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ACKNOWLEDGEMENT

In preparation of this report, which is entitled Internationalization & Innovation,


there are several issues that I have encountered such as limitations on information and lack of
resources. However, I am very thankful to Allah, my own beloved parents, family members
and friends for their constant encouragement without which this assignment would not be
possible to finish.
Furthermore, with a help from my own wise lecturer, Sir Ammar Amierul and my
fellow colleagues, I have managed to overcome the problems easily. Thus, I would like to
take this opportunity to express my profound gratitude and deep regards to my lecturer, for
his exemplary guidance, monitoring and constant encouragement throughout the course of
this report. Besides that, I would also like to take this opportunity to express a deep sense of
gratitude to my fellow classmates for their cordial support, valuable information and
guidance, which helped me in completing this task through various stages.
These people have helped me to get through a lot of barriers and without them this
project could not have reached this stage. Hence, once again I would like to thank all of them
very much for their full support.

Table of Content
1

Content

Page

Introduction

2.0 Internationalization of a Chinese born glocal brand in a foreign sector:

the case study of GoodBaby


2.1 Goodbaby: History, brands, and main achievements

2.2 A competitive analysis of the baby strollers sector in China

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2.3 Interviews with customers

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2.4 Finding

13

2.5 Future Research

14

2.6 Comments

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3.0 Green growth and technological innovation: A case for South Asian

15

countries
3.1 Technological innovations and Intellectual Property Right

15

3.2 Technological innovations and Research and Development

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Expenditure
3.3 Technological innovations and Green Taxes

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3.4 Finding

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3.6 Comments

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4.0 Integration of Ideas: Technological Innovations and Internationalization

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5.0 Conclusion

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2

References
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1.0 Introduction

TITLE

Internationalization of

Green Growth and

a Chinese "Born Glocal" Brand

Technological Innovation:

in a Foreign

A case for South Asian

Sector: The case study of

countries.

GoodBaby.

AUTHOR

Francesca Checchinato, Lala

Rabia Manzoor & Shakeel

Hu, Alessandra Perri & Tiziano

Ahmad Ramay.

Vescovi.

YEAR OF PUBLISHED

PROBLEM STATEMENT

September, 2013
How Chinese latecomer firm

August, 2013
How the South Asian

adopt internationalization

countries can rise to the

strategies to compete in local

challenge of achieving

and global market.

sustainable green growth while


keeping technological

RESEARCH OBJECTIVE

To analyse how an emerging

innovation in context.
1. To assess the relationship

multinational enterprise copes

between Intellectual Property

with other firms in a new

Rights (IPRs) and

market, i.e. a market where

technological innovations.

products are not typical for

2. To assess the role of

Chinese traditions

Research and Development


(R&D) Expenditures and
Environmental Taxation in
technological innovation.
3. To ascertain the role of
technological innovation in

RESEARCH QUESTION

RQ1: Are Chinese firms

shaping market size.


RQ1: Can Intellectual Property

marketing and branding

Right (IPR) be described as an

strategies influenced by the one integral tool to foster


of international or global firms

innovation in developing

operating in the Chinese

countries within South Asia?

market?

RQ2: Are Research and

RQ2: In order to compete with

Development (R&D)

international brands in the local Expenditures continued to


market, do the features of

demonstrate an increasingly

global brands affect Chinese

significant role in patenting of

brands "going global"

green technologies?

strategies?

RQ3: Does environmental


taxation plays a fundamental
role in introducing and
developing the innovative

RESEARCH

Mixed Method

green technologies?
Qualitative Method

METHODOLOGY

1. First phase:

By using secondary sources,

Analyzing Goodbaby

the information has been

companys profile, history, and

collected from all the related

internationalization activities

organizations in South Asia,

by using first and secondary

which are directly or indirectly

data.

related to the green growth

2. Second phase:

developmental agenda induced

Made a competitive analysis of

by IPRs, R&D, and

the strollers brands in the

Environmental Taxation.

