Distribution Channels for Philips

Distribution Channels of Philips Domestic Appliances and
Personal Care Products in Chinese Economic Transition --
A Case Study
Don Y. Leea , Gangling Chaob and Weiling Yec aHong Kong Polytechnic University, Hong Kong b,cShanghai University of Finance and Economic, China
Address for Correspondence:
Don Y. Lee PhD
Associate Professor of Marketing
Department of Business Studie
Hong Kong Polytechnic University
Hung Hom, Kowloon
Hong Kong Special Administrative Region
China
Telephone: [phone]
Facsimile: 852-2765-0561
Email: [e-mail]
The first author acknowledges the support of a grant for this research from his institution, the
Hong Kong Polytechnic University (grant number: G-S943). The authors would like to thank
Professor Gerald Albaum and Professor David Wilson for their constructive comments on an earlier version of the case.
1
Abstract
There is general agreement that the distribution channel is the key to any company's success in Chinese market. Nonetheless, distribution is always cited as one of the most serious problems for foreign companies (including joint ventures) that operate in China. One of the reasons contributing to the difficulties in managing channels in China is that they are so different from western channels, thus difficult to understand. This teaching case provides detailed information about distribution channels in China to business students, managers and scholars who are interested in marketing in China.
The case illustrates distribution channels management of an international joint venture company in China's transitional economy, using Philips domestic appliances and personal care products as examples. The case devoted considerable coverage of key channel management issues, distributor selection, contract and incentive designs, monitoring and socialization between the boundary personnel of the up-stream and down-stream. In addition, the case also shows the general management problems in the state-run distribution
companies,

References: China Daily, September 28, 1999 Gijsen, Rob (1997), Reaching the Shanghai Consumer, Hong Kong: Asia Information Royal Philips Electronics (1999), “Philips in China: 2000 and Beyond” Royal Philips Electronics (1999), “Annual Report – 1998” Royal Philips Electronics (1999), www.philips.com Shanghai Statistical Yearbook (2000), China Statistics Publishing House Yu, Xingfa and Cheng Xinkang (1997), Commercial Reform and Innovations in China, Shanghai China: Publishing House of the Shanghai University of Economics and Finance. Zhang, Fengzhu (1989), Department Stores in China, Beijing, China: Publishing House of Beijing University. Philips’ Worldwide Sales by Region (1998)* Region Sales (million Dutch Total 109,814 100.0 * Table based on Royal Philips Electronics (1999), “Philips in China: 2000 and Beyond” and Royal Philips Electronics (1999), “1998 Annual Report”. Table 3. Per Capita Disposable Income in Shanghai (1990-1999)