An analysis of factors influencing the online presence in distant countries: the case of Italian fashion firms in China

Francesca Checchinato and Giulia ZanichelliDepartment of Management, Università Ca’ Foscari, Cannaregio

873,Venice, Italy

Abstract

Obiettivo del paper è esaminare quali siano i fattori in grado di influenzare la decisione delle imprese di dotarsi di un sito web in Paesi distanti. Più in particolare, lo studio si focalizzerà nell’analisi di alcune marche italiane del settore fashion presenti nel mercato cinese ed esaminerà l’impatto di dimensione, esperienza internazionale e posizionamento della marca sull’adozione di sito Internet e social media.

Abstract

The aim of the paper is to examine some of the factors that potentially could affect the firm’s online presence in international distant markets. More specifically, the study focuses on Italian fashion firms that operate in China, and examine the impact of firm’s size, experience, and positioning (luxury brand or not) on its intention to adopt a digital presence in this emerging country.

Introduction

Two phenomena seem to have modified business behavior: the increasing internationalization of firms and the advent of Internet and social networks. These two events are correlated, since the Web can help companies to enter in geographically distant markets by supporting their communication - and in some cases sales process (Sinkovics et al., 2013). This relationship is supported by the use of the word “Internetalization”, that is the process of integrating the Internet into the internationalization activities of the firm (Mathews et al., 2012). However, Internet is not completely global: even if it holds true that players such as Google, Facebook, Amazon and Twitter do dominate the western market, they are still not leaders or even present in some countries with strong cultures and institutions as in China. As Berthon et al. (2012) stated, the most prominent social media types and how they are used depends on the country’s technology, culture and government.

1

Most of the research work about the Web has investigated the antecedents of the adoption of internet related marketing tools (Web site, e-commerce, social media) among firms (Dholakia & Kshetri, 2004; Walczuch, Van Braven, & Lundgren, 2000). Studies on the use of the Web in the internationalization process have been analyzed the Internet’s impact on distribution, sales and export activities in general (Upad-hyaya & Mohanan, 2009; Cho & Tansuhaj, 2013) and only a few have investigated the standardization-adaptation options related to the website (Chao, Singh, Hsu, Chen, & Chao, 2012; Shneor, 2012). Another stream of research is related to the multilingual dimension of the Internet use, and aims at understanding of how website differs in different linguistic context (Chang, 2011; Pariyar, Murakami, Lin, & Ishida, 2014). From our knowledge only few scholars have investigated (Shneor, 2012) the antecedents of the adoption of Internet in international contexts, focusing on emerging countries that require a localization approach.

The aim of this paper is to fill this gap, verifying the factors influencing the choice to have an online presence in culturally distant countries, examining the existence of a dedicated website and Social Networks profiles of a sample of Italian firms in China. The analysis focuses on the fashion sector for two reasons: first it represents one of the “Made in Italy” excellences, second because of the role played by the brand image in this sector.

This paper analyzes the case of Italian brands in China, since it is one of the most distant markets from Italy, the cultural and government situation are peculiar and, as a consequence, the Web World Web has many differences as compared to the western one. Moreover in this country, Internet is a key communication tool and information channel to approach the Chinese consumers, since the use of Internet in the Asian country is developing at a very fast pace (642 million active Internet users in 2015 according to WeAreSocial Research1). However, establishing an online presence in this country - particularly in local Social Media - entails many difficulties, given the political, cultural and social differences existing between the East and the West and the limitations linked to the firewall which bans some websites.

The paper is structured as it follows. The first part analyzes the literature on Internet and Social Media, introducing the options related to the Internet adoption and the social media features also in the Chinese market. Then we identify some of the factors that have an impact on the firms’ use of the web and develop the hypotheses to test.

1 http://wearesocial.com/special-reports/digital-social-mobile-worldwide-2015 [Access date: 25/01/2016]

2

The second part present the results of a research carried out on a sample of Italian fashion firms operating in China. The presence of the company website in Chinese language and in the main social media has been monitored. The empirical analysis aims at verifying the factors that can explain the strategy, thus proposing some managerial implications and direction for future research.

From an academic perspective, this study broadens the theoretical research pertaining the antecedents of internet adoption by firms, investigating the issue in an international perspective.

