Entry modes into China: the Brembo S.p.A. case

Abstract

The master’s degree thesis work provides an analysis of the potential entry modes of MNEs in the Chinese market, focusing on the entry choices of Brembo S.p.A, Italian leader company in the production of braking systems and components for vehicles. After the initial presentation of the automotive industry and the case study’s firm, the thesis discusses the selection of the proper entry strategy by multinationals according to their international experience, market knowledge, bearable costs and risks, percentage of acquirable control and need of resources. Specifically, it firstly investigates the determinants of choice of export, EJV, M&A, greenfield and brownfield from a firm-specific point of view and then the reasons that led Brembo to opt for these sort of investments in the country. Regardless the mode of entry chosen, the concrete entrance and the following development of MNEs’ activities in the Chinese market can be a particularly critical process. On this subject, the paper explains the major barriers perceived by firms when investing in China, which are cultural distance, business plan implement, protection of the intellectual property rights and the relationship with local authorities. For each obstacle, the work offers a detailed explanation about possible reasons and resolutions. Lastly, actions undertaken by Brembo to limit their negative effects are described.