The road to China - The relationship between entry strategy and intellectual property on the Chinese truck market

Abstract: Commercial motor vehicles is one of the restricted industries in China and also an industry where market potential is enormous. For foreign commercial vehicle manufacturers market entry is only possible through highly regulated joint ventures with a domestic partner that requires transfer of core-technology. This highlights the intellectual property rights debate that has been a topic in China for years and affects foreign companies willingness to bring the latest technology to the market. The size of the Chinese market and the rapid economic development provides a context for studying foreign manufacturers' strategies on how to establish a presence in China. There is no doubt that a presence on the Chinese market will be a key for future success. This thesis looks at the relationship between entry strategy and intellectual property considerations given these governmental regulations through a case study on the two Swedish truck manufacturers Volvo and Scania. This study provides an insight into the two companies' reasoning behind establishing their business in China and why they believe their different strategy choices will be successful. This thesis finds that intellectual property and entry mode choice have a circular relationship; strategy regarding intellectual property affects entry strategy choice, which affects how intellectual property is managed.