Literature Review

Internet and Social media as marketing tool The adoption of the Internet as a new channel for firms’ international

development or to support and facilitate the firm’s international expansion has been studied by many scholars (Petersen et al. 2002; Shneor, 2012). Firms can choose among many options for their online presence (El-Gohary, 2010): from using simple and low interactive tools such as the (brochure version of) website to adopting social and interactive applications thanks to an integrated online communication strategy (Rao et al. 2003; Bingley et al. 2010). Using the lens of innovation adoption theory (Rogers 1983), previous research on Internet adoption suggest that a set of sequential steps or stages through which firms passed during the adoption of Internet can be found. For example Daniel and Grimshaw (2002) studied the e-commerce adoption in SMEs and found four clusters of Internet technology adoption companies, based on stages.

Nowadays companies are continuously increasing their awareness of the importance of using Internet and Social Media as part of their marketing strategies, both as a support to traditional tools, and as sole communication channel (Mangold & Faulds, 2009; Gandolfo e Lupi, 2014). Social Networks are online open-source applications which allow users to communicate and exchange information and personal contents (pictures, videos, images, news, etc.). Their diffusion has had a strong impact on the consumers behavior, on their ways of communicating, thinking, acting, socializing and above all consuming (O’Reilly, 2005). Therefore, as well as the Web site, social media have become a marketing tool (Constantinides & Fountain, 2008): they allow firms to adapt their communication strategies to the new social and economic environment. Companies can therefore achieve advantage from the new technology offering to consumers a different, creative, and innovative approach and information channel which adapts to their new needs in a more efficient way, as compared to traditional communication tools (Anderson, 2010).

3

Despite significant advantages, using Social Media requires planning and following a correct strategy, continuously monitoring how the networking activities proceed (Lowe & Alistair, 2012). Moreover, from the point of view of the firm’s commitment, the use of such applications requires numerous resources to avoid that mishandling generates negative impact (Öztamur & Sarper, 2014). Social media marketing activities leverage web-based technology to create interactive medium (Dahnil, Marzuki, Langgat, & Fabeil, 2014) so it needs continuous updating and thus human resources efforts. Thus, we can suggest that in the adoption of Internet by firms, developing social network profiles represents a step further in the innovation process.

Internet and the China as a distant market

When companies have to reach their international online consumers they struggl between two alternatives: developing a global site or creating a new local online presence for the foreign market they are entering. Adaptation or localization refers the contents both on the linguistically and culturally aspects (Chao et al., 2012) and the issue gains more attention when companies entering psychically distant markets, meaning markets with high differences in language, cultures, education, industrial development and business practices (Johanson and Wiedersheim-Paul, 1975). In fact some studies reveal that the larger the distance towards a market, the more inclined the managers are to make a decision that involves a larger degree of adaptation of the marketing elements (Kraus, Meier, Eggers, Bouncken, & Schuessler, 2016).

Analysing the factors highlighted by Johanson and Wiedersheim-Paul (1975) to define a distant country, it can be argued that the psychic distance between China and the Western Countries are high and this is more evident if we focus our attention on the Web.

Unlike Western countries, the Chinese population is very fragmented as far as Social Media usage is concerned. While in the Western countries online applications such as Facebook or Twitter are used indifferently by all the Web population with no evident distinction, most Asian Social Networks have their own peculiarities, each attracting a different segments of users (Crampton, 2011). Moreover, the strict censorship policy imposed by the Chinese government blocks the access to Asian users to the most popular western Social Networks. This does not mean that China is not in the forefront as far as Web 2.0 is concerned; on the contrary, the Asian Social Media environment consists of numerous applications, microblogs and Social Networks, such as RenRen, Douban, Youku – Tudou and many more (Yu, Asur & Huberman, 2010). Each of these Chinese Web platforms has its own peculiarities, which present some differences as compared to the

4

correspondent western ones, both concerning technical characteristics and usage method (Crampton, 2011).

From a marketing point of view, social networks represents an excellent tool that foreign firms adopt to generate and enhance their brand awareness and to communicate and interact with their customers. Culture is an important variable that affects what consumers say about brands online and Chinese consumers use the Web as a tool to express themselves and to engage in social interactions with famous brand, demonstrating great interest in what is popular and in vogue paid more attention to status features (Ma, 2013). However, there are several challenges that Western firms encounter when trying to establish their presence in the Chinese online world.

