The determinants of foreign pharmaceutical firms’ FDI entry mode choices between joint venture and sole venture into China

Summary

The popularity of foreign direct investment (FDI) activities in China also applies to the pharmaceutical industry. Foreign pharmaceutical firms invest their capital and technology in what is likely to be developed as the world’s largest pharmaceutical market in the future with the expectation they will earn an excellent return in a longer term. This study aims to investigate the determinant factors that affected foreign pharmaceutical firms’ decisions in choosing either a joint venture or sole venture entry mode into the Chinese pharmaceutical manufacturing industry. This research shows that the probability for establishing a joint venture in China is positively related to the importance of China’s investment environmental and market factors. A marginal significant positive relationship between sole venture entry mode and the importance of parent firm’s decision task related factors is found.

Keywords:

• foreign pharmaceutical firm
• FDI
• entry mode
• sole venture
• joint venture
• China