China Market Entry Modes: Advantages & Disadvantages
Fig. 1: Risk (red) and control (green) associated with mode of market entry. Exp. = Export, Rep. = Representative Office, L/F = Licensing/Franchising, JV = Joint Venture, M&A = Merger & Acquisition, WOFE = Wholly Foreign Owned Enterprise.
Entry modes
Home production (export strategy)
- Indirect exporting
- Local agents (in home country)
- Advantages
- Disadvantages
- Local trading companies (in home country)
- Advantages
- Disadvantages
- Local agents (in home country)
- Direct exporting
- Foreign sales representatives (in target country)
- Advantages
- Disadvantages
- Foreign distributors (in target country)
- Advantages
- Disadvantages
- Foreign sales representatives (in target country)
Contractual market entry strategy
- Licensing
- Advantages
- Disadvantages
- Franchising
- Advantages
- Disadvantages
Foreign production (equity strategy)
- Strategic alliance
- Advantages
- Disadvantages
- Joint ventures (JV)
- Advantages
- Disadvantages
- Wholly Owned Foreign Enterprise (WOFE)
- M&A
- Advantages
- Disadvantages
- Greenfield investment
- Advantages
- Disadvantages
- M&A
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