Exploring the Changing Roles of Western Subsidiaries in China: Balancing Global Priorities with Local Demands

Over the past 30 years of economic development, the role of subsidiaries in China has changed. China has become an important host country for subsidiaries of western multinational companies seeking cost advantages and/or access to the emerging market potential. The objective of this paper is to explore the effects of the emerging strategic mandate of subsidiaries to serve local demands while meeting global corporate standards and operations priorities. We confirm well established dimensions such as strategic importance and operations capabilities while embeddedness into local business networks and level of process optimization are suggested as other dimensions determining the roles of subsidiaries and consequently their capabilities in an emerging market. These dimensions are established through literature review and validated by case studies of four Chinese subsidiaries of Danish industrial companies.