ABSTRACT
There are three major modes of firm internationalization: exchange-based, contract-based, and investment-based internationalization. The exchange-based mode is a basic choice for firm internationalization, including direct export and indirect export. The contract-based mode is an intermediate choice, including licensing agreement, franchising, management contract, and turnkey contract. Among these, there is a new form of management contract: outsourcing, which has two common forms – original equipment manufacturing (OEM) and original design manufacturing (ODM). The investment-based mode refers mainly to foreign direct investment (FDI), which includes wholly foreign-owned operation, joint venture, transnational acquisition, and equity internationalization. The internationalization of China's private enterprises is still at an early stage. Their entry modes are simple: 90% of them choose the exchange-based mode to enter the international market, with the rather simplistic purpose of seeking market opportunities. Firms that are inclined to adopt the contract-based mode and the investment-based mode to enter the international market include technology startups, state-owned enterprises that have a tradition of international operation, and some specialized foreign-trade companies.
