Authors: Asta Salmi; Yuan Virtanen
Research background and its relevance: This paper analyses international purchasing and the role that Western intermediaries play in SMEs’ sourcing from China. China has been an attractive sourcing context, mainly due to cost factors, but recently firms have been turning towards other (emerging) sourcing markets. Consequently, it becomes relevant to ask what kind of changes take place in the business relationships with Chinese partners, and we address here the potentially changing role of intermediaries, as well as ending relationships. Buyer-supplier relationships between the Western buyers and Chinese suppliers caught the researchers’ attention a decade ago when many companies accessed this sourcing market (Fang et al., 2004: Salmi, 2005). The motives for sourcing, the specific requirements of the area, and features of supplier relations were analysed, The important role of intermediaries was noted, but received relatively little focused attention (with the exception of e.g. Balkow, 2012). Today, China is experiencing a remarkable transition and its position as the world’s top sourcing destination has been challenged. Increasing labour costs (Fang, Gunterberg and Larsson, 2010) among other factors raise the question of its competitive position as a low-cost sourcing destination. This leads to the questions of whether companies, such as Western SMEs, continue sourcing from China, and if so, do they still choose to use domestic, instead of Chinese local, intermediaries. Furthermore, what is the role of intermediary over time – for instance, in the different phases of business relationship’s development: given the contemporary setting, will relationships disappear among the actors? And, what are the challenges of ending relationships? Purpose of the paper: The aim of the study is to analyse the contemporary role of intermediaries in buyer-supplier relationships between Western (Finnish) firms and Chinese suppliers. The research questions are as follows: what kinds of challenges can be identified in the relationships between Finnish buyers, intermediaries and Chinese suppliers: what role does the domestic intermediary play in Chinese sourcing: and what are the challenges of ending relationships? Methods: We use qualitative research methods with multiple (three) cases and rely on interviews with six people conducted in 2015. We focus on the perspectives of the (Finnish and Swedish) intermediaries, but add also views from a Chinese supplier in contemporary business. Main contribution of the paper: This paper analyses international purchasing and the role that Western intermediaries play in SMEs’ sourcing from China when the country is loosing is competitive position as a low-cost sourcing context. Our analysis shows the changes that have taken place in the business relationships with Chinese partners and in the roles of the intermediary. Our key contribution is to focus on the role of the intermediating actors and relationship changes in sourcing from an emerging market. The personalization of relationships (guanxi) in China is bound to affect relationship dissolution and needs further studies.
Journal: n.a. (n.a. – n.a.)
Web Address: n.a.
Publish Year: 2016
Conference: Poznan, Poland (2016)