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Standardization and Localization: A case study of Marketing channels of Multinationals in Mainland China
Program: HES MBA

Abstract

Along with the quickened step of globalization, many multinational corporations (MNCS) have invested in entering new markets where risk and opportunity coexists. To compete and operate successfully in the global environment, in–depth comprehension of the local marketing channel and adopting suitable channel strategy are crucial for these multinational enterprises. This dissertation reviews the marketing channels of MNCS (including several fortune 500 companies and some other famous enterprises, such as BMW, Coca Cola, McDonald's, Kodak, Fuji IBM, HP, Siemens, Dell, Bertelsmann, Amway) in China. The main objective is to provide a better understanding of marketing channels in developing market.
My research has started with a review of classical theory on marketing channels and a literature search on the marketing practice in China, after which I have formulated my research questions for which I have developed a methodology including the method of data collection and research frameworks.
From my desk research，I have concluded that the eVolvement of MNCS’ channels in China has gone through three stages: initialing, development and maturity. For more details, the channel structures of MNCS in China are reviewed later on applying the definition of Anne (2001). The channel structure of MNCS in China is summarized in two general types: direct type and indirect type. To illustrate the point, the typical MNCS are analyzed as the cases. The result shows that MNCS’ channels are changing with economical and policy transformation in China. Furthermore, the channel structure is discussed taking the product character, consumer, environmental and company factors into consideration. The discussion shows that the choice of standardization and localization is greatly determined by four factors as the former theory indicates while the environmental factor is most important. Later on two important MNCS’ channel behaviors, namely, recruiting channel members and channel conflicts is overviewed and discussed.
Analyzing the interview result of channel partners recruiting standards, we found that high marketing ability, great financial strength and extensive social relationship are deemed most important characters of the suitable local distributors in China.
Applying the framework of literature, three forms of channel conflicts (horizontal, vertical, multi conflicts) within MNCS’ channels are investigated afterwards. Investigating the lowering-conflicts programs carried out by MNCS by applying channel power analysis approach, we find that Non-coercive power (especially the reward, reference) will increase the channel satisfactory and lessen the vertical conflicts. Furthermore, coercive power will decrease the flee goods in China. By choosing creditable distributors and providing differentiated channels in different regions or for different customers, the multi channels conflicts is not fully perceived. The discuses also show that the channel theories developed in the developed market are feasible in the developing market.
At last, this dissertation makes some recommendations for enterprises that hope to exploring the new market and some suggestion for further studies.