We analyze political sensegiving by expatriates and political sensemaking by local employees through stages of development of local knowledge in two China based subsidiaries of Japanese MNCs, SBM and TESS. At both sites, at the establishment stage, expatriates had attempted to embed home country knowledge through standardized sensegiving and the locals had reciprocated through compliant sensemaking. At TESS, this had been largely internalized by locals with relatively little subsequent contestation, and a cooperation stage had
ensued, involving formative sensegiving by expatriates and cooperative sensemaking by locals. Furthermore, within the domain of environmental protection, local knowledge development had progressed to an integration phase, with locals initiating solutions that were being recognized as breakthroughs for the company. By contrast, at SBM, the home country model was merely symbolic, an unfavorable enterprise context and coping based and oppositional sensemaking by locals at the contestation stage had undermined progress through the cooperation stage, and there were few signs of integration. Our findings suggest that contestation may serve as a barrier to further progress in local knowledge development, unless expatriates respond to constructive feedback by local managers by: reframing oppositional sensemaking as attempted cooperative sensemaking, refraining from coercive sensegiving, and adjusting the home country model.