Chinese market in
order to have an overview of
the sector, demonstrate the
internationalization
characters of the brand, and
define its positioning.
3. Third phase:
Preparing and administering a
multiple choice questionnaire
for consumers to
analyze Goodbabys brand
awareness and purchase rate,
as well as the product
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variables and influencers role


in the strollers purchase.

1. Quantitative
VARIABLES/DIMENSIONS

Dependent variable:

1. Intellectual Property Right

IPRs increase the

Strollers purchase

awareness and

Independent variable:

knowledge, and then

Brand awareness, purchase

are able to promote the

rate, products variable &

technological

influencer role.

innovation.

2. Qualitative
i. Goodbaby marketing and
branding strategies.

2. Research and Development


Expenditure

Research and

ii. Global brand features in

development introduce

affecting Goodbaby going

the new knowledge of

global strategies.

production and the


method of technological
change.
3. Environmental Taxation

Environmental taxes are


the vital policy
instruments to decrease
the environmental
damages.

Globalization together with the reduction in trade barriers and tariff provide the
opportunity for business firms to expand their business into foreign markets, even on the first
day of its establishment. Due to this phenomena, business firms rapidly expand their business
by penetrate into new markets abroad. The term internationalization is used to define such
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activity that could be seen in the business world today. There are various definitions of
internationalization were being used by researches and it varies depending on the interest and
phenomenon of the study. One of the most applied theories of market internationalization is
represented by the internalization theory of Buckley and Casson (1976), which conceives the
firm as an internalized bundle of resources. These resources can be allocated between product
groups, and between national markets, reducing transaction costs and maximizing profits.
Dunning (1988) identified three necessary conditions for firms to be willing to
undertake investments abroad: the ownership advantage (derived from extending the existing
proprietary assets abroad, such as brands and proprietary technologies), the location
advantage (resulting from the foreign countrys superior market or production opportunities
in terms of costs), and the internalization advantage (maintaining the core competences of the
firm within the firms boundaries). These advantages constitute the "OLI framework" or
"eclectic paradigm" of international production.
Furthermore, business firm needs to develop their own new innovation to stay
compete in the real business world. Innovation could be defined as, a new idea, device or
process. Innovation can be viewed as the application of better solutions that meet new
requirements and market needs. This is accomplished through more effective products,
processes, services, technologies, or ideas that are readily available to markets, governments
and society. The term innovation can be defined as something original and, as a consequence,
new, that "breaks into" the market or society. In other words, innovation is the process of
translating an idea or invention into a goods or services that creates value or for which
customers will pay.
By the end of the 1990s, there has been a significant worldwide increase in
technological innovation, spurred on by a number of factors, but mostly the ease at which
information has been made available due to advances in the internet. Access to technology is
just as important as the invention aspect of innovation for all the countries to develop and
grow. Developing countries often face a multitude of issues, therefore, diffusion of green
technologies is especially important for addressing global environmental issues (World Bank,
2012) and the most effective and efficient solution is to turn towards technological
innovation. There is a dire need to foster the technological innovation in developing countries
that will facilitate the transition to less carbon intensive economies to address the green
growth.
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In this report, we shall discuss on the topic of the importance of innovation towards
Chinese firm as a vessels to internationalize their business through certain effective and
efficient strategies.

2.0 Internationalization of a Chinese born glocal brand in a foreign sector: the case
study of GoodBaby
2.1 Goodbaby: History, brands, and main achievements
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The foundation of Goodbaby Company starts in the year of 1989 by Song


