Analysis of strategic alliance management – lessons from the failure of Korean and Japanese licensed games in China

Abstract

The Chinese online game industry is a young knowledge-intensive service industry with huge potential. Since 2003, setting up strategic alliances with the Chinese online game operators has been chosen as the main mode by foreign game companies to enter China. With the rise of the Chinese online industry, the market shares of the foreign licensed games have been declining from their original dominant position. In this paper, instead of concerning the relationship between natural cultural difference and the foreign licensed game operation, the authors use Tung's technical competence theory to explore factors that have caused decline in the market share of foreign licensed games in China. In the findings, the lack of in-depth knowledge of market demand, the lack of appropriate product supply, the lack of effective business strategy and management teams as well as the Chinese government's local protection policies are classified as the main reasons for foreign games' market decline in China.