Establishing in China’s ‘good-enough’ market - - A benchmarking study on Scandinavian engineering industries’ further establishment in China

Sammanfattning: Title: Establishing in China’s ‘good-enough’ market - A benchmarking study on Scandinavian engineering industries’ further establishment in China. Problem discussion: The Chinese market is gaining importance for Scandinavian engineering industries and is by many considered a crucial market to be successful in. These companies have a tradition of producing premium products for premium customers. However, in China many are currently experiencing the threat from local competitors producing products of somewhat less quality aimed at the vast Chinese middle market - the good-enough market. Entering this market mean a first time venture into a lower quality segment for the Scandinavian companies. Hence the questions of if the good-enough market should be entered or not and what trends that can be distinguished. Purpose: The purpose with this thesis is to examine how Scandinavian engineering industries producing premium products for premium customers, enter local middle markets in China. Methodology: The research consisted of a benchmarking study where Scandinavian engineering industries in China were studied in order to distinguish an eventual pattern and trends. Distinguished trends were finally analysed according to the Uppsala internationalisation model and the theory of good-enough markets. Conclusions: It is possible to merge segmentation theories with the Uppsala internationalisation model; it acts as a complement in order to better understand the mechanisms in the initial phases. The decision-making process remains incremental during the entire establishment chain where R&D is a natural continuation. The same internalisation model can also be distinguished during further establishment of an existing market, as in the case of the good-enough market. Companies that acknowledge this market tend to also see the threat aspect of it. Hence the trend of acquiring a good-enough company and get rid of a potential threat.