One of the first main problems is related to the language, which is completely different from the Italian one. Chinese people use ideograms instead of letters; these are written symbols that represent an object rather than a particular word or speech sound. Moreover, each ideogram has both an independent meaning and a different transformed significance when paired with others (Vescovi et al. 2013). In addition, Chinese people are not so confident with the Latin alphabet and most of them are not able to read English contents. For these reasons, foreign firms which want to develop an online marketing strategy in China have to tackle the translation problem. Moreover to reach and involve consumers they need to use country specific Social Networks.

Other key topics that affect the online presence are the issue of censorship and of the values which are rooted in China’s traditions: some contents are not allowed to be published on Chinese Social Networks.

Thus, for foreign companies which wish to effectively approach Chinese consumers, it seems necessary to adapt their online contents to the peculiar traits of Chinese culture and traditions, since they reflect on the tastes, preferences and lifestyles of the target audience (Lowe & Alistair, 2012); at the same time, however, these firms should maintain the coherence of the brand image at international level.

Therefore, despite the globalization, Internet websites and social networks can be quite different in China for three main reasons: 1) different culture; 2) Chinese language; 3) censorship.

4.1 Hypotheses development

Previous research on Internet as a marketing tool has shown that factors influencing the adoption of the Web or of some of its applications, such as social media and e-commerce, can be referred to both internal and external

5

elements. Correspondingly, we postulate that the Web sites creation in new distant markets depends on resources that firms can invest on the development of the Internet strategy - that is often related to the firm size – on international experience and on the context and competitors strategies - that are related to the positioning of the firm in the market.

4.1.Factors affecting the adoption of Internet

Size effect in the Internet adoption One of the structural or internal elements which have been analyzed by

prior literature about Internet as new technology adoption is the dimension of the firm. Some scholars stated that one of the most important reasons of Internet adoption by firms is its low barriers to entry (Öztamur & Sarper, 2014), therefore it is accessible for all firms, despite to their dimension.

Therefore this dimension is often used as a proxy for resources that company can invest on the development and implementation of the Internet strategy. In fact, as any other marketing and communication investment, also the web budget is usually linked to sales (Belch & Belch, 2014).

As stated by Sinkovics, Sinkovics & Jean (2013), the internet has led to entirely new ways for exporters to access markets, particularly in the case of SMEs, due to their limited resources. However, even if SMEs can achieve significant advantages from the web, it emerges from literature that SMEs do not adopt Internet as much as big firms do, both due to the fact that they own scarcer resources and because they lack the technical knowledge and managerial capabilities needed to effectively operate online (Walczuch, Van Braven & Lundgren, 2000; Del Aguila-Obra & Padilla-Meléndez, 2006).

When the Web 2.0 was introduced, such differences between large and small firms were at first reduced thanks to its ease of use and low costs, insomuch as Web 2.0 applications (Constantinides & Fountain, 2008; Cooke & Buckley, 2008; Harris et al., 2008) were initially considered a way to lower the dimensional barriers existing among firms, giving also SMEs the possibility to effectively operate online (Harris, Rae & Grewal, 2008). However, SMEs still lack resources which are necessary to manage their social media marketing strategy, and this represents an obstacle to their development (Bulearca & Bulearca, 2010; Becker, Nobre & Kanabar, 2013). Moreover, when firms enter in distant markets, the lack of experience and market knowledge – well known among the literature on internationalization (Johanson & Vahlne, 2009) – can broaden the distance between big firms and SMEs. Previous studies (Cho & Tansuhaj, 2013) demonstrate that Internet can be a very helpful tool for managers of SMEs in their internationalization

6

effort, but also a challenge because of their lack of competencies, resources and knowledge concerning the foreign market they want to enter.

H1a: Firms’ size is a factor that affects the adoption of Internet and the probability of having a local website in a psychic distant market is higher for big companies.

H2b: Firms’ size is a factor that affects the adoption of Internet and the probability of using local social media in a psychic distant market is higher for big companies.

