Marketing localization of Korean foreign investment firms in China is becoming one of the key success factors for their good economic performances. They are just beginning to execute the localization of their business management, especially after expe...
Marketing localization of Korean foreign investment firms in China is becoming one of the key success factors for their good economic performances. They are just beginning to execute the localization of their business management, especially after experiencing the excessive labor dispute in the end of 1990's. The main motive of Korean FDI into China is changing from utilization of low labor cost to pursuit of China's domestic market. The recent rise of wage level in China is likely to stimulate this change in the future.
Meanwhile, the research trend about Koran firm's foreign direct investment in China, which started ten years ago, is moving from the entry mode to china toward the operation ones.
This study tries to analyze in depth the factors behind decisions of marketing localization of Korean foreign investment firms when they are engaged in China markets. The main purpose of this study is to test empirically both the determinants of marketing localization of Korean foreign firms in China markets and ascertain how the level of marketing localization affects the performance of firms measured by the rate of profit, and growth of profit ratio & rate of market share and growth of market share ratio.
The research was conducted in three stages.
First, for a successful accomplishment of this study, the research model of this article was designed by reviewing relevant theories, previous studies, and the current marketing environment in China. It is essentially concerned with theory building and attempts to take into account inadequacies of existing models.
Second, a survey of Korean firms engaged in local marketing projects in China was done by collecting questionnaires from the relevant company. The data used in this study was collected from a survey questionnaire of 82companies those have marketing activities in China.
Third, on the basis of the survey, several statistical procedures were executed to analyze the data sequentially. ①, reliability test was employed to obtain the proper scales from the pool of items for exploring the relationship of interest. ②, factor analysis were conducted to demonstrate the proper operation of the constructs. ③, multiple regression analysis were used to test several hypothesis.
The results of this empirical study are as follows:
First, the characteristics of environment is institution and regulation factors which had appeared to be regarded in the localization level of product, price and circulation, but these factors turned out to give no effects to promotion localization. Other characteristics such as economical, cultural, social factors also appeared to give effects to the localization level of all marketing programs.
Second, the characteristics of a industry structure is competitiveness which appeared to be regarded in the localization level of product and circulation, but these factors turned out to give no effects to those of price and promotion.
Third, the company characteristics turned out to give no effects in determining the level of marketing localization.
Forth, the characteristics of product and service are durables and nondurables which had appeared to be regarded in the localization level of product, price and promotion, but these factors turned out to give no effects to circulation localization.
Last of all, the inspection results of the different level of marketing localization turned out that the factors of circulation and price give positive effects to the market share, and the factor of price give the market share growth ratio, profit/sales growth ratio positive effects.
This research which will be the first multidimensional empirical test on determinants of marketing localization of Korean foreign firms in China ,it will gave the bases of a theory to researchers and also gave an opportunity to research in marketing localization more reasonably and organizationally.
Future research is expected reflecting certain limitations of this study including followings:
① There could be some variables missed in this study which may appropriately represent environment and marketing strategy.
② The relationship assumed in this study may not be homogeneous across different industries. The restriction of the sample size, however, does not allow a detailed industry-specific analysis.
③ A rigorous statistical method could be applied to investigate the direction and magnitude of the causal effects on performance of the variables in this study.