The Art of Turning Relationships into Competitive Advantages : Managing direct customer relationships in China

Abstract: Many firms are today established in China via intermediaries, such as distributors or agents. However this establishment is not valuable in a long-term perspective if the industry environment offers a possible higher return on investment by establishing on its own. Furthermore, when a firm establishes more committed in a foreign market, it gain control over the marketing activities and the sales channel. When entering new markets, problems occur in cases of cultural barriers, institutional distances and lack of contact with the customers within the market. The focus of this master thesis is the establishment of relationships in order to achieve competitive advantages through enhanced understanding of market specific factors and the adaptation towards the market. The thesis is initiated by our interest for firms expanding in international markets. We have recognized the importance of the relationship establishment when entering China. Based upon the identified problem we build a theoretical framework and apply the empirical findings from our case company Dako A/S, which are about to establish in the Chinese market with more commitment. We have for this master thesis collected data from our case company. We have, via semi-structured interviews, conducted the material within the division for the establishment in China. The purpose of the thesis is to introduce findings that will help Western firms to enhance their understanding of the importance of establishing, developing and maintaining customer relationships in China in order to gain a competitive advantage. The central phases of the thesis, is our theoretical framework, the findings from the case company and the establishment of competitive advantages through relationship and choosing the right entry mode. Throughout our research and our seeking towards answering the above purpose we can draw the following main conclusion; it is crucial for a foreign firm to develop its capabilities in order to establish a competitive advantage. The organizational capabilities have to be addressed the market specific knowledge and the feedback towards the organization in order to exploit the competitive advantages. We summarize the findings in a conclusion, which can be applied for Western firms in different industries, in order to establish competitive advantages in China. Finally, we provide recommendations to our case company and their establishment in China, within the research area of this thesis.