International experience and the Internet adoption Experiential knowledge is depicted as an important assumption of the

internationalization process because it allows firms to gain cumulate knowledge in order to successfully enter new and distant markets, allowing firms to subsequently penetrate them, enhancing their commitment (Johanson & Vahlne, 2009). This knowledge is composed of: 1) general knowledge about international process and 2) market-specific knowledge, characterized by knowledge about a specific national market. Therefore previous experience in international markets allows firms to develop abilities and routines that help to properly analyze and interpret signals from distant and unfamiliar external environments and firms can thus better cope with distant countries due to the accumulated ability in understanding foreign markets (Perri, Checchinato & Colapinto, 2013; Eriksson, Johanson, Majkgard, & Sharma, 1997; Yeniyurt, Townsend, & Talay, 2007).

Experiential knowledge is important to successfully operate in a new foreign market and it is an antecedent to explain firms’ expansion and commitment in host countries.

Commitment related to the online presence refers not only financial resources for the development and implementation of company websites (Samiee, 1998) and social media, but also ongoing investments for maintenance and content updating, as well as dedicated human resources to manage these tools. In fact, Morgan-Thomas & Bridgewater (2004) state that international experience influences the acceptance of Internet use in international markets since experiential knowledge may be required to effectively apply technology (Garvin, 1993). Shneor (2012) stated that “once operating in certain foreign market, firms may develop sufficient familiarity with the local culture to be able to adapt its marketing practices and communications to local needs”. Based on these assumptions, we can postulate that the time spent by firms in the host country can enhance their knowledge and familiarity with it.

7

H2a: the greater the firm’s generic experiential knowledge, the higher the probability that the company adopts a local online marketing website

H2b: the greater the firm’s experience in the specific country, the higher the probability that the company adopts a local online marketing website

H2c: the greater the firm’s generic experiential knowledge, the higher the probability that the company adopts a local social media

H2d: the greater the firm’s experience in the specific country, the higher is the probability that the company adopts a local social media

Luxury and the adoption of the InternetFactors affecting the IT adoption by firms can be also external. Previous research with a focus on the adoption of the Internet have found

that, among others, users expectation and pressure coming from competitors, consumers and suppliers are common adoption stimuli (Del Aguila-Obra & Padilla-Meléndez, 2006). Competition intensity is highlighted as antecedents of the likelihood of local site launch in new market (Shneor, 2012) Therefore, operating in a market with an high involvement in marketing activities, but in a different and higher positioning can affect the decision to adopt the Internet tools. Among the fashion market luxury and non-luxury brands co-exists, depicting different competitive settings and consumer preferences in the same industry. Phau and Prendergast (2000) propose that luxury brands involve exclusivity, perceived quality, brand awareness and a well-known brand identity.

Internet websites and social media are tools to enhance the knowledge of the brand, but some scholars have raised the issue of the compatibility of luxury with the Internet, indicating that the Web represents a ‘dilemma’ for the companies which operate in this sector. Interactivity is one of the main features of the web, and in particular of the social media, since these platforms allow users to connect with one another and create their own contents (Chu, Kamal & Kim 2013), thus possibly modifying the brand image and reputation.

Due to positive and negative effects arising from the web adoption, findings are not consistent: some authors state that rarity and uniqueness of their products oppose to the characteristics of the digital environment (Jahn & Kunz, 2012; Okonkwo, 2009), so social media are dangerous for luxury brands. Others found that luxury can be successfully positioned online, and the web could be an opportunity to enhance brand image in this industry too (Okonkwo 2009; Kim & Ko 2010). Due to strong cross‐cultural differences, the interpretation of the meanings of luxury depends on the culture, previous

8

research (Godey et al. 2013) has found evidence of strong cross-cultural differences, thus, even if having a website can be useful in distant market, managing a highly interactive tools can be challenging for firms. So we hypothesize:

H3a: the probability to have a local website is higher for luxury companiesH3b: the probability to have also a social media profile in a distant

market is higher for fashion firms that do not operate in a luxury context.

The research

Methodology

To investigate the use of Internet and social media in psychically distant countries by foreign firms, we analyzed the case of Italian fashion firms in the Chinese market. In order to avoid changes due to country-/culture-specific characteristics, we concentrated our research on firms located in one country, (i.e. Italy with the Internet presence in one distant country, i.e. China) as in Del Aguila-Obra and Padilla-Meléndez (2006).

The research focuses on the fashion industry in Italy because among Italian firms which have expanded their business in China, those belonging to the fashion sector2 seem to be thriving more than other (Farrar, 2012). Fashion goods belong to the “shopping goods” class, and the luxury ones are even “specialty goods”. This means that such products are characterized by a strong emotional content, for which consumers perceive a high decisional risk, investing much time and effort during the buying process. For these types of products Internet can be seen as an important tool in the communication process.

