Gregory J. Brush and Nexhmi Rexha
Executive Summary
Opportunities to conduct business with the overseas Chinese community continue to grow because Asian companies are increasingly looking beyond the borders of their home country. However, the difficulties in achieving effective working relationships and strong performance in the Asian region have often been noted. In a study of the supplier share allocation behavior of overseas Chinese manufacturers, Brush and Rexha find both similarities and differences with Western firms’ supplier choice and share allocation practices.
The authors’ key assumption is that the supplier’s share of the manufacturer’s business depends on the manufacturer’s perception of the supplier’s performance and trust in the supplier, in addition to the availability of alternative suppliers. Supplier performance and the manufacturer’s trust in the supplier are posited to be the result of various supplier behaviors that reflect communications with the manufacturer, as well as investments and initiatives made in the focal relationship. Singapore is the location for this research. Its history, exposure to Western business practices, and stage of economic development make the nation-state now what some countries of Asia may be in the future.
Brush and Rexha find that to achieve a significant business share allocation, suppliers need to communicate and demonstrate to overseas Chinese buyers their superior performance and a high level of trust because both are equally important factors in share allocation. The findings of this study indicate that managers largely can achieve this by displaying a commitment to the manufacturer through offering product and market support, by paying attention to end customer needs, by adapting processes and procedures to develop product offerings that better match these needs, and through open and extensive communications and information sharing. Supplier location and relationship duration had no significant effects on performance and trust perceptions or and share allocation. Thus, Western suppliers can compete successfully in the market with local firms if they develop an appropriate Asia-sensitive corporate culture and emphasize the building of competencies in developing relationships. Moreover, although the exchange parties may have transacted together for some time, the quality of the relationship is the defining factor in determining performance outcomes for the supplier.
To ensure commercial success, suppliers to this region need to go beyond simply transplanting their corporate culture into the Chinese context. It is imperative that suppliers view relationship and trust development and management efforts as a critical rather than peripheral part of their operating strategy when conducting business in the Chinese context. Lower business shares can result from low levels of trust, regardless of how well the supplier meets buyer expectations of performance.
Biography
Gregory J. Brush is currently a lecturer in the Department of Marketing at the University of Auckland. He recently received his PhD from the University of Western Australia. In addition to research and consulting experience with small business, manufacturing, and service organizations, he has published in several international journals and has presented his work at leading international marketing conferences. His current research interests include industrial marketing and governance, customer value perspectives, and cross-cultural consumer and organizational behavior.
Nexhmi Rexha is Associate Professor of Marketing at Curtin University of Technology (Perth, Australia). He holds a Doctor of Social Science in Business from the University of Zagreb, Croatia. His research and consulting interests focus on issues in relationship marketing, international marketing, international supply management, banking, and the marketing of higher education. Dr. Rexha has published in Journal of Business Research, Journal of Services Marketing, Journal of Business-to-Business Marketing, and Journal of Supply Chain Management, among others.
Journal of International Marketing, Vol. 15, No. 4, December 2007
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