By Fung, Mark T.
The China Business Review , Vol. 29, No. 1
Strategy, Structure, and Performance of MNCs in CHINA
by Yadong Luo. Westport, Connecticut Quorum Books, 2001. 320pp. $72.50 hardcover.
Yadong Luo's book Strategy, Structure, and Performance of MNCs in China provides a broad analysis of organizational behavior and strategies of multinational corporations (MNCs). In the book, Luo undertakes a comparative study of Western versus Asian business practices in China. Among Luo's findings are that Asian MNCs tend to focus on direct product promotion while Western MNCs concentrate their efforts on research and development. He finds no difference in the return on assets between these two approaches, however.
Luo, an associate professor of International Business and Strategies at the University of Miami, has written this book for the newly minted manager to China or the student of Chinese business management. The book primarily serves to provide statistically significant data sprinkled with mini-case studies, along with a breakdown of foreign direct investment flows into China during the reform era.
While Luo provides a basic framework of how successful and unsuccessful MNCs have operated in China, he makes some glaring oversimplifications. For instance, he notes that Japanese investment practices were constrained mainly by Japan Inc. itself. He tries to make the case that Japanese firms preferred to trade first and then invest because they were overly risk averse. While this is true to a certain extent, Luo does not mention that in most industrial sectors, the more realistic explanation for the cautiousness of Japanese firms is their strong resistance to coproduction in, and transfer of business technology to, China. The exception is, of course, when technology is the primary good, such as in semiconductor manufacturing. …