Is China Uniform? Intra-Country Differences in the Takeoff of New Products

52 Pages Posted: 21 Aug 2015

See all articles by Ying Li

Ying Li

School of Business, East China University of Science and Technology

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing

Date Written: August 18, 2015

Abstract

Multi-national corporations (wrongly) introduce new products in China rather late. Such a strategy arises because research treats all of China as one monolithic country, thus, finding that takeoff occurs quite late. However, for large or multi-ethnic countries, intra-country diversity may be quite high, rivaling or exceeding that among inter country differences of some continents (e.g., Europe). This study examines the takeoff of new products among provinces of China based on data of 30 Chinese provinces on 10 categories over 34 years. Rooted in the theory of institutions and product network externalities, this study tests the drivers of new product takeoff using a discrete time hazard model. The major results are as follows: First, time to takeoff varies dramatically across provinces in China. Second, the average time to takeoff varies substantially between products with strong and weak network externalities. Third, time to takeoff is converging across provinces. Fourth, the intra-country differences in time-to-takeoff are explained by economic institutional variables: economic wealth, trade openness, education, media and transportation infrastructure; and product characteristics: network externalities and year of introduction. Fifth, the vast differences in takeoff of new products across provinces suggest that a waterfall strategy within China might be more profitable.

Keywords: China, Intra-Country Diffusion, New Products, Takeoff, Growth

Suggested Citation

Li, Ying and Tellis, Gerard J., Is China Uniform? Intra-Country Differences in the Takeoff of New Products (August 18, 2015). Available at SSRN: https://ssrn.com/abstract=2647035 or http://dx.doi.org/10.2139/ssrn.2647035

Ying Li

School of Business, East China University of Science and Technology ( email )

Shanghai
China
86-21-64253987 (Phone)

Gerard J. Tellis (Contact Author)

University of Southern California - Marshall School of Business, Department of Marketing ( email )

Hoffman Hall 701
Los Angeles, CA 90089-0443
United States
213-740-5031 (Phone)
213-740-7828 (Fax)

HOME PAGE: http://gtellis.net

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