Abstract
This paper aims to shed some light on the development of inter-business relationships based on an international alliance. With the maturation of the domestic market, more and more Japanese companies are making inroad into overseas markets. It is important for firms to properly assign suitable functions to their domestic and foreign plants. More concretely, by considering its core competence and efficiency, firms should assign suitable functions to their production plants to achieve internationalization of their activities. Especially, constructing a cooperative partnership to foreign firms is an important matter for Japanese firms. In this paper, a single case study method was employed to explore how a Japanese machine tool provider entered into a strategic alliance (JV) with a Taiwanese manufacturer of a different type of machine tools. The key findings of this case is that the Japanese firm is able to succeed in extending its business in China, and develop optimization of production and cooperative relations for international specialization through the alliance with the Taiwanese firm. In the process of the business activities of the JV and the headquarters, to recognize their competitive advantage each other build a complementary relationship and develop the international specialization. It is possible for such a relation to recognize their strength and develop the further division which can make use of them. Theoretically, we enrich/extend the entry strategy by pointing out that 1) forming a strategic alliance could be a way of entering a foreign supply market; 2) in a Japan-China context, it is recommended for the Japanese firms to form alliance with Taiwanese firms who have the same root as Chinese and are influenced by Japanese culture in the modern era when Taiwan was colonized by Japan. Taiwanese are therefore accepted by both Chinese and Japanese. Practically, this approach (forming international alliance with Taiwanese firm), as an emerging market entry model, could be recommended to Japanese firms to enter Chinese markets.
