What Are the Differences of International Luxury Brands Operations in China and India? A Multiple Case Study

Karolina Rud

Student thesis: Master thesis

Abstract

Emerging markets have changed the way international firms are doing business and have the potential to become the leading economies in the global landscape. This trend has in the last years reached the luxury industry where international luxury firms have established businesses in emerging markets in order to embrace the fast growing population and wealth, and to exploit the highly growing luxury market in these countries. The markets that were of particular interest for the luxury industry are China and India. This thesis therefore aims to answer: “What are the differences of international luxury brands’ operations in China and India in terms of market presence, market knowledge, development of operation modes and marketing mix?” Based on the findings and the discussion of them, implications for international luxury firms and research are made.
The Uppsala internationalization model by Johanson and Vahlne (1977) and the 4P framework by McCarthy (1960) lay the foundation of the underlying analysis in order to answer the research question. Within the analysis, 5 international luxury case brands are studied in regards to their operations in China and India. The aggregation of the findings for each country has revealed patterns and thereby differences of the operations in each market.
In regards to the market presence, the luxury firms were identified to have multiple times more stores in China than in India. Furthermore, the stores in China are spread throughout the country whereas in India only big metropoles are covered. All luxury brands have further entered China at least 10 years earlier and have operated in the country through a more direct operation mode than in India and thereby have accumulated a higher knowledge about the Chinese than about the Indian market. In China, most of the luxury firms have either entered the country through a wholly owned subsidiary or have within the time changed to this operation mode. In India contrary, licensing models were used from the market entry until today as a means of operation mode. In regards to the marketing mix, only slight differences of the variables product and price between both markets have been found. The variable place differs in the way that in China the luxury firms plan to increase customer access through expanding their ecommerce network whereas in India the focus lies on opening new stores in the country. Lastly, the case brands’ promotion activities in China are focused on digital marketing whereas in India traditional offline marketing is adopted.
The findings were identified to have implications for international luxury firms that plan to enter China and/or India and those already present in both markets. Further, the Uppsala model was identified to not be completely suitable for internationalization patterns of luxury brands in emerging markets. According to the findings, a model is proposed that could be appropriate for luxury firms operating in emerging markets. By answering the research question and challenging the applicability of the Uppsala model, this thesis lays the foundation for future research from which international luxury firms and academia can benefit.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2018
Number of pages103