Chinese Foreign Direct Investments Entry Strategies and Firm Performance

Abstract

The study sought to answer the following research question: What are the entry strategies adopted by Chinese FDI to enter Kenyan Economy and their influence on firm performance? The research objectives were to determine the entry strategies used by Chinese FDI to enter the Kenyan economy and to determine the extent to which Chinese FDI strategies affect firm performance. A case study design was used since all the MNCs involved were from the same country that is China. Interview guide was used for data collection. The respondents were required, based on the interview guide, to indicate the review frequency of entry strategies their organizations had deployed, and majority of the respondents stated that review of entry strategies is normally predicated upon environmental factors at a point in time, and the respondents noted that factors which influence review of entry strategies included political , legal and cultural environment, and that it played an important part in identification of opportunities inherent in the new market as well as the challenges the organization is most likely to encounter in the short and long run. The respondents also noted the level of competition in the target market as some of the factors influencing their decision to review entry strategies, and terrorist activities as well. Changes in the legal environment was also a concern that the respondents noted had a significant influence on whether to review entry strategies. Respondents also indicated that venturing into the foreign market like Kenya was motivated by the need to survive competition at the parent home of the company and to expand market size of the organization, to increase the sales and profits of the organization, and to moderate cost of doing business at home. This indicates that firm performance was influenced by the entry strategy adopted by an organization. The study recommends that policy development needs to take into account the structure of entry strategies. And that policies need to be designed in a way that accommodates conveniences of licensing, foreign direct investment, management contract, exporting, joint venture, assembly option, manufacturing, strategic alliance, turnkey operations and acquisitions as entry strategies.