Research On Firm’s Sequence Of Entry And Export Performances In China’s New Export Markets

This dissertation studies the issue of China entering new market from a microperspective, in order to make policy suggestions to promote China’s export marketdiversification. Three questions are sysmetically researched:(1) What determines firms’sequence of entry in the new markets? In other words, whare kind of firm would like toact as pioneer, to explore new market for China?(2) How long could the trade relationbetween firms and new markets last? Is there any difference between the survival ratesof pioneers and follower?(3) How is firm’s market share evolving over time in the newmarket? How long could the pioneer firm retain its first-mover advantage?Based on comprehensive literature review and three typical case studies, thedissertation proposes a theoretical framework. It points out that under the interaction of“heterogeneous discovery costs”,“externality”,“opportunity cost” and “first-moveradvantage”, only firm with appropriate capabilities would play the role of pioneer, whileboth stronger and weaker firms will act as followers. On the ground of this theoreticalframework, this research adopts a Binary Choice Model, Survival Analysis and dynamicanalysis using multiple-perid data to study on the above questions. The main conclusiosare three folders.Firstly, overall speaking, firms with higher productivity, with more focused exportexperience in term of number of products, and with more export partners are morelikely to be pioneers; SOEs have much higher probability to be pioneers than non-SOEs.However, among firms who are capable enough (e.g. with large production scale or withexport capacity), the role of productivity is not significant any more; it is the relevanceof past export experience becomes the key factor determing firm’s sequence of entry.Secondly, firms’ survival rates are overall low in the new markets; two thirds of firmsquit the market immediately after entry. Besides, when first entering the new markets,pioneer firms present a higher survival rate than followers, due to the lack ofcompetitors and easy matching with buyers when a new market just emerged. As timepasses by, the stress of competition grows along with the entry of follower firms, the survival rate of pioneer firms might fall below that of the followers. Thirdly, ifmeasuring by market share, most pioneer firms in the new markets only sustain theirleading and monopolistic position for a short period of time. First-mover advantage interms of higher market share decays over time at a decreasing speed, and will decreaseto0in aobut three years time.In the end, this dissertation proposes five pieces of policysuggestions based on above findings, to promote the process of market diversification ofChina.