An Analysis On The Coating Industry In China And The Effective Entry Strategy

In the paper, several topics are addressed but with a common denominator which is the analysis of the most effective entry strategy model chosen by Chemical companies to enter Chinese Coating Market. The author firstly presents the theoretical framework, the literature review and analyzes the dynamics inside the Chinese Coating Industry, focusing on the main market players on the business arena, first with an overview on Chinese Chemical industry and later, with a deeper screening of the status quo of the Chinese coating situation.Then, the author analyzes the most common entry mode strategies chosen to enter Chinese Coating market for an international firm, focusing on pro’s and con’s of each one. After that, the analysis brought two previous aspects together, while the author analyzes what it means for a company to adopt different entry strategy and how this selection might affect the corporate performance. The analysis is carried out from both the strategic and operative point of views, providing guidelines and a rough model intended to prepare to evaluate and compare which strategy will be more effective in accordance with company’s objectives.Finally, the author investigates, through the SWOT analysis tool, the entry mode choice panorama of an Italian manufacturing painting company in setting up his corporate structure in Chinese Coating Industry. The study shows that, in entry mode decisions, both formal and informal institutions are considered. Formal institutions refer to government prescribed institutions (laws and regulations), while informal institutions refer to rules prescribed by the industry and the society. Both institutions are shown to affect the entry mode choices but one important type of institution, professional norms, is conspicuously missing in China. The paper also looks at the possibility of using the SWOT analysis as a practical tool to establish a real framework/matrix for the evaluation of the most effective strategy in the penetration process of such a huge but also complicated market as the Chinese Coating one.