Zhenghuan in which he designed a children's "push and rock" stroller and launched
" Goodbaby" ("", pronounced "hao haizi", literally means "good baby")
brand in Kunshan, Jiangsu Province.
Even though Song did not have any relevant business experience, he was able
to identify a shift in the children products market. Therefore, he thought that the
factory should make finished products and decided to design a stroller himself. The
product he invented was not only a stroller, in fact its wheels could be folded in to
become a rocking chair and dining chair. In 1990 the company was granted a 10-year
patent in China for the "push and rock" stroller and soon after, Goodbaby established
its leadership in the local market, ranking number one in strollers sales in 1993. In
mid-1990s the company started its international expansion: first, in 1995 during a
trade fair in Dallas they established contact with Cosco, an American company part of
Dorel Group. Dorel is a leading Canadian player in the juvenile sector, which is
proprietary of global stroller brands such as Quinny, Maxi-Cosi, and Safety First. The
active collaboration with Dorel started in 1996: since that year Goodbaby has
produced strollers for the American market under local brand names, as "Goodbaby"
was not perceived as effective enough in the American culture ("Geoby" brand was
used as alternative, but it was soon replaced). Thanks to the collaboration with Dorel,
Goodbaby also entered the Canadian market and later the European one in 2002. In
Europe Goodbaby has also built relationships with Play and Silver Cross, respectively
for the Spanish and English markets.
Since the establishment of the company, Goodbaby Group invested on R&D
centers in China and abroad, aiming to build a comprehensive global R&D system,
composed by five R&D centers with more than 330 professional R&D and design
engineering staff located in Kunshan, Hong Kong (toy division), Boston, Amsterdam,
and Tokyo.

Figure 1
In 2010, Goodbaby decided to update its brand image, by changing its logo
(Figure 1) and creating a new brand framework due to a more competitive market
caused by an increasing presence of international competitors. The new design was
developed by Beginstudio, which changed the logo by making it more modern. The
name was shortened into the initials "gb", therefore it can be used to indicate other
names different than "good baby". Four brand values were defined (safety, durable
quality, modern fashion, and love), and with accordance to the logo and brand values,
the payoff unified Chinese and English texts: " with love from gb" ("
" translation is "Let love embrace you"). During our interview with the
assistant to president, he declared that for Goodbaby China represents the most
competitive market due to two main reasons:
It is not a unique market, but an international one, in fact different products
need to be developed depending on their geographic area (the Southern part is more
similar to Japan, where there is a higher demand for light strollers, whereas the
Northern part is similar to Russia, in fact heavy and thicker strollers are more
common);
The Chinese distribution system is very complex, in fact contracts need to be
negotiated with distributors for different areas. Therefore, Goodbaby has established
35 sales branches in China and developed a wide distribution network that covers
more than 5,000 points of sale, including 1,000 mono-brand stores.
Goodbaby manage to established cooperative relationships with 32
international distributors and 82 brand owners. It sells its products under the "gb"
brand in Japan and Russia, whereas in the United States and Europe local brands are
used. Its products occupy 41.2%, 34.1%, and 16.4% of the market share respectively
in China, United States, and Europe.

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2.2 A competitive analysis of the baby strollers sector in China


In order to analyze the price of strollers with the sample, an average price of
1,241.74 RMB Goodbaby is positioned low (below the mean, which is 2,422.89
RMB) like the other Chinese brands. But comparing the price only with Chinese
brands, its price is the highest one (Exhibit 1). In addition, Goodbaby has a wide
variety of products (i.e. number of categories), satisfying the majority of the needs in
baby carrying. The only competitor with a similar strategy is Combi, a Japan-based
company with subsidiaries in many countries. This is also confirmed by the data
gathered during the interview with Goodbabys manager.

(Exhibit 1)

To go deeper with the assortment strategies analysis, the width and the depth
(number of different strollers each brand offers) of the product variety were
compared. Goodbaby occupies a distinctive position (Exhibit 2) as it is present in
most of the baby products categories and has the deepest variety of products. It is
followed by Happy Dino, which is a brand of the same group. Once again, Combi is
the main competitor.

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Exhibit 2
Moving towards distribution part, the most distributed brand is Goodbaby,
whose products are sold in more than 5,000 points of sale (including 1,000 monobrand stores), followed by Stokke with 173 stores (no information related to their
format), Chicco (105 mono-brand stores), and Zooper (105 specialized stores). The
main competitor Combi declares to have 53 mono-brand stores.
Brands

