve the long term objectives which to secure a suitable international environment for China economic development. It also promote economic exchange and to reduce the wrong perception of the “China threat”. Lastly, to further strengthen China’s status as a regional and international power. On the other sides, both Japan and Thai prime minister also agreed that China’s economic growth is not a regional threat. Meanwhile, they mention that a rich China mean a prosperous Asia and these will give Asia the greater bargaining power in any trade forum. From the Asian financial crisis and the recent economic difficulties, Asian countries still can believe that they can cope with the expansion of China Economy. Many Asian countries would not threaten the five peaceful coexistences as long as they still can maintain their economic growth in the region.

In the last two decades, China economy has gone through a phenomenal growth after the economic reformation. Income per capita of China has quadrupled. Besides that, China’s gross domestic product also reaches a record high which is nearly a double-digit growth rate. Moreover, the export performance also has extraordinary performance which has made China the largest exporter among emerging East Asian economies and the seventh largest exporting nation in the world. China is able to produce high quality yet inexpensive goods. Furthermore, China also became member of World Trade Organization. Because of this, many ASEAN countries were losing their foreign direct investment, as most of the company moved their plant to China. However, the rise of China economy should be seen as an opportunity rather than a challenge. ASEAN countries should take advantage from China’s economic growth through enhancement of trade and investment linkages.

Based on this research, when organizations adopt free enterprise system of the West, the business will result in adoption of Western value too. Meanwhile, culture is a force to make managerial value remain different from different countries. In the cases of COOs, socio-political and economic systems are supporting fast adaption to foreign organizational systems and management styles. There are only two approach of managerial values in an organization; convergence approach and divergence approach. Convergence approach means that managers will stick to attitudes and behavior common to managers rather than make changes according to cultural difference. Meanwhile, divergence approach means that managers will make changes according to cultural differences. China is a mix of socialism and Confucianism, and it remains a mirror to US and other Western nations.

Based on the study, it can conclude that many of Japanese products are positioned as a global culture brands. Underlying consumer ethnocentrism and cosmopolitanism, both influential and purchase behavior in China are forecasted and conducted of the Japanese product diffusion strategy. However, there are Chinese firms that already implement the modern branding techniques and eventually close the gap to global brand. The popularity also not only reflects Chinese consumer behavior and it shows that Chinese consumers will evolve into a localized brand profile. Japan’s company has to look for an answer to the nascent ethnocentrism paired with changes in attitudes toward brands with a foreign culture positioning. As the China market is continuing growing, Japan’s MNC has to monitor the unique product diffusion patterns carefully. Japan’s corporation can further uphold their market positions in China, if they start adapt and extend local brand presence to evolving shifts in local innovativeness.

The lessons from China’s leap into information age are depending on three questions. “Who makes investment decisions, what types of investments they make, and how investment returns are distributed”. The study shows that scientists and engineers is the one who had good understanding of main technological disciplines and are willing to transform their knowledge into a final product. Types of investment involved include R&D, manufacturing and marketing. The scientists and engineers partner with Chinese state agencies and foreign companies in order to learn new technology, but still remain control over strategic decisions for their firms. At last, the revenue was distributed by sharing with employees so that they will find themselves better remunerated.

2.3 The economic relationship between China and Japan

Japanese investment and business in China has been in modest period of recovery in the mid-2000s. This can be seen from the resumption of foreign direct investment as compared to earlier years. In addition, Japanese FDI regional coverage in China has become wider. This is because there are more investment has been made in the interior provinces of China. Japan’s investment is focus in the East, mid-South and North. However, it is a changing nature because of the decreasing cost competitiveness of the operating environment and also the highly skilled labor market. Therefore, Japan’s MNC begin to emphasize on high value added activities such as offshoring and outsourcing in Eastern seaboard in China. At the same time, low value added activities has been moved to other hinterland region.

Japan and China mobile phone market each stand at the opposite ends of a spectrum. In Japan, mobile phone is sold as a bundle with a telephony services. In contrast, in China, mobile phone is sold independently of service operators. In other words, entry barrier in Japan is very high while in China is very low. The reasons why Japan phone manufacturer failed in Chinese market are the difference of distribution structure and demand conditions between Japan and China. The common approach that used by Japan phone manufacturer is centralized organization and innovation process. However, these approaches are hard to adapt to China. In China, they required a more decentralized approach or more allocation of resource for oversea market development within centralized organization. The start of 3G services is treated as the new opportunity for Japanese phone makers as service operators can bundle sales of handset and services to promote the 3G services. Therefore, Japanese phone makers can stand a better position in China market.

