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1 Contents CHAPTER 1 1 INTRODUCTION BACKGROUND PROBLEM STATEMENT RESEARCH OBJECTIVES RESEARCH METHODOLOGY ASSUMPTIONS 3 CHAPTER 2 5 LITERATURE REVIEW CHINA INTERNET MARKET China Internet Trends Main Investment Sector in China Internet Market MARKET ENTRY STRATEGY MARKET ENTRY MODES RESTRICTIONS OF FOREIGN INVESTMENT IN CHINA INTERNET INDUSTRY (MII 2004) SUMMARY 18 CHAPTER 3 19 RESEARCH METHODOLOGY RESEARCH PURPOSE RESEARCH APPROACH RESEARCH PROCESS Task1: Define and Restrict Entry Modes Task2: Compare Entry Modes RESEARCH STRATEGY DATA COLLECTION SAMPLE SELECTION DATA ANALYSIS 24

2 ii Contents CHAPTER 4 25 EMPIRICAL DATA CASE 1 EBAY INC. (NASDAQ: EBAY) Company Profile Selection of Entry Mode Performance Measures Reselection of Entry Mode CASE 2 GOOGLE INC. (NASDAQ: GOOG) Company Profile Selection of Entry Mode Performance Measures CASE 3 BLIZZARD ENTERTAINMENT Company Profile Selection of Entry Mode Performance Measures 32 CHAPTER 5 34 DATA ANALYSIS MAJOR BARRIERS OF INVESTMENT IN CHINA INTERNET INDUSTRY Legal Barrier Economic Barrier Social Barrier Cultural Barrier Internal Barrier REASONS OF MARKET ENTRY MODES CHOICES IN CASE STUDIES Case 1 ebay Case 2 Google Case 3 Blizzard BE2 OPINIONS FROM FUTURE PLAYER THE9 OPINIONS FROM LOCAL PARTNER A COMPARISON OF MARKET ENTRY MODES IN CHINA INTERNET INDUSTRY 55 CHAPTER 6 60 CONCLUSIONS SUMMARY OF THE RESEARCH Definition and Restriction of Market Entry Modes in China Internet Industry Major Barriers of Market Entry in China Internet Industry Comparison of Market Entry Modes in China Internet Industry LIMITATIONS OF THE RESEARCH FUTURE RESEARCH 63 LIST OF TABLES LIST OF FIGURES

3 iii Contents BIBLIOGRAPHY GLOSSARY APPENDIX

4 Bibliography Alexandrides, C. G. and Bowers, B. L. (2005): Market Entry Strategies-choosing a Foreign Market Entry Modes. Bain, J. S. (1956): Barriers to New Competition, Mass: Harvard University Press, Cambridge. Chen, C. (2005): Entry Strategies for International Construction Markets, The Pennsylvania State University. Chen, G. (1998): E-Commerce with Chinese Characteristics, China Internet Network Information (2007a): 19th Statistical Report on China s Internet Development. China Internet Network Information (2007b): 20th Statistical Report on China s Internet Development. China VOIP market research report (2005): iresearch 2005, URL: id_4 81.html

5 67 Chinatechnews (2006): ebay Eachnet Provides Mobile Shopping With Tom Online, URL: Chon, ET. AL. (2003): A Structural Analysis of Media Convergence: Cross-Industry Mergers and Acquisitions in the Information Industries, Journal of Media Economics, 16(3), Donews (2006): ebay TOM (Transcripts of press conference: ebay Eachnet Tom Online), URL: Earnshaw, G. (2005): Chinese Business Guide 2005, China Economic Review. ebay (2003): Annual Report, URL: ebay (2006): Annual Report, URL: Google (2006): Annual Report, URL: Fellows, R. M. and Liu, A. (1997): Research methods for construction, Blackwell Science Ltd., London. Foster, T. (1998): International Marketing Communication- An Empirical Investigation of the Use of Marketing Communication Tools (Licentiate Thesis). Lulea University of Technology. Hoff, R. (2006): Why can t U.S. Web companies make it in China on their own?, URL:

