When can Chinese competitors catch up? Market and capability ladders and their implications for multinationals
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Abstract
Chinese companies have been much more successful in catching up with, and sometimes surpassing, their global competitors in some industries compared with others. This holds true in both the China and international markets. In this paper, we show how both the demand and the supply sides of an industry explain these differences, in terms of the existence of market and capability “ladders” that can help a new competitor climb from the low end, though the middle, to the top end. We then propose a number of alternative strategies that multinational companies can follow to respond to growing Chinese competition and recommend which ones are likely to be most effective, depending on the characteristics of the market and capability ladders in the industry.
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1873-6068