Asian multinational company tends to provide more training in services sectors. This is because in recent years, Asia economy is shifting from manufacturing sector to services sectors. Therefore, it is reasonable service sector has higher demand of highly skilled labor which resulted from training practices. However, in order to achieve better performance, both manufacturing and service sector also require more training. Most Asian multinational companies provided externally training program to managerial and professional staff. However, these staff has found that the training is irrelevant and lacking in quality which would not help in their career advancement. This study also suggests that training program should take into account about the structure, culture, managerial philosophy and global business strategy so that a better training program is conducted. However, for non-Asian MNC, training program must address the local employees’ training needs instead of following their human resource strategy blindly. By doing so, non-Asian MNC will be able to compete with local companies.

2.4 Japanese multinational companies in China

At China, both the Japanese PM theory of leadership and the western-developed theory of organizational culture can be put into practice. This is because there are huge impact on organizational performance is sought by the coexistence of the Japanese PM theory. Based on finding, the degree of affective attachment to organizational among employees of Japanese company is lower than employees in the Chinese company. Therefore, in the Japanese company, the sense of belonging to organization is significantly lower. Besides that, there is no positive relationship between nationality of the parent company and organizational performance. Therefore, as long as corporate management is conducted in proper way, organizational performance will eventually improve. In addition, the reality of investments by Japanese company in China is that China practice M function rather than P function. This is because intense routine work, M function is more effective than P function. This is because in manufacturing sites, efficiency and quality is required, employees are working under pressure. However, Umezawa says that Japanese company should adopt a global perspective and operate in global scale which mean those Japanese companies have to value organizational culture.

TQM practices in Japanese-owned manufacturers in China have improved the customer’s satisfaction. TQM is an operations management ways that focus on human resources and then motivating employees. Through TQM practices which are related to internal performance like cost reduction, profitability improvement and improvement of employee’s satisfaction, overall organization performance can be improved. Therefore, it can be conclude that TQM is very effective in improving business performance as long as it is implemented correctly.

Consumer nationalism has three main components of self-definition through consumption, globalization, and symbolic national unification. The emotion of nationalism is from the symbols in the nation’s history. Besides that, nationalism also provides a bridge to us and history. Therefore, consumption has become one of the social processes where the emotion of nationalism is expressed and communicated. In addition, consumer nationalism is also not an isolated case. It is expressed in many ways such as negative publicity and boycotts. In the case of global brand TOSHIBA, China’s media and consumer have invoked and rediscovered a nationalistic sentiment which is underlined by past colonial occupation of Japan toward China. Lastly, there is reason to believe that consumer is the main character in the global marketplace. Therefore, in order to expand businesses into China, company need to develop a better understanding of China consumer behavior.

Firms that want to outperform its competitors in China need to know how to manage China’s abundant and high quality human resource. However, these have created a major challenge for firms to achieve competitive advantages. Based on the interviews with the general manager or vice-general manager of top five Japanese multinational corporation operated in China, there are three main strategy orientations in the China market. There are cost reduction, differentiation, and quality enhancement strategies. Basically, these strategies are consistent with Porter’s framework of competitive strategies. However, there is an independent strategy which is quality enhancement which Japanese MNC used in China. For companies that adopt cost reduction strategy, they usually adopt short term, flexible human resource policy. This is because it can reduce personnel expenses. The main idea of this cost reduction strategy is to ‘buy’ human resource and these companies rely on external labor markets. For companies adopt differentiation strategy, they usually emphasize human resource management in R&D section. The main idea of this strategy is to “buy” and “make” human resource and they are basically result-oriented. For companies adopt quality enhancement strategy, they usually emphasize on replicating HRM policies and practices used in their parent company. The main idea of this strategy is to “make” human resource within firm that can contribute to enhancement of product quality.