Social Networks are also an effective tool to achieve this goal and to create relationships with customers: they allow companies to perform one-to-one marketing activities, interacting with consumers and enhancing their brand awareness (Strugaz, 2012).

We tested our hypotheses on a sample of Italian brands belonging to the fashion industry in China, running out two logistic regression models in order to measure if the likelihood to adopt an online local presence in the Chinese market is affected by identified factors. Variables are all related to the brand. If a brand is part of brand portfolio, we analyze the specific brand website and

2 For the definition of the fashion sector, please refer to the ICE classification (textile-clothing, leather goods-footwear, eyewear-jewelry).

9

the social media profile related to the brand and not the corporate one. This level of analysis was chosen because in the fashion industries websites and social media profiles are related to the brand, sometimes without any mention to the firm or the corporate level.

Variables

In order to test our hypotheses, we created two dependent variables and four independent variables (Table I).

Table I: Variables

Independent variables Dependent variables

Brand sales Chinese website (0=no; 1=yes)

Number of countries in which the brand is present

Chinese Social Network profiles (0= no one; 1= at least 1)

Numbers of years in China

Luxury positioning (0=no; 1=yes)

Consumers websites usually refer to and are created to communicate the brand instead of the firm, therefore our data were collected at this level.

The presence of a translated version of the brand website (Chinese Website) has been used as dependent variable in H1a, H2a and H3a. We analyzed only the translation and not the full adaptation of the website (web localization), since even just translating the website in Chinese language requires a relevant effort. Moreover in China translation is already a method of interpretation and adaptation of the communication messages due to the aforementioned characteristics of the language.

The use of at least one local social network has been used as dependent variable in the remaining hypothesis.

Sales are used as a proxy of firm size. Some of the brands in our sample is part of brand portfolios and their websites are not related to the corporate one. In these cases the balance sheet reports were checked and sales related to the specific brand was collected.

Brand sales has been used as measure of firm’s size in H1a and H1b, while previous market entries of a brand are used to measure previous international

10

expansion experience at a given point in time and the number of years from the entry in China have been used as measures of experiential knowledge at international level and in the specific country in H2 hypotheses.

In order to classify the selected firms according to their positioning (luxury or not) and use this as dependent variable in H3, a dummy variable was created based on the opinions provided by four experts (retailers and traders) working in the Italian fashion sector in different branches of the industry (menswear/womenswear, jewelry, shoes, accessories, leather goods). Our informants were interviewed submitting the list of the brands in the sample and asked them to classify each one as “luxury” or “non-luxury”. We also asked to specify the main criteria used to determine such opinion. Accordingly to the literature about luxury brands (Li, Li, & Kambele, 2012) the main criteria are price as indicator of accessibility, also related to the customer segments considered as core target for each brand. Other criteria used are product quality (preciousness of raw materials, craftsmanship, etc.) along with emotional elements such as brand uniqueness and recognizability, primarily identified considering examples of their customers’ experiences.

Approximately 15% of the brands in the sample were not known by each expert, so they did not answer for those brands. For around 90% of the companies, the provided feedbacks were unanimous; where the answers differed, the majority criteria was adopted to determine the brand’s classification. For all uncertain cases, we collected additional information related to the criterion mentioned by the experts, by reviewing each brand’s website and related articles, news and data, in order to accurately identify the relevant category.

Data collection

In order to test our hypotheses, we selected a sample of Italian fashion brands present in China, using the following approach. We reviewed articles and news from the 14 most recent issues of “Fashion Magazine”, listing all brands of Italian fashion companies actively involved in the distribution and selling in China mentioned. We verified each information extracted by deepening the research through the analysis of data, documents and website of the detected firms. To complete and confirm the sample, we selected other companies from the information extracted from the online magazine ICE – Live in I Style3. A total of 102 companies are randomly chosen, by collecting

3 http://www.ice.it/lifestyle/LifeItaly_2011.htm;

11

sample of brands that represent the main areas of the “fashion system” as defined by ICE4.

For each brands, we verified the creation of the brand website in Chinese language and the presence of the brand in the local social networks. This last data was collected based on their indication on the official Chinese website. We decided to examine only the social networks explicitly cited in the official brands website due to: 1) the high number of non-official profiles of the brands existing online; 2) the counterfeit problems in China and 3) the possibility that distributors and other stakeholders created profiles with the brand name but not in behalf of the owner.