Presence in the Top 5 E-commerce websites

Britax Romer, Chicco, Combi, Concord,

Easywalker ,Goodbaby, Graco, Happy Dino,


Kiddy, Quinny
Aprica, Fatone, Joie, Seebaby, Zooper

Inglesina, 4moms

Aillia, Stokke, UPPAbaby

Bugaboo

2.3 Interviews with customers


According to the case study conducted, Goodbaby is the most purchased brand
with 31.19% of preferences, followed by Combi with a rate of 16.83%, Graco
(7.43%), and Aprica (4.95%) (Table 3). It has to be noted that the top five brands,
with the exception of Goodbaby, are all foreign, whereas all Chinese brands purchase
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rates are very low. In addition, Goodbaby is also the preferred brand in the prepurchase phase: 28.74% of our sample planned to buy a Goodbaby stroller, again it is
followed by Combi with 13.79% of preferences, and Graco (8.05%).
Brand

No. of purchased strollers

% of purchased strollers

Goodbaby

63

31.19%

Combi

34

16.83%

Graco

15

7.43%

Aprica

10

4.95%

Quinny

3.96%

2.4 Finding
Goodbaby acts as an international brand in a wide national market, a new way
to become global that could be an example of internationalization process operated by
Chinese brands. In this sample, Goodbaby is the first of the five most purchased
brands and it is the only Chinese one, whereas all the other local brands belong to low
cost-low quality competitive groups with absolutely marginal market shares.
Obviously, this situation can be read as a strong preparation phase in order to
massively enter international markets. Answering to RQ1, the researchers said that
international and global companies influence Chinese ones as a benchmark, however
this is true only for the excellent ones that aim to compete with a global attitude
within the global market. Answering to RQ2, the local market together with the
international competition create an environment where Chinese companies that want
to emerge from a marginal role are pushed to "go global", by gaining the features of
global brands: quality (at least "good-enough"), a brand with an international
sounding name and logo, marketing alliances with foreign partners, and large
investments in R&D. In addition, they have found that to be a leader, a link with its
own country is important, too. First, Goodbaby has gained social recognition thanks
to its many awards received by Chinese institutions. Then, only in a second phase of
its success, it updated its logo in order to be perceived as more modern, changing the
brand framework but maintaining the original ideograms.

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2.5 Future Research


Future research could incorporate an analysis of the internationalization
strategies and the foreign direct investments data of Goodbaby abroad. In addition, the
implications of different Chinese industry settings could be considered in order to
increase the generalizability of our findings. Yet, case studies do not have
generalization as their main objective, being rather aimed at describing specific
phenomena that extant literature has not completely explained yet.

2.6 Comments
In my opinion, Goodbabys history reflects the steps undertaken by other
Chinese firms and EM-MNEs: its internationalization process was necessary since the
companys foundation in order to gain the resources and know-how it did not have the
adequate access before. Therefore, the internationalization expansion was initiated in
a big market such as the United States, where they established partnerships and
strategic alliances that provided Goodbaby with the conditions to become the first
strollers brand in China and a leading stroller manufacturer in the world. Taking
Haier as example, Goodbabys success is also built on its competitive advantage of
being more flexible, faster, and closer to Chinese customers than the competitors.
Moreover, the value of their offer in the perception of the customers is enhanced when
local companies become global and create an international image.

3.0 Green Growth and Technological Innovation: A case for South Asian Countries
3.1 Technological innovations and Intellectual Property Right
In South Asian countries, there is a focus on Intellectual Property Rights to
access the environmental protection technologies. Day by day this trend is drawing
much attention, and IPRs are important to access these technologies. In developing
countries especially in South Asia, the enforcement of Intellectual Property Rights
increases the global competition in green technological innovation. Yet, technological
innovations strengthen the IPRs and speed up the process of technological innovation
and development. IPRs are an integral tool to achieve the technological innovation.
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Despite this, the level of IPRs protection in South Asian countries is very low as
compared to developed countries. Due to weaker protection of IPRs, very few
inventions are marketed in these countries and most of industries rely on pirated
technologies. The following graph shows the situation of Intellectual Property Rights
in South Asian countries.