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Based on this research, there are sixteen of the twenty-five MNC including their government affair manager in strategic management. The main responsibility of government affair manager is to align their business goals with the development of policies and regulations. There are four key roles of government affair manager which are the business developer, expert prescriber, senior advisor and internal consultant. Moreover, this research also suggests that a good relationship between the participation of government affairs in strategic management and excellence in government affairs. However, there are still other factor can affect the integration of government affairs with the overall strategic management. The factors are organizational mechanism of management, organizational expectation and culture, and the nature of the MNC’s industry.

Based on analysis with the diamond model, it can conclude that China’s telecommunication industry has improved after China’s admission into World Trade Organization. The improvement is not only caused by WTO commitment, the domestic and economic reform as well as technological development has made the changes. Therefore, the China government should abide by its commitment to WTO and liberalize telecommunication industry so that it can be more competitive at international stage. In addition, the government should slowly eliminate its control over the major firms in the industry. Lastly, Chinese telecommunication firms should adopt differentiation strategy rather than cost leadership.

2.5 The development of Toshiba in China

As financial crisis at 2008, many liquid crystals producer like Toshiba, Sony, and Panasonic have taken a serious hit. Many of these companies have record operating loss after financial crisis. Therefore, they are forced to look for new strategy for the firm continues to be profitable. It is not surprise to hear that Sharp decides to move their production of LCD and solar panel outside Japan and most possibly to China. Besides that, Toshiba is preparing to buy the stake of joint venture with Panasonic. The deal will made Toshiba more concentrating on new polycrystalline silicon panels which have higher resolution. It also allows Panasonic to be more concentrating on large display.

Furthermore, Kent Displays Inc. upholds the patents on its Reflex display. This new way of production has reduced overall cost.

In China, color TV is developed step by step, as the industry first build up production capability and then only learn to configure, design; unlike in developed countries, the production is built up after new product development. Meanwhile, many domestic firms also make an effort to move from downstream to upstream. In the era of flat panel TV, domestics firms are stand on a disadvantageous position. This is because develop flat panel TV require both technology and financial investment. Besides that, path dependence also is a weak point for local firms. Furthermore, the domestic market demand also has effects on the evolution. For example, high demand is good for local industry to continue growing. However, diversification and imbalance demand has forced the technology to upgrade. Moreover, the government which comes out with policies and regulation also play an important role. It is necessary for local government to protect domestic industry. As a result, vertical integration is a must. This is because it provides the opportunity for domestic players to control key component and then continue to improve their overall performance. Next, collaboration with other organization is a necessary step to improve performance. This is because the technological and financial barrier is too huge for a single firm to overcome.

The rise of China has made a necessary to deepen a Northeast Asian Forum at the summit in order to build trust and a common identity. This is because with more frequent dialogues, exchange and institution-building, it can close the gap between China and other countries. Based on this study, it can conclude that the future of East Asian security and prosperity depend on China and Sino-Japanese relations. In addition, China’s economy is forecasted to overtake Japan and US sometime in the near future. Furthermore, Japan and China have to cope with their impulse for nationalism so that East Asian community building processes can be accelerated. In order to achieve this purpose, Japan needs to make a clean break with its colonial legacy. Meanwhile, China needs to make transition to Development Democracy from Development State. South Korea also can be the bridge-builder between China, Japan and other Asian countries.

This study suggests that a product-based web sites should be localized the content according to the local market. Information and creative elements based on local should be maximized in the web sites. In order to make a better product-based web site, the cross-cultural differences should not be left behind. This is because understanding of cross-cultural differences will help to adjust product and brand image to better suit the local consumers.

The rise of economy in China and India has made the global competition more aggressive ever before. These changes have made the world economy more volatile compared to the past. Therefore, many MNC responded to this volatility by becoming more flexible. In the cases of Japanese MNC, they have responded by implementing strategies such as outsourcing, offshoring, and so on. However, they still not fully open their internal capital markets to external influences and their top-level labor markets to foreign executives. These phenomena have prevented Japanese company to be a fully global firm. This is because there are still headquarter control and high levels of internal integrations of activities in Japanese firms. Therefore, a better understanding is needed to clarify this hybrids situation a new status quo or just a stage of transition.

