Chinese hotel firm internationalisation: Jin Jiang’s joint venture acquisition

The purpose of this study was to examine the characteristics of mainland Chinese hotel firm internationalisation relative to traditional Western internationalisation theory through an analysis of the Shanghai Jin Jiang International Hotels Group’s joint venture with the Thayer Lodging Group to acquire Interstate Hotels & Resorts.

The case study method was used to examine the three firms involved in the joint venture acquisition. The technique of elite interviews was used to collect primary data. Semi-structured personal interviews were conducted with senior corporate executives who were engaged as principals with the conception, execution and administration of the joint venture. Content analysis was performed with the interview data, seeking themes and patterns consistent with the study purpose.

The findings demonstrated specific characteristics that distinguish the internationalisation that Jin Jiang has pursued. The five distinctive characteristics were as follows: a “leap” market entry mode, a pattern of “a small fish eats a big fish”, a preference for purchasing hotels in the West, capital sourcing from Chinese banks and strategic rather than operational control of the acquired firm.

The findings indicate both similarities and differences between the China context of hotel firm internationalisation and that of Western firms. Theoretical implications are examined through an analysis of Dunning’s OLI (ownership, location, internalisation) framework. Generalisability of empirical findings may be limited by the China context and the unique combination of three firms.

The findings advance our understanding of the relationship between Chinese and Western practices, particularly in the approaches that firms take in internationalisation.

The story reported in this paper is about the first firm internationalisation endeavour in the mainland Chinese hotel industry. This is a landmark event for the international hospitality industry that will have historical significance, and represents the leading edge of mainland Chinese hotel firm cross-border expansion. This study contributes an early analysis of how the Chinese hotel sector may approach internationalisation.