Conquistadores in China

In 2002, China became the world’s number-one recipient of inward foreign direct investment (FDI). One of the major attractions was China’s entry into the World Trade Organisation (WTO) in December 2001. Spanish firms, which had previously had a major focus on Latin America, participated in the general enthusiasm. The case presents the experience of three Spanish companies with operations in China. What are the problems and opportunities which they confront, and what lessons may be learnt? The three companies operate in different business sectors and therefore have rather different experiences and insights. The case text is supplemented by a documentary based on direct interviews with the managers concerned.

Sensitivity to local conditions is the prime teaching objective. The exercise is to ask students to explore the types of problems facing an inward investor coming to China. The questions seek to draw lessons from the case regarding: 1. Entry into China and market penetration. 2. Maintenance and build up of position in China. 3. What firm characteristics would most help it to be competitive in China. 4. Dealing with the direct and indirect impacts of the political environment.