There are positive and negative impacts of the localization strategy of multinationals to China. Positive impacts of localization strategy are help to promote the upgrade of culture, Chinese industrial structure, fostering industrial cluster accelerate China as “world factory”. It also promotes cultural integration and management reform. Besides, it promote enhancement of Chinese talents quality and speed up the spread of technology in China.

The negative impacts are exacerbating the risk of brain drain of domestic firm. Besides, local advantage resource to be seized and local firm’s interest will be affected. Only high profit industry will be invested and this may not consistent with China’s current economic development strategy. To avoid from being affected, many local firms choose to cooperate with the MNC.

Based on this study, it can conclude that experience and institutional factors are the main determinants of ownership strategy of Japanese firms. These mean that a higher ownership position will be taken when there are increased risks of unwanted dissemination of assets. In contrast, transactional factors are less influence than the previous two factors. Transactional factors pointed out a higher ownership position will be taken when firms tend to operate in technologically and marketing intensive industries.

Based on this study, there are few ways that a manager can stimulate employees’ creativity. Firstly, managers should clearly state the expected outcome so that every employee knows where they should put attention. Secondly, managers should respect employee work style. This is because everyone has different approach to generate new ideas. Thirdly, managers should communicate with employee about where creative solutions in needed. Fourthly, managers should encourage employee to take careful risks by rewarding them. Fifthly, managers should develop an organizational climate that will take personal responsibility. Finally, managers should encourage active communication within different departments to gather new ideas.

Chapter 3 Research Methodology

3.1 Research objectives

Through the exploring about the relevant studies about Toshiba in China, the following objectives should be reached.

Understand about the paths of become a successful multinational corporation in China

Discuss and understand the marketing strategies of Toshiba used in China

How the marketing strategies can drive Toshiba in China into a successful multinational corporation

3.2 Research methodology

The main research method of this research paper is to conduct the literature review and get the information from authorized publishers. The data used in this research paper is mainly secondary data.

In this study, the researcher focuses on Toshiba in China. This is because China is one of the largest economies in the world. Multinational companies which in the similar field with Toshiba have become variable for the researcher to conduct comparison. For this study, the researcher is only focusing on Toshiba instead of the whole sector that Toshiba in. This is because the objectives of this study is to find out the best marketing strategies that made a multinational company more competitive in foreign market.

This research is a qualitative method utilizing case study to answer the research questions and objectives. Case study method was chosen as is an excellent tool to identify what marketing strategies Toshiba is using in China as well as to identify how successful the marketing strategies are.

The design of research in this study is qualitative. This study employed a qualitative method utilizing case study to answer the research questions and objectives. Case study method was chosen because the study aimed to look into what marketing strategies made a multinational company successful in foreign market. In order to determine how successful Toshiba is, few comparisons with other multinational company in the same field are made. The case study chosen was in the English language instead of Chinese language. English language is chosen because Toshiba is an international corporation as English is an international language.

There are few multinational company that operated in China are used to make comparison with Toshiba in order to determine the development progress of the company. Besides that, the researcher also presents the organization performance of Toshiba for the past decade in order to determine the development of Toshiba in China. In addition, there are thirty journals are referred in order to find the fact of the development of Toshiba in China. In order to correctly answer the research questions and objectives, all the information is gathered from several reliable sources. Moreover, any journal or news or decisive phrase expressed from Toshiba in the last ten years is reviewed.

In order to analyze the information, the marketing strategies that used by all multinational companies are listed out. After that, these strategies are compared to Toshiba’s marketing strategies in order to clarify the validity of Toshiba’s marketing strategies. Besides that, the development path of Toshiba in China for the last ten years is also been listed out. This is because it can clarify the fact of Toshiba is continue growing.

3.3 Limitations of the research

Time scope

The time scope of the journals are different. It is quite difficult to compare between these journal articles. In addition, these journals are research result many years ago. These result may not reflect the real situation Toshiba faces in China now. Further research still need to be done to fix the time variance.

Limited information

This research is conducted based on the literature review of the journal articles from the publishers. Many of the information is not available for use. More information has only paid access. The limited information result in inaccurate of the research result. Further research need to be done to add more information and make the research result more accurate.

Lack of effective primary data

This research is done with secondary data and information. The primary data and information is absent. The secondary information may not perfectly suitable for the research propose and answer the research questions perfectly. The result of this research is not accurate without the necessary primary data. Further researches still need to be done in the future to get more accurate conclusions.