This graph clearly shows that the enforcement of Intellectual Property Rights
is very weak in South Asian countries as compared to the developed ones. India and
Sri Lanka had somehow better in IPRs enforcement compared to Bangladesh and
Pakistan. Because of no incentives for advanced technologies in these countries, the
number of inventions is less. This situation has given rise to many challenges in the
way of achieving green growth in South Asian countries.
Looking at the significance of patenting green technology, Intellectual
Property Rights (IPRs) is an integral tool to foster innovations in developing countries
within South Asia. As the region itself is severely deprived of advanced equipment, an
effective IPRs system would provide the necessary incentives to adopt the risks for
considering new technology. The initiation of IPRs in South Asian countries would
encourage cost-effective export, foreign investment, technology transfer and
innovative products. This mechanism will benefit both the relevant developers along
with their consumers and above all provide access to innovative green technologies.

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3.2 Technological innovations and Research and Development Expenditure


Research and Development (R&D) Expenditures play a significant and
positive role in innovative technologies. The emphasis of R&D Expenditures
generally and green R&D Expenditures specifically are important for technological
innovation. New research and development introduce the new knowledge of
production and the method of technological change. Through this developing
countries reduced the emissions and produced the efficient technologies. Some
countries like South Asian countries have limited R&D Expenditures and thats why
their innovative capabilities are very low as compared to the developed countries.
It is evident that R&D Expenditure and patent applications have a positive and
significant role to foster the technological innovation because a patent is taken for
preventing information theft. Patent is a protection given to an invention and the
number of patent applications demonstrate the performance of countries, regions,
enterprises and technology centres in the field of innovation. The figure below
compares the patent filings with Research and Development Expenditure. Total
research and development is slow in constant year (2000) US dollars at the purchasing
power parity. This is a meaningful cross-country comparison by weighting the number
of patents while taking different measures of economic activity and country size.

The Research and Development (R&D) Expenditures continue to demonstrate


an increasingly significant role in patenting of green technologies. The emphasis of
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green R&D Expenditures generally is imperative for innovative green technologies.


These expenditures foster the commercialization of new innovative technologies and
successfully reduce the environmental pollution. Consequently, production of
environment-friendly goods would improve, ensuring sustainable development. These
products would also be helpful in minimizing degradation.

3.3 Technological innovations and Green Taxes


The environmental taxation plays a significant and positive role to raise
technological innovations. In international market, developing countries, like South
Asian countries, have to face tough competition due to the imposition of green taxes.
Green tax would damage the competitiveness of the domestic industry. Local produce
may also affect due to this. With the imposition of green tax on industries the cost of
subject increases. Developing countries like India, Pakistan, Bangladesh and Sri
Lanka are not in a position to bear the extra cost of production, as it affects its
exports. On the other hand, it is a fact that these countries lack high environmental
standards. This is the reason why imposition of green taxes is not applicable in
developing countries. Still its importance cannot be ignored because through this
revenues increased, pollution is reduced.
Environmental taxation plays a fundamental role in introducing and
developing the innovative green technologies. Unlike other costly instruments such as
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tradable permits, and environment related taxes introduce a complete range of


innovation and new production techniques. With prospect for the government to
generate colossal revenue from the environmental taxation, they would be able to
exercise public-private partnership and use it for further green R&D Expenditures.

3.4 Findings
The initiation of IPRs in South Asian countries would encourage cost-effective
export, foreign investment, technology transfer and innovative production. This
mechanism will benefit both the relevant developers along with their consumers and
above all provide access to innovative green technologies (BIAC, 2012). As a result
of the low protection of IPRs, the study identifies various challenges related to few
inventions and lack of incentives in the region to attain Green Growth. The
emphasis of green R&D Expenditures generally is imperative for innovative green
technologies (OECD, 2009). These expenditures foster the commercialization of new
innovative technologies and successfully reduce the environmental pollution.
Consequently, production of environment-friendly goods would improve, ensuring
sustainable development. These products would also be helpful in minimizing
degradation. This study indicates that South Asian countries have a very limited R&D
base and a low level of invention and innovative capabilities as compared to
developed countries. Environmental taxation plays a fundamental role in introducing
and developing the innovative green technologies. Unlike other costly instruments
such as tradable permits, environment related taxes introduce a complete range of
innovation and new production techniques. With prospect for the government to
generate revenue from the environmental taxation, they would be able to exercise
public-private partnership and use it for further green R&D Expenditures.
3.5 Comments
The study illustrates the green growth perspective of South Asia to address the
question of achieving sustainable green growth in the context of technological
innovation. The reason is that South Asian countries are in the process of establishing
their infrastructure, transport and energy systems. So, it is time to innovate and
upgrade the knowledge, skills and technologies towards green solutions from the
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outset. However, it is necessary to know the benefits of green growth and what can
green growth brings for South Asian countries. Precisely, access to technology is just
as important as the invention aspect of innovation for all the countries to develop and
grow.

