However, an increased interest in this emerging market has required another type of investment in a sales subsidiary and a centre for packaging design to meet new packaging demands. Such investment involves other kinds of risks in relation to an emerging e time new relationships need also to be developed with local actors, especially in a high-context culture like China. A new business context and hidden obstacles also contribute to a certain market uncertainty in case B. The firm-specific advantages refer mainly to the inherent technological know-how and international market experience about the supply chain, whereas the main market-specific advantage is a growing market for packaging materials in relation to other market regions in the world. This study highlights the importance of market screening and selection procedures.
ent decisions
In case A, the firm has chosen to make the entry into an emerging market area by investing in a JV for the local production of packaging materials for the food industry. This solution gave management local production facilities and converting capacity to develop greater flexibility in meeting customer demand. Local stock facilities and improvement in the distribution system also contribute to a higher service level to customers. Even if the firm previously had some experience with the partner, a closer relationship required management to overcome different cultural factors from a national to an individual level (within a high-context/collectivistic culture).
In case B, management has chosen to export products and build relationships with different actors in its supply chain. An important competence in international relationship development is the ability to communicate. Griffith (2002) argues that managers who possess the necessary competencies “to develop new communication and cultural environments within their relationships are able to establish effective and efficient communication exchange conditions” (p. 261).
Co-operation and relationship building with machine suppliers, packaging manufacturers, design agencies and researchers at universities also support the firm in its global reach with packaging solutions. A high-context/collectivistic culture can also put pressure on the firm to find solutions to meet the requirements in the local business culture for building necessary relationships and guanxi with key actors (benefits gained from social connections). Guanxi refers to social connections and usually extends to family, school friends, workmates and members of clubs or organizations. It is customary to cultivate an intricate web of relationships, which may expand in a huge number of directions and include lifelong relationships. Reciprocal favours are the key to maintaining a guanxi web (Ling, 2015). Kriz and Fang (2003) argue that success in China is built on interpersonal xinren (deep trust) and not, as most suggest, on guanxi (connections, personal contacts, relationships). They suggest that guanxi tends to open the door but it is xinren that helps make a deal. Xinren in essence is limited to only a smaller number of immediate familial ties and deep friendships.
Market performance
Packaging is an essential item in every household in developed countries and with a growing disposal income for people ColombiaGirl online, this has become the situation in emerging markets. The with an annual growth rate of 4.2% during the period 2010–2014. According to a ), Asia accounted for the largest share of the packaging erica and Western Europe in 2014. The packaging industry was expected to grow at an annual rate of 3.5% between 2015 and 2020 and 3.9% between 2022–2027. This growth is expected to be driven by Asian countries. A growth in the consumption of packaging materials has remained strong for regions in Asia and the potential for further growth is expected through an increasing consumption of consumer goods. Rapid changes in technology are also driving the growth of specialty papers e.g. for the cosmetic industry.