Negotiating Sourcing Successfully in China
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
China has the past decade become the leading destination for companies looking to cut costs, due to the low cost labor and high-tech manufacturing, which have made China the “workshop of the world.” Thus, the importance of China as a key strategic market for sourcing is increasing rapidly. Despite the huge possibilities in China in cutting costs, many companies are still afraid of the physical and cultural distance enclosed with sourcing from China. Other western companies have tried to source in China without great success, due to lack of understanding of the counterpart’s values and socio-cultural characteristics. Academic research has paid much on negotiations with Chinese on the marketing side, however, there is a lack of research on negotiations with Chinese when it comes to purchasing. By means of case study research carried out in eight Swedish companies, in different industries and with different size and complexity of the product, this thesis is investigating the sourcing negotiation process and brings out factors to consider when doing business with Chinese. The purpose of this thesis is to develop new knowledge about how to conduct successful sourcing negotiation in China. Through the development of an own framwork influenced by existing theories from the marketing perspective we have found the interrelated varibles Sourcing Strategy, Negotiation Process and Chinese Business Culture and Negotiation Style as affecting the outcome of the negotiation with Chinese suppliers. Our framework suggests that successful sourcing negotiations can be achieved by managing three dimensions; business relationship adaptations, communication and control and buyer-seller interaction. Other major findings in this thesis include the greater difficulties and need for involvement a complex product and complex sourcing situation brings. Furthermore, the attitude towards culture on the purchasing side has more the character of seeing similarities which upon you can build a business relationship compared to the marketing side. What is important is a mutual understanding of objectives. Another finding is the importance of a long-term approach.
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IdentifiersURN: urn:nbn:se:su:diva-6496OAI: oai:DiVA.org:su-6496DiVA: diva2:196561