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Domestic Competition: Helped or Hindered by Foreign Firm Entry

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Domestic Competition: Helped or Hindered by Foreign Firm Entry
The presence of foreign firms improves domestic competition; if the foreign entrant is bringing anything new to the table in order to expand in a new market, it brings technology and ideas that domestic companies can emulate. This is especially true in the case of countries new to capitalism, such as China. According to Crocker and Yi-Chung (2004) foreign firms entering China during the 1980s faced negligible competition from domestic businesses. Large multinational enterprises (MNE) such as Procter and Gamble (P&G) and Unilever were rapidly able to capture large market share in China. Within ten years, they began to encounter pressure from domestic companies that marketed less expensive, all be it lower quality, replacements. While much of the increased competitions MNEs confront in China are foreign, domestic and joint ventures firms, they also combat illicit competition from knockoff, or pirated products.
P&G a Foreign Entrant Perspective
P&G entered China in 1988 (Nelson, 3, 2012); at its peak, it had 50% of the Chinese market share with some of their most trusted brands (Crocker & Ti-Chung, 2004). While P&G is still the country’s largest consumer products goods company, domestic companies such as Masson Ltd Masson Ltd and LaFang.
Masson Ltd started in 1896, it was a state owned local toothpaste manufacturer until 1993 when it was privatized, it learned quickly from it foreign competitors diversifying into “several business branches including oral cavity care products, food additive, cosmetic and skin care products, and hi-tech separation technology equipment, as well as real estate and international trade” (Masson, 2013, para. 1). Masson the small domestic ...

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