Moreover, for each of the sample brands, we analyzed the following elements. First of all, we checked the Social Network each firm declares to be present in. The main Chinese social networks considered are: Sina and Tencent Weibo, RenRen, QZone, QQ,Youku Tudou, Douban, DianDian, Weixin, Jiepang, and Tuding.

Moreover, we collected the following data: the sales related to each brand in 2013, which has been used as dimension variable to test H1; the number of countries in which the company operates with the brand and the number of years of presence in China, used as experience variables to test H2.

Results

After collecting data, our sample was restricted to 78 brands due to unavailable data related to some of the independent variables.

Table II shows the mean and standard deviation for each variable.

Table II: description of the sampleMean Sd

Brand sales (millions Euros) 328.30 597.94Number of years operating in China 9.72 12.28Number of Countries 38.69 28.10

The average sales are 328.30 million Euros, the number of years operating in China is 9.718 and the number of countries in which they operates is 38.690. 52 (66.67%) firms have created a Chinese website to promote their brand and only 25 (38.01%) have an official presence in one of the most famous Chinese social network. 45 (57.69%) brands are classified as luxury fashion brands from interviewed experts.

4   http://mefite.ice.it/settori/Moda.aspx?idmacro=112

12

In order to test H1a, H2a H2c and H3a, a multiple logistic regression has been run where the dummy variable Chinese website has been used as dependent variable, and all the independent variables have been inserted in the model.

Findings show that factors related to the firm’s experience, size and position in the luxury market affect the probability that a company creates a website for its brand in the specific host country. The model results significant (p <0.01) with an AIC of 84.2. To test if the model could be improved deleting some variables, we also verified if the model without each of the single independent variable is significantly different from the complete model. Results of these tests are shown in Table III. The best model is the first one: all of the independent variables affect the probability of Chinese website adoption.

Table III - Comparison between the complete logistic regression model for website adoption compared with the model without each variable

MODEL DEVIANCE AIC LRT Pr (>Chi)

SalesNumber of countriesNumber of years in ChinaLuxury

74.200 84.20

Number of countriesNumber of years in ChinaLuxury

80.469 88.47 6.2692 0.01229*

SalesNumber of years in ChinaLuxury

77.994 85.99 3.7936 0.05145 .

SalesNumber of countriesLuxury

78.187 86.19 3.9869 0.04586*

SalesNumber of countries Number of years in China

80.05 88.05 5.8495 0.01558*

Note: * p<0.05, . p<0.10

Table IV reported the odds-ratios for each variable of the selected model. Results show that the probability that firms invest in a simple online presence for its brand in China increases for big brands, for companies operating in many countries and for luxury firms, but it decreases of 6.2% for each year spent in China. Thus, evidence supports H1a , H2a and H3a.

13

Concerning the use of social media, a multiple logistic regression model was run using the local social media as dependent variable in order to test our hypotheses H1b, H2c, H2d and H3b. Results do not strongly support these hypotheses, since the model is not significant. We tested other models using the same method explained before, by comparing the complete model with others in which we deleted one variable at time. The variance analysis suggests that only the luxury variable is significant; thus, we have applied the model using it as unique dependent variable and calculated the odds ratio. Results are shown in table V: H3b is marginally supported (p<0.1).

Table IV – Multiple logistic regression model’s odds-ratios Odds-ratio

Turnover 1.003Number of Countries 1.024Number of years in China 0.936Luxury 4.023

Table V – Selected regression model for local social media adoptionOdds-Ratio

(Intercept) 0.183Luxury 0.364

Summarizing the results, we can conclude that the likelihood that a firm adopts a social media profile in China is higher if it does not operate in the high end of the market (luxury). The sales, which represent the dimension of the possible investments on the brand, and its international experience are not antecedents to adopt social media.

Discussion

Focusing on Italian brands, our findings suggest that all the three identified factors - firms or brand size, experiential knowledge and luxury positioning - have an impact on the decision to adopt a Chinese website to promote them. However, while sales, generic international experience and belonging to the luxury sector positively affect the adoption of translated websites, surprisingly one of the variable to test the experience level- market-specific experiential knowledge - seems to go on the opposite direction.