Chapter 4 Discussion

4.1 General discussion

Yung-Hsing Guo (2012) argues that the open door policy of China has successfully turn China into a worldwide economic warehouse. The Chinese economy is successfully integrated into the global economy. Based on the macro-economy of China, Japan has become one of the biggest foreign direct investments (FDI) country in China. Two peaks of the Japanese firm direct investment are discussed in the research of Yung-Hsing Guo. Firstly, it is in the mid-1990, the Japan’s electronics industry. Secondly, it happen after 2003, the Japan’s automotive industry. Cross-border production network used in the electronics industry is different from the conventional global productions industry networks (GPN) theory. Small and medium enterprise can dominate in the building of production networks. For example, the know-how of SME to operate production bases in Southern China made them to lead the top tier firm such as Toshiba to build cross-border production networks. For the enterprises such as Toshiba, many of the manufacturing sites are located in China. As one of the most important role in the global supply chain of the multinational enterprises, China is really a world factory. For the example of Toshiba, the manufacturing facilities of Toshiba are located in many cities of China. The economic development centralized policy of China gives incentives to the central and also local government to take action to attract foreign direct investment from other countries. The Japanese firms take the opportunity to set up sites and factories in China. Toshiba is one of the important Japanese enterprises that come into China in that big background. Toshiba has been in China for operations for 40 years. The development of Toshiba accelerated since the economic evolution in 1978. More than 40 years’ development has made Toshiba one of the foreign firms that contribute a lot to the sustainable development of China.

A. Delios, P.W. Beamish & X. Zhao (2009) advocates that Japanese investment and business in China has been in modest period of recovery in the mid-2000s. This can be seen from the resumption of foreign direct investment as compared to earlier years. In addition, Japanese FDI regional coverage in China has become wider. This is because there are more investment has been made in the interior provinces of China. Japan’s investment is focus in the East, mid-South and North. However, it is a changing nature because of the decreasing cost competitiveness of the operating environment and also the highly skilled labor market. Therefore, Japan’s MNC begin to emphasize on high value added activities such as offshoring and outsourcing in Eastern seaboard in China. At the same time, low value added activities has been moved to other hinterland region. The opinion of the author in his article mainly focuses on the evolution of the Japanese investment in China. For a long time, China is the world’s factory. Many things are produced in China and sold in many other countries. However, China only played the role of low value added for a very long time. As the development of China and along with the economic evolution in China, the labor cost and also the other costs raise in China. The low value added activities of Japanese firms have been moved to other countries. The Chinese branches of these Japanese firms can take responsibility of higher value added activities. Toshiba, as one of the leading Japanese firms, also engages in adopting these change. Some of the manufacturing factories are beginning to move to other countries where the labor cost is lower. Toshiba is now more focused on the Chinese market instead of being a manufacturing center.

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P.J. Buckley (2009) states that the rise of economy in China and India has made the global competition more aggressive ever before. These changes have made the world economy more volatile compared with the past. Therefore, many MNC responded to this volatility by becoming more flexible. In the cases of Japanese MNC, they have responded by implementing strategies such as outsourcing, offshoring, and so on. However, they still not fully open their internal capital markets to external influences and their top-level labor markets to foreign executives. These phenomena have prevented Japanese company to be a fully global firm. This is because there are still headquarter control and high levels of internal integrations of activities in Japanese firms. Therefore, a better understanding is needed to clarify this hybrids situation a new status quo or just a stage of transition. Among many of the Japanese firms in China, the top executives are mainly from Japan. The operations of Japanese firms are still under the control of the Japanese headquarters. Toshiba also follows this strategy. Toshiba opens its subsidiary companies in China, but the top managers of the China Company are mainly from Japan.

