Lala Hu

The Chinese market as an opportunity to innovate distribution strategies? Evidences from Italian firms

Purpose The purpose of this paper is to analyze the distribution strategies implemented by foreign firms in emerging markets, and to investigate whether they represent an opportunity for firms to innovate their practice. China is selected as the setting of the investigation as distribution is a critical determinant of business success for international firms operating there. Design/methodology/approach A multiple-case study approach is adopted by investigating the distribution strategies of four Italian firms in China. The collected data consist of interviews with firm managers and their distributors. To ensure triangulation and cross-verify the findings from the primary data, secondary data consisting of sector reports and newspaper articles were analyzed. Findings Results discuss how foreign firms develop their distribution system in China and suggest that emerging markets can enable reverse innovation in their distribution strategies. Research limitations/implications The research suffers from the limitations of the generalizability of the findings as the study was carried out on a restricted number of firms, and it considered their strategies in one single market. Practical implications Managerial implications are discussed on the extent to which the Chinese distribution system still represents a key issue for foreign firms, but it also provides with opportunity for innovation. Originality/value While previous research on innovation in emerging markets has mainly focused on product innovation, this study suggests some areas for distribution innovation.

The country of origin effect: a hedonic price analysis of the Chinese wine market

The purpose of this paper is to analyse the country of origin (COO) effect on wine purchase in China by considering a sample from an e-commerce website. The paper contribute to the literature on hedonic pricing by applying this model to the Chinese market and including COO as product attribute.,A hedonic price model is adopted to measure the effect of search attributes on wine sales in China. A reduced form of the classical hedonic analysis is used as in Nerlove (1995), given the assumption that prices and attributes are taken as exogenous to consumers.,Results show that the COO represents the attribute that most influences wine sales in China. Protected indicators of origin, which denote wine with recognised certificates, are also significant, reinforcing the importance of the production area. Vintage attribute does not impact sales, suggesting a low level of consumer experience with wine.,The study suffers from the limitations of results’ generalisability, given the size and characteristics of the sample. In the future research, the model should be tested on a larger sample. Moreover, it can be applied on other products, in which COO represents an information and quality cue.,Firms operating in sectors where COO implies specific characteristics of quality should enhance this attribute in their marketing strategies to increase their competitive advantage. Also policy implications with respect to the governmental actions to support wine producers are discussed.,Hedonic price analysis represents a well-established model; however, to the best of the authors’ knowledge it has never been used in China before. This study also highlights the primary role of COO as search attribute in wine purchase.

Do distributors really know the product? Approaching emerging markets through exports

Exports represent an entry mode into international markets that is less risky than more direct strategies, therefore it particularly fits SMEs (small-medium enterprises) that generally have a few resources to invest. In the case of emerging markets because of the high psychic distance, SMEs tend to rely on their distributors for the business operations in the new market. However, although this type of intermediary allows the access to the foreign distribution channel that is particularly complex in countries such as China, it can limit the market control and in some cases, the product expansion. Based on a qualitative research consisting of interviews and secondary data, we present two original case studies of Italian firms operating in the Chinese market. It is shown that in emerging markets, since distributors do not really analyze and know consumer expectations and behaviors, they may represent a barrier in the knowledge accumulation of foreign products in the new market. Managerial implications are discussed on the extent to which SMEs are not able to replicate marketing strategies used in other countries, but they should define a clear strategy that involves their distributors in the process of knowledge accumulation and brand value creation in the foreign market.