Ni hao. Nice to see you again in the lecture series. I'm Professor Ma from the Chinese University of Hong Kong. Today, we'll continue our journey, doing business in China, China strategy. After our first lecture, surely you have learned about the shifting environment under the new context in China. But do you have any further ideas about whom you might encounter when doing business in China and where to locate your business in China? To help you solve these problems, here comes our second station of the China business tool: Who and where, players and locations in China. Before we start, let me ask you some simple questions. Who are the players in China? How do foreign firms identify and differentiate different types of Chinese players? What does subnational location mean in China? And, do foreign firms respond to the idiosyncratic natures of different Chinese locations? You shall be able to answer all these questions after taking this lecture. So, let's start with this question. What are possible relationships between local Chinese firms and the foreign firms when we talk about doing business in China? There are mainly four types. Chinese firms can be alliance partners, acquisition targets, acquirers or competitors of foreign firms. Now I will talk about the four types of relationships in detail. First, Chinese firms can be alliance partners of foreign firms. Strategic alliances are frequently used between firms from different countries and among different parts of the value chain. For example, when Volkswagen entered China, this German automobile giant set up joint ventures with Chinese firms such as FAW to produce Jetter in Changchun and SAIC to produce Santana in Shanghai. On the other hand, GAIC started joint ventures with Toyota and Honda in Gwangju respectively. Second, Chinese firms can also be foreign firms acquisitions targets in China. To enter China, first we ought to increase market power in China. Acquiring existing Chinese company might be a sensible choice for foreign firms. One significant case is the proposed acquisition of Huiyuan Juice by Coca-Cola, though it finally failed. Huiyuan Juice is a leading firm in China's juice production industry. In 2008, Coca-Cola proposed the acquisition for Huiyuan juice. This was a typical horizontal acquisition as these two firms are in the same industry. However, China's MOFCOM or Ministry for Commerce denied Coca-Cola's request in 2009 due to the antitrust law. It would be worth it to pass the largest ever acquisition of a Chinese company by a foreign counterpart. Third, besides acquisition targets of foreign firms in China, Chinese firms can also acquire foreign firms. In other words, Chinese firms can be the acquirer of foreign firms in China and the beyond. Recent years have seen the acquisitions of foreign firms by Chinese firms in China. For example, Uber sold its China business to his Chinese competitor Didi. In fast food industry, several firms express their intention of acquiring McDonald's China business, and Alibaba, China's e-commerce giant, partnered with other Chinese firms, acquired KFC's China businesses. An interesting story about this acquisition is that the job application of Jack Ma, the founder and chairman of Alibaba to join KFC as an entry level employee was rejected by KFC about two decades ago. Fourth, in addition to alliance partners, acquisition targets of acquirers, Chinese firms can also be foreign firms local competitors which compete for market shares, resources, skills and so on. The competition between Walmart and a China's local supermarkets, a wide example. In 1990s, Walmart went into the China market and has been competing with local supermarkets. As a result, Walmart, the world's absolute leader still ranked in the second place in China's super market ranking list in 2015. The figure of eBay in China is another interesting case. According to Jack Ma, Alibaba's founder and Chairman, we, Alibaba, are crocodile in Yangtze river, while eBay is a shark in an ocean. If we compete in ocean, we will definitely lose, but if we compete in river, we will win.