Sourcing from China. The case of re‐branding in Elof Hansson MED

Abstract

The cost pressure in developed countries has stimulated many companies to shift their supplier base towards low cost countries. Under this background, the Machinery Export Division (MED) in Elof Hansson (EH) is also heading for a new strategy, which may imply the re‐branding of the products sourced from China under a brand owned by EH, so as to increase the business and strengthen its position in global markets. The purposes of this thesis are to identify the added value EH can provide in this new strategy, discover the viewpoints from different actors in EH’s business work regarding the new strategy and investigate the possible consequences and requirements of EH MED when implementing the new strategy. The conclusion indicates that, the primary added values EH can provide are financing, shipping and market knowledge. Regarding the reflections on the new branding strategy, the authors discovered that EH is quite positive to re‐brand the products under EH’s brand while the Chinese suppliers are eager to promote their own brands but also expressed their willingness to create a new brand jointly owned by EH. Surprisingly, the customers involved in this study are not so concerned about this new branding strategy. When it comes to the possible consequences, it can be observed that Brand Effect is found to have some influence in the decision making process among different actors but not the dominant element, however. Country of Origin Effect is also proved to play a role in some markets, but not so strong and can be moderated by some other factors such as a competitive price and a prestigious brand name. Concerning the requirements, the authors are convinced that the consensus and strategic cooperation with the Chinese suppliers are essential for EH’s future success when implementing the new strategy since they are all aiming for long term and close relationships with business partners, on the basis of mutual trust and common goals. Finally, the authors come up with some recommendations for EH MED, such as setting up local offices in China to take care of the quality control and other activities required in the new branding strategy, making investments on R&D to enhance the suppliers’ product development capability, establishing service centres in target markets to guarantee customer satisfaction, etc. In a nutshell, the authors suggest that EH MED should enhance its communication with all the actors in its business network, try to fulfil their expectations on the new strategy and achieve a win‐win situation in the future.