Theories Of Internationalization

3.2.1 Stages Approach

There are a lot of theories that exist in relation to internationalization process. To take for example the decision for a firm to enter into international markets can be seen as a sequential gradual process related with other stages of internationalization (Johansson and Vahlne 1990).This process of internationalization is viewed as a resource acquisition and learning process. Authors like (Johnsen and Vahle 1977) have disagreed on the aspect that the internationalization process can be divided into various stages depending on the degree of the market and resource commitment and also its control. Based on the findings of Swedish companies these authors discovered that mostly firms develop a series of small sequential

Knight (1971), defined Born Global as “a company which, from its time of establishment, seeks to draw a substantial proportion of its income from the sale of its products in international markets.” A company that is internationalized right from the beginning is usually associated to as Born Global (Knight and Cavusgil 1996; Rennie 1993). Hollensen (2004: 69) cites the following factors giving rise to the emergence of Born Global:

 Increasing role of niche markets – In the expanding growth among customers and also an increase in worldwide competition means a lot of growing firms have little or no option but to specialize in a narrower market riche.

 Advances in process/technology production – New technologies pave way for small Companies to achieve comparable footing with large multinationals in the Production of sophisticated products for sale around the

When considering the stages model and its applicability to Chinese firms it is apparent that many do not pass through a gradual sequential process. To take for example, dot.com companies like China’s Baidu.com do enjoy a global coverage from the outset. The likes of Baidu.com can also be described as Born Global. Nonetheless, both the stages model and Born Global do not apply to all types of Chinese firms. Family run businesses are a perfect example in china and amongst the Chinese diaspora. Most of these firms are Committed in exporting to international markets, raising capital on foreign exchange markets and have started developing their brand beyond China. An example of this is the Beijing based family run firm - Sunrise Technologies. The company’s recent Boom on the UK’s Alternative Investment Market (AIM) in order to raise the needed capital to develop and promote its Mulberry Tea brand beyond China. China’s development shows that the present body of literature on Internationalization theory is inadequate when explaining internationalization in a Chinese context. Prior to developing a conceptual framework that may be applied to the internationalization of Chinese firms, it is first cardinal to understand their present internationalization process. The next section now addresses this