Abstract
This study explains how MNCs acquire competitive roles in international joint ventures
（IJV） with local state-owned enterprises （SOE）. Former research pointed out that Japanese
firms’ IJVs determine the division of roles and conduct business with their local partners.
However, the dynamic process of role changing in IJV still needs to be clarified. Moreover, in
IJV with the SOE, government influence interferes with the competitive role-acquiring process.
How can an MNC acquire a competitive role in IJV under the influence of the government?
In this research, we studied the case of Qingling Motors, an IJV between Isuzu Motors of
Japan, and Chongqing Automobile, an automobile company owned by the City of Chongqing
government of China. The Chinese commercial vehicle market has a dual structure of price and
performance, and Qingling Motors could not gain a significant market share. Moreover, Isuzu’s
role in the IJV was limited by capital ratio constraints. In addition, with the local partner, a local
state-owned enterprise under the influence of the local government, management strategy had
to be linked to the local government’s policies, and they had no choice but to pursue short-term
results in management. Also, the synergies expected by Isuzu from the commonality of
technology between the two companies could not be realized. As a consequence, Qingling
Motors was unable to build a competitive advantage in the Chinese market.
In order to acquire a competitive role within the IJV, Isuzu established a subsidiary for
engine production under the IJV so they could transfer product technology to it. Besides, Isuzu
continued steadily transferring production systems from Japan to the IJV manufacturing site.
With its achievements on these two sides, Isuzu also gained a role in marketing. In this case, we
clarified the role-acquiring process of an IJV under the influence of local government.