S.A. Horn (2009) states that many of Japanese products are positioned as a global culture brands. Underlying consumer ethnocentrism and cosmopolitanism, both influential and purchase behavior in China are forecasted and conducted of the Japanese product diffusion strategy. However, there are Chinese firms that already implement the modern branding techniques and eventually close the gap to global brand. The popularity also not only reflects Chinese consumer behavior and it shows that Chinese consumers will evolve into a localized brand profile. Japan’s company has to look for an answer to the nascent ethnocentrism paired with changes in attitudes toward brands with a foreign culture positioning. As the China market is continuing growing, Japan’s MNC has to monitor the unique product diffusion patterns carefully. Japan’s corporation can further uphold their market positions in China, if they start adapt and extend local brand presence to evolving shifts in local innovativeness. The Japanese firms in China faces difficulties in further expanding the market. The historical and political issues between these two countries like a bomb. This situation appeared in 2012. Toshiba as one of the leading Japanese in China, also suffered a lot.

Toshiba as a company of innovation, spends a lot of money on the creative activities (2006). The investment of Toshiba into the R&D activities also in turn save the company a lot of money. There are few ways that a manager can stimulate employees’ creativity. Firstly, managers should clearly state the expected outcome so that every employee knows where they should put attention. Secondly, managers should respect employee work style. This is because everyone has different approach to generate new ideas. Thirdly, managers should communicate with employee about where creative solutions in needed. Fourthly, managers should encourage employee to take careful risks by rewarding them. Fifthly, managers should develop an organizational climate that will take personal responsibility. Finally, managers should encourage active communication within different departments to gather new ideas.

Based on Masahiro Miyagawa, Kosaku Yoshida, (2005) TQM practices in Japanese-owned manufacturers in China have improved the customer’s satisfaction. TQM is an operations management ways that focus on human resources and then motivating employees. Through TQM practices which are related to internal performance like cost reduction, profitability improvement and improvement of employee’s satisfaction, overall organization performance can be improved. Therefore, it can be conclude that TQM is very effective in improving business performance as long as it is implemented correctly. Toshiba is a company that focuses on the product quality as well as the feature innovation. Since Toshiba came to China, the innovation and product quality have been two core competencies of the company.

4.2 The six selected journal articles for discussion

Article one

Small and medium enterprises as pioneers in the expansion of global production networks: A case study of the Japanese electronics industry in Guangdong, China

Article two

The evolution of Japanese investment in China: from toys to textiles to business process outsourcing

Article three

The rise of the Japanese multinational enterprise: then and now

Article four

Product adoption and innovation diffusion: the case of Japanese

marketing to China

Article five

Toshiba sparks a wave of innovation

Article six

An empirical study of TQM practices in Japanese-owned

manufacturers in China

4.3 The investment of Japanese Enterprises in China

Yung-Hsing Guo (2012) focuses on the cross-broader production networks in China, while A. Delios, P.W. Beamish & X. Zhao (2009) emphases the foreign direct investment in China of Japanese firms. The two authors both discussed the characteristics of the Japanese firms and investigate the investment and the operating of the Japanese firms in China.

Through the analysis of the findings of the two articles from Yung and Delios, I can conclude that the economic opening policies of China attracted the Japanese firms enter into China and supported the foreign firms’ development in China in many aspects, including the tax and other regulation policies. The Japanese set up firms set up branches or sites in China because of China’s low labor cost and other policies that supporting the export.

The Japanese firms’ Chinese plant build cross broader production networks in China to support the global expansion of the company. The Japanese firms use the advantages of low labor cost of China to produce many of its products and export the products to other countries.

Since 1978, the Chinese economy is under a serious of revolution. At the early stage of the revolution, the labor cost was low and the regulations on the environmental issues was loose. However, as the development of the Chinese economy, the regulations from the Chinese government is strict. The labor cost of Chinese workers no longer exist. The Japanese firms also need to do revolution. The production or service of the Chinese branches of the Japanese firms climbed up along the value chain. The low value added production processes are moved to other countries that have lower labor cost. The Chinese branches of these Japanese firms have more value added production or service processes.

Toshiba have been in China for more than 40 years. The subsidiary company of Toshiba in China first set up the factory in Dalian under the encouraging policies of the Chinese government. Toshiba has many production and services in China now. The processes of Toshiba’s Chinese company integrated with the other subsidiary companies in other countries.

4.4 The expansion of Japanese firms in China market

The article of P.J. Buckley (2009) examined the raising of Japanese firms in China and India. The article of S.A. Horn (2009) checked the product and marketing strategy of Japanese firms in China. The two researches are all about the expansion of Japanese firms in the emerging market, especially in China.

