Guanxi and distribution in China: the case of Ferrero Group

This paper aims to analyze how guanxi-based business relations impact on distribution choices of foreign companies entering China. In particular, it investigates the influence of guanxi on decisions regarding both the organization of distribution channel and the management of distribution channel. It emerges that from an organizational point of view guanxi-based business relations may favor interdependence, low integration in the channel relationships, and foster multichannel choices. From a management point of view, guanxi may reduce the control of local partners over channel, create coexistence between conflict and collaboration in the channel relationships, and favor unmediated communication. The authors examine the emblematic case of Ferrero, a well-known Italian multinational company, specialized in chocolate production, which began to develop its entry strategy in China more than 30 years ago.