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Table of Content
1
Content
Page
Introduction
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13
2.4 Finding
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14
2.6 Comments
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3.0 Green growth and technological innovation: A case for South Asian
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countries
3.1 Technological innovations and Intellectual Property Right
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16
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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20
5.0 Conclusion
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2
References
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1.0 Introduction
TITLE
Internationalization of
Technological Innovation:
in a Foreign
countries.
GoodBaby.
AUTHOR
Ahmad Ramay.
Vescovi.
YEAR OF PUBLISHED
PROBLEM STATEMENT
September, 2013
How Chinese latecomer firm
August, 2013
How the South Asian
adopt internationalization
challenge of achieving
RESEARCH OBJECTIVE
innovation in context.
1. To assess the relationship
technological innovations.
Chinese traditions
RESEARCH QUESTION
innovation in developing
market?
Development (R&D)
demonstrate an increasingly
green technologies?
strategies?
RESEARCH
Mixed Method
green technologies?
Qualitative Method
METHODOLOGY
1. First phase:
Analyzing Goodbaby
internationalization activities
data.
2. Second phase:
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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1. Quantitative
VARIABLES/DIMENSIONS
Dependent variable:
Strollers purchase
awareness and
Independent variable:
technological
influencer role.
innovation.
2. Qualitative
i. Goodbaby marketing and
branding strategies.
Research and
development introduce
global strategies.
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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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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(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
Inglesina, 4moms
Bugaboo
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
% 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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2.6 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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3.4 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.
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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