Japanese firms enter into Chinese market and compete with the Chinese local competitors. Normally the Japanese firms will still use the Japanese people as the top managers. The activities of the firms in China are still controlled by the headquarters of the company and the operation in China may do not have enough flexibility to suitable for the changing situation.

These two articles also discussed about the brand of Japanese products. The Japanese brand normally associated with quality products in China. However, the Japanese brand also needs localized profit to support the brand recognition. Under the fierce competition from the local companies in China and also the companies from other countries, the Japanese company also do more to keep the competitiveness.

As the case of Toshiba, the company also faces competition from other competitors. For example, in the personal computer market in China, there are still HP, Dell and also Lenovo in the market. Toshiba expanded the business in China through providing quality products and good services to the customers.

4.3 The quality control and technology of Japanese firms

As a Japanese company that engages in innovation, Toshiba takes action to boost the employees’ creativity. It is now often highlighted that Chinese industries have been growing rapidly and that the quality of products “made in China” has improved dramatically. Since China began the “open-door and reform policy” in 1978, the planned economy has been transformed to a market economy. China’s new policy has accelerated the rate of foreign direct investment since 1980. Chinese industries needed to improve the quality of goods and services to become competitive in the international market place. Therefore the Chinese government issued a series of instructions to improve quality and tried to promote TQM widely and strongly.

The Japanese firms are practicing quality management since the 1950s. The Japanese are still the leader in producing quality products in a number of industries and are still the role model for U.S. companies to emulate.

Through the discussion, I can see that the innovation and good product quality lead to the success of the Japanese firms. The Japanese not only had outstanding production technology but also good at the kind of incremental innovation that 1980s pundits thought would be critical to win the markets for this technology as it matured. Further, Japanese technology firms were supported by the Japanese government. The financial system of Japan provide huge amount of support to its technology industry. The Japanese firms, including Toshiba, are engaging in long-term planning. The citizens of Japan are of high education level to support the development of the technology industry. The Japanese firms focus on the quality and reliability of the products. These product characteristics were the keys to competitive advantage during the age of mainframes, but in an era of low-cost PCs the Japanese firms are providing more quality than users are willing to pay for. Moreover, the pursuit of perfection causes Japanese firms to be slow to market new products. The result is that they have lost market share to competitors in East Asia and elsewhere. One of Toshiba’s main product is the Personal computer. The PCs of Toshiba are of good features through innovation and the quality of Toshiba’s product re very high.

Chapter 5 Conclusion and recommendation

5.1 Conclusion

Toshiba is one of the most famous multinational company of Japan. From the investment and development of Toshiba in China, the investment of Japanese companies in China can be examined. Toshiba has been in China for more than 40 years, however, the rapid development of Toshiba in China is after 1978, which is the end of the Cultural Evolution. After the year of 1978, the government of China adopts the open policy in the economic sector. The foreign direct investment in China increase dramatically. A lot of Japanese firms come to China and invest in China. Toshiba’s development in China is very fast, especially after the year of 1978. This research paper examined the development situation of Toshiba in China. At the same time, the basic information about China’s economic revolution is also reviewed. The expansions of the Japanese firms in China are studied and the quality and also technology part of Toshiba are also reviewed. The study found that the economic situation in China for the past 30 years was very good and provide the macro environment for Toshiba’s development. Toshiba uses strategies to expand in the Chinese market. The technology and quality of products produced by Japanese firms are also examined.

5.2 Recommendation

Based on the information reviewed and also the discussion, I would like to give some recommendations to Toshiba.

Focus on innovation

Innovation is very important as a technology based company. As the development of the economy, the living standard of people is raising. The users of the technical products request new features of the product. Toshiba should focus on the innovation and develop more products to catch the market share.

Design localized products

Toshiba is originated from Japan. Even though the culture of Japan and China is similar, the differences are still obvious. The user’s habit is different. Toshiba should develop more products that specialized for the Chinese users. China is a very big market and the purchasing power of the citizens is quite big in total. Catching the market share in China will bring a lot benefits to Toshiba.

Monitor the market trends

In the technology industry, one big company can fall down in the next second if the market trends are missed. Nokia is the example of the failure. Toshiba should monitor the market trends of the technology industry. By monitoring the technology industries market trends, new products can help the company catch the market share of the China.

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