6 68 Internet Association of Shanghai (2007): URL: iresearch (2007a): 06. (Sharply increasing of online game market in 2006, new companies started grab market share) URL: iresearch (2007b): China Online Game Research Report Q iresearch (2007c): China Online Advertising Research Report iresearch (2007d): China Wireless Value-Added Service Market Report iresearch (2007e): (New Eachnet restart Business in China to drive new market development), URL: Ji R. and Meeker M. (2005): Equity Research China Internet: Creating Consumer Value in Digital China. Morgan Stanley. Jiang, X. H. (2007): (2010 estimated revenue of e-commerce in China), Jiefang Daily Newspaper. Karakaya, F., and Stahl, M. J. (1991): Entry barriers and market entry decision: a guide for marketing executives, Greenwood Publishing Group, Inc., New York. Lin, M. (2004): Changes and Consistency: China s Media Market after WTO Entry, Journal of Media Economics, 17(3),

7 69 Lu, Z.G. (2005): Internet Development and E-commerce Barriers in China, Chinese Business Review Volume 4, No. 7, USA. Luo, Y. D. (2002): Multinational Enterprises in Emerging Markets, Copenhagen Business School Press, DK. Miles, M. B. and Huberman, M. A. (1994): Qualitative Data Analysis, 2nd Ed., London: SAGE Publications. Ministry of Information Industry (2004): Notice Concerning Strengthening the Administration of Foreign-invested Value-added Telecommunications Business Operations. New Chinese. New Zealand Trade & Enterprise (2002): Strategic Alliances and Joint Ventures a how to guide, URL: New Zealand Trade & Enterprise (2006): Exporter Information "Costs of Setting up an office in Shanghai, URL: Pan, Y. G., and Tse, D. K. (2000): The hierarchical model of market entry modes. Journal of International Business Studies, 31(4), Peltier, S. (2004): Mergers and Acquisitions in the Media Industries: Were Failures Really Unforeseeable? Journal of Media Economics, 17(4), Phillips, E. M. and Pugh, D. S. (1992): How to get a PhD: A handbook for students and their supervisors. Milton Keynes: Open University Press.

8 70 Porter, M. A. (1980): The Competitive Strategy, The Free Press, New York. Puljeva, A. and Widén, P. (2007): The Influence of Internal and External Factors on Entry Modes, Luleå tekniska universitet. Reed, S. F. and Lajoux, A. R. (1998): The Art of M&A: A Merger Acquisition Buyout Guide, McGraw-Hill Professional. Rein, S. (2007): EBay s Tom Online Deal: Timely Lessons for Global Online Company Managers. URL: Ressner, J. and Powell, B. (2005): Why ebay Must Win in China, URL: Root, F. R. (1987): Entry strategies for international markets, D.C. Health and Company, Massachusetts. Root, F. R. (1998): Entry Strategies for International Markets, Jossey-Bass. Rothaermel et al. (2006): International Market Entry by U.S. Internet Firms: An Empirical Analysis of Country Risk, National Culture, and Market Size, Journal of Management 2006; 32; 56, Southern Management Association. Shannon, V. (2007): EBay returning to China, Herald Tribune International, URL: Sohu (2007): Interview with Xing by Sohu. URL:

9 71 Sun, H. S. (1999): Entry Modes of Multinational Corporations into China s Market: a Socioeconomic Analysis, International Journal of Social Economics, Volume 26, Issue 5, Wilmer Cutler Pickering Hale and Dor LLP (2004a): New Chinese Regulations Affect M&A, Competition and Venture Capital. Wilmer Cutler Pickering Hale and Dor LLP (2004b): A Crackdown on Foreign Involvement in China s Internet Industry. Wirtz, B. W. (2006): Medien- und Internetmanagement, Gabler Verlag. Yang, A. S. (2007): The Curse of the Chinese Internet, Far Eastern Economic Review, 170 (3), Year Book. (2002) (2003): China E-commerce Year Book, 2002 & Yin, R. K. (2003): Case Study research: design & methods, 3rd Ed. Thousand Oaks, Sage Publications Inc. Yin, R. K. (1994): Case study Research- Design and Methods, Thousand Oaks: Sage Publications Inc. Yu, P.K. (2001): Barriers to Foreign Investment in the Chinese Internet Industry, GigaLaw.com.

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