LOCAL ADAPTATION IN EMERGING MARKETS – in theory and reality : Study of the Swedish subsidiaries in China

Some MNEs encounter frustration or failures when they enter a new market. The main reason is due to a lack of adaptation. There is a lack of theoretical study about the local adaptation phenomenon of Swedish MNEs in China. Most studies are at the level of experience. Therefore, the purpose of this study is to find out the dimensions subject to local adaptation and their degree for the Swedish MNEs in China. Culture and business practices, government demands, competition intensity, product customization, distribution channels and organizational structure, are the six main dimensions subject to local adaptation. The degree of their adaptation varies depending on different factors (established network, the MNE strategic choice, entry mode, etc). We have developed eight hypotheses to test the theories and find new factors influencing the need of local adaptation. A new model is developed by applying existing models and with the new insights specific to the Chinese market. The central dimension in this model is the culture and business practices, as it influences the other dimensions to different extents