Haier Globalization Case Study

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This version: 16 January 2006

This version: 16 January 2006

ACCELERATED INTERNATIONALIZATION BY EMERGING MULTINATIONALS: THE CASE OF WHITE GOODS

ACCELERATED INTERNATIONALIZATION BY EMERGING MULTINATIONALS: THE CASE OF WHITE GOODS

Andrea Goldstein OECD Development Centre 2, rue André Pascal 75775 Paris Cedex 16 France Tel. 33 1 4524 8946 Email andrea.goldstein@oecd.org Federico Bonaglia OECD Development Centre 2, rue André Pascal 75775 Paris Cedex 16 France Tel. 33 1 4524 9603 Email federico.bonaglia@oecd.org John Mathews Macquarie Graduate School of Management Sydney NSW 2109 Australia Tel. 612 9850 6082 Email John.Mathews@mgsm.edu.au Submitted for a focused issue of the Journal of International Business Studies entitled “International Expansion of Emerging Market Businesses”.

We thank Alice Amsden, Lucia Piscitello, and seminar participants at MIT and Centro D’Agliano for useful comments on earlier drafts. The usual caveats apply. In particular, the opinions expressed are the authors’ ones and do not reflect the views of the OECD, the OECD Development Centre and their members. Submitted for a focused issue of the Journal of International Business Studies entitled “International Expansion of Emerging Market Businesses”.

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Abstract

1. Introduction
The emergence of a “second wave” of developing-country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalization in the most recent years. These new

Outward foreign direct investment (OFDI) enables both small and large MNEs to MNEs did not delay their internationalization until they were large, as did most of their predecessors, and often become global as a result of direct firm-to-firm contracting. Many grow large as they internationalize; conversely, they internationalize in order to grow large. This is a striking pattern which, if confirmed, indicates that enterprises from developing countries have pursued distinctive approaches to internationalization. It is a further

potentially enhance their competitiveness through securing access to new markets, technologies, brand names, resources and strategic assets abroad. In their constant search for better exploiting, consolidating and expanding their capabilities (or

interesting hypothesis to investigate to what extent such firms, born as suppliers of established incumbents, have leveraged on their “latecomer” status to accelerate their internationalization. This paper documents how emerging MNEs may follow quite different patterns to reach, or at least approach, global competitiveness. In particular, it investigates how three latecomer MNEs pursued global growth

resource base), firms pursue a variety of strategies, which include product and technological diversification across fields and geographical sites (Cantwell and Piscitello 1999). These potential enhancers of competitiveness would not be available

through accelerated internationalization combined with strategic and organizational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as Dragon Multinationals in the large home appliances (so-called “white goods”) industry. This is a producer-driven global value chain, characterized by mature technology and rapid delocalization to developing countries, where not only input costs are lower, but demand growth rates are

to firms that elected to stay focused on their own domestic economy. Moreover firms that stay focused on the domestic market increasingly miss out on opportunities that are available only to firms that are prepared to internationalize – opportunities such as

higher – giving a decided latecomer advantage to these MNEs. Haier, Mabe and Arçelik leveraged their strategic partnership with established MNEs to upgrade their operations, evolving from the production of simple goods, into new product lines developed through their own design, branding and marketing capabilities. The recipe of their...
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