4.0 Integration of Ideas: Technological innovations and Internationalization


Expansion in market size has positive dynamics in innovative knowledge and
activities. The reason the market expansion is important is industrial growth, which leads to
new invention and technological innovations by achieving the economies of scale. When
demand of green products increases in the market, then Research and Development
Expenditures increase too. As a result, the structure of firms, industries and markets is
changed. This situation may lead to invention and innovations and then green technologies
are automatically increased.
In China, the pollution rates are considered at the most extreme level and the
government have taken several measures in order to curb the problem. However, in some
developing Asian countries, green taxes are imposed and it affect the firm performance
because they have to control the amount of production and bear the additional cost in order
for them to go green. Thus, encouraging the emerging firms to practice green technology is
one of the best ways to solve the problems and enhance the technical functioning of its
production, process and finished products. Furthermore, the Chinese emerging firm can gain
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advantage from the green growth practice as this will attract more interests from abroad to
build up collaboration and several capabilities in the form of new development and
operations. With the development capability, the Chinese firm could internationalize by
exploiting into many countries because they could develop green products especially for the
country that practice the using of friendly environmental products. As for the operational
level, if the Chinese have a high operations capability in green technology, the managers can
internationalize by using their experience which would result in developing a new process for
their firms.
The world is rapidly growing due to the globalization and technological advancement.
Firm who intend to compete in international market should take innovative ways in terms of
IPR and research and development because the international markets are much more
competitive and rapidly evolving.

5.0 Conclusion
In conclusion, Goodbabys history reflects the steps undertaken by other Chinese
firms and EM-MNEs: its internationalization process was necessary since the companys
foundation in order to gain the resources and know-how it did not have the adequate access
before. Therefore, the internationalization expansion was initiated in a big market such as the
United States, where they established partnerships and strategic alliances that provided
Goodbaby with the conditions to become the first strollers brand in China and a leading
stroller manufacturer in the world.
From my opinion, the EM-MNEs successful internationalization processes start from
domestic market. They need to establish a strong base local market before they begin
penetrating in the international market. Advantages are related to a higher competitiveness of
EM-MNEs in the home market as they have a better knowledge of the clients, the distribution
channel and the institutional environment, considering the Chinese firms, they prefer going
abroad through acquisition and organic growth as they might want to reduce the psychic
distance.
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The world is rapidly growing due to the globalization and technological advancement.
Thus, it is crucial for business firms to be innovative and adapt to current situation. These two
factors are really important, especially for the firms that want to stay compete in the
international market. If the firm manage to go global by using one of the internationalization
method that have been suggested above, they still need to be innovative because the
international markets is much more competitive and rapidly evolving.
Technological innovation, which focuses on increasing efficiency and reducing waste
is crucial to increase productivity and reduce its impact on environment. Therefore,
exponential green growth is next to impossible without technological innovation. Both
internationalization and innovation plays an important role in the life-cycle of a business
firms. These two factors are some of the main element that would enables the business firms
to stay competitive for a long period of time throughout their existence in the world market.
There is a dire need to foster the technological innovation in developing countries that
will facilitate the transition to less carbon intensive economies to address the green growth.
This proves that innovation in terms of green growth is really important for business firms to
stay competitive and stand tall in their own industry. Without innovation, a business firm that
goes abroad might not be able to survive for a long-term.

References
Francesca Checchinato, Lala Hu, et al. (2013), Internationalization of a Chinese Born
Glocal Brand in a Foreign Sector: The Case Study of Goodbaby.
Manzoor Rabia & Shakeel A.R. (2013), Green Growth and Technological Innovation:
A case for South Asian Countries.

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