Study On The Localization Strategy Of The Multinational Corporations In China

Comparing with the localization strategy adopted by the multinational corporations (MNCs) entering China, this study analyzes a successful localization in China by KUMHO Tire Co. Ltd, which ranks the10th in the global market share but the1st in the personal car&light truck tire market in China.The purpose of this paper is to suggest the future direction and provide the best model of localization strategy to Korean MNCs, which are currently facing localization in China.In order to understand the localization strategy of KUMHO Tire Co. Ltd, this paper analyzed the localization process by utilizing four phases (production, marketing, R&D, Organization) modeling of Ohmae.First, the massive investment and plant establishment are base of localization. KUMHO Tire Co. Ltd own its production sites in China and localized in production&logistics.Second, formation of brand image, ad strategy and distribution strategy are important in localization strategy of marketing. KUMHO Tire Co.Ltd is successful in this point.Third, KUMHO Tire Co.Ltd has R&D center in China, which helps to make the products satisfying needs of local consumer.Finally, KUMHO Tire Co.Ltd employs many Chinese in its plants or office. But Chinese cannot be promoted to senior level. In addition, the head quarter in Seoul controls the administration and strategy of plants or R&D center in China. The localization of organization in China is unsatisfactory.The most important business strategy of MNCs in China is localization. I am convinced that this study will be helpful for Korean MNCs, which are pursuing localization by learning more from how Korean firms are rooted in China.