Global Business

The Challenge for Multinational Corporations in China: Think Local, Act Global

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The place of multinational corporations in China has rapidly changed since the 1970s. No longer expected to bring cash and management expertise to China, the authors argue that MNCs have taken on a new role as teachers and role models. However, recent high-profile mistakes including a McDonald’s Corp. (of Oak Brook, Illinois) ad that over 80% of Chinese surveyed found offensive, show that MNCs are not entirely up to this task. They illustrate the consequences of this inability to cope and suggest eight strategies for improving MNC’s success in China: Think local-act global, don’t apply double standards, don’t bend the rules, avoid making “symbolic” acquisitions, avoid employing aggressive tactics over intellectual property rights, guard against management insensitivity, don’t “strip mine” profits and don’t use China as a lab. The authors then go on to show how these strategies can be executed to increase MNC’s profits and standing in China.

Seung Ho Park is president at Samsung Economic Research Institute in Beijing, China, and British American Tobacco Chair Professor, professor of strategy and director of the Center for Emerging Market Strategy at the China Europe International Business School in Shanghai, China. Wilfried R. Vanhonacker is head and Chair Professor, Department of Marketing, and executive director of the Center for Marketing and Distribution at HKUST Business School in Kowloon, Hong Kong. Comment on this article or contact the authors through smrfeedback@mit.edu.

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