Samsung Network

1. Background Samsung Group is a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul. Samsung was founded by Lee Byung-chull in 1938 as a trading company. It entered the electronics industry in the late 1960s and the construction and shipbuilding industries in the mid-1970s. Since the 1990s Samsung has increasingly globalised its activities, and electronics, particularly mobile phones and semiconductors, has become its most important source of income. In the first quarter of 2012, Samsung Electronics became the world's largest mobile phone maker by unit sales, overtaking Nokia, which had been the market leader since 1998.

Since 2001, Samsung expanded its business to the Chinese market. Although the Chinese market is huge, it is fragmented and unbalanced in economic development between city and countryside, east and west. Therefore, the distribution channels have always been a perplexity to foreign manufacturers and sometimes even to domestic manufacturers in many industries, including the mobile phone industry. Before the year of 2010, Samsung mainly depended on agencies for exporting its products into the China market. More specifically, Samsung delivered different models of mobile phones to the Chinese national agents, such as EagleTec, Fortune Telecom Holdings Limited, Aisidi Limited Company, Newland, Telling Telecom Holdings Limited and so forth, and then such national agents would to distribute the products to the provincial agents. The responsibility of provincial agents was to deliver the products to different wholesalers and retailers for selling to final customers. It could be seen that the distribution channel of mobile phone was highly complex as there were many steps by flowing a product from manufacturers to final customers and Samsung was not responsive towards the market.

However, in order to maximize the profit, Samsung China mobile phone division had decided to restructure the mobile phone distribution