The China Venture

assets in negotiations; consequently, these cannot be used to the SMEs' full advantage. Again,
advanced technology has a special role: it seems to be one important, if not the most
important, asset.
3.3.1 The Choice of the Market Entry Mode: A Framework
Co-operative joint ventures, equity joint ventures, wholly owned subsidiaries, representative
offices or simply direct or indirect exporting are possible vehicles for China activities. In each
category there are examples of successful companies that are happy with their specific
decision as well as numerous examples of complete failures. If one market entry form turned
out to be superior over others, it would be the strategy of choice for all newcomers with
“China ambitions”. However, a strategy that fits for all companies, products and in every
situation does not exist. There is no best strategy for China activities. Whether an entry
strategy is appropriate in a certain situation depends on a multitude of determinants.
The contingency approach which is one school of organisational theories can be used to
explain the choice of different market entry modes. Originally, the contingency approach was
one-dimensional: only one factor such as firm size or technology intensity was used to explain
the existence of different organisational forms. The deficiency that only a single factor has
explanatory value for the existence of different organisational forms was recognised by Kieser
and Kubicek (1992) who developed the one -dimensional contingency theory into a multi
factor approach. Obviously, by introducing other explanatory variables they added complexity
to the approach. To remove some of the added complexity in order to make its application
easier they propose to distinguish between internal determinants which can be influenced by
the organisation and factors related to the external environment which are - at least for a SME
- de facto given.
The internal factors are linked to the nature of the SME itself, they are controllable by the
SME to some extent. External factors include the microeconomic and macroeconomic
environment. Though they are not necessarily a given datum, they often can be influenced to a
certain degree, too, depending on bargaining power and skills. While large multinational
companies may have the necessary power to influence the external environment significantly,
SMEs are more likely to be in a position of compliance.
Although technology formally belongs to the group of internal determinants, it merits to
receive special attention. As outlined above, the nature of high technology plays an important
role in the choice of the market entry mode for high-tech SMEs. Although technology is
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