On the contrary these variables have low or no impact on the decision to create a brand profile in the local social networks. It can be confirm that in the adoption of Internet some stages can be noticed and developing social network profiles represents a step further in the innovation process. The Internet adoption is the most important from a strategic point of view, so the

14

antecedents affect it and not the second step (the social media profile creation) Therefore the reasons why companies decide to be present on the social media environment are to be find in other characteristics.

A more detailed analysis of our findings suggests that a relation between the sales amount and the adoption of a local website does exist. There are more big rather than small brands present in the Chinese Web world; this is probably because the former have more resources to invest and so they are able to also create the Chinese version of their websites. Such reasoning supports Walczuch, Van Braven & Lundgren’s (2000) findings concerning the existence of some barriers in adapting online marketing strategies for SMEs or for small brands. Approaching the online chinese market requires relevant investments in order to translate and transiterate the contents, and such activities are even more challenging due to differences existing between the Chinese and Western language settings. Moreover in a Country such as China where the fashion industry is still growing and cultural values are different from the Western one, firms have to provide consumers with continuously updated contents to educate them (Hartley & Montgomery, 2009), they have to explain their values using different codes and this is a time effort activities that need resources. Therefore, it is likely that small brands may not have enough resources to manage this situation. At the same time, however, our results suggest that the brand size has no impact on the decision of creating a profile in the chinese social media, which means that this is also a strategic choice and not only a decision related to resources. These findings can be related to the need of consistency, commitment and time required for implementing social network (Bulearca & Bulearca, 2010), and even big brands face difficulty in updating and sharing contents in multilingual profiles (Pariyar et al., 2014) that are not only related to communication or marketing investments.

As far as the creation of a company website is concerned, our findings also support the importance of generic international knowledge experience in the Internet adoption decision, confirming to some extent the classical internationalization model by Johanson & Vahlne (1977 and 2009). On the contrary, experience acquired in other countries played no role in the decision to create a company profile in social networks, so to go a step further in the Internet adoption process. The reason for the absence of the relationship between knowledge experience and the social network adoption may be found in the peculiarities of the Chinese social media context, since they are completely different form the Western ones and so they require very specific knowledge and competencies both considering the cultural and the language aspects. So the high distance play a big role in this decision. Generic

15

international knowledge experience is not enough to enter the Chinese social media environment, that is too different from the Western one.

The market-specific knowledge, so the familiarity with the market, which usually drives the adaptation of the marketing mix (Shneor, 2012), results to play an unexpected role in the decision to adopt a chinese website: the higher the number of years firms operate in China, the lower is the likelihood of a chinese website’s launch. Observing the data distibution, it can be argued that firms that entered the chinese market in recent years are more likely to adopt a chinese website, while firms with a long history in China tend to do the opposite.Therefore, we can suppose that, due to the consumer behavior and the high Internet penetration, entering the Chinese market nowadays requires an online presence, and companies can not avoid this. This finding supports the important role of the context in the firms decision to adopt and adapt their precence in a distant Country. China in fact is a fast moving market and the competitive conditions have been changed during the years, consequentely also the marketing and communication strategies to enter this market have to be changed. In one of the first studies about the Internet adoption, Dohlakia and Kshetri (1995) argued that as the number of firms using the website increases, it is likely that this change in the competitive environment will increase the pressure and further accelerate the Internet adoption process. Therefore it can be argued that the brands that are not first mover in the chinese fashion industries, have to cope with the competitive pressure in the new internet environment more than the others, so they are obliged to create a chinese website to be credible.

On the contrary, firms that are already known in China because they entered in the market when Internet was not so commonly used, continue to adopt the same strategy. This assumption is consistent with Morgan-Thomas & Bridgewater (2004) finding: inexperienced exporters benefit more from the Internet than the more experienced firms, maybe because they are more commitment to technology.

Finally, when entering emerging markets, luxury fashion brands find challenging to balance the adaptation to local culture and standardization to maintain the global image (Cui, Wajda, & Walsh, 2015). The purchase of luxury brands can be used to communicate social status and earn respect (Zhan & He, 2012) so it is important to create a strong brand image without any cultural mistakes. Our results demonstrate that they tend to adopt Internet as communication tool in China, but they are sceptical in using social media, since they require high level of involvement and could be dangerous for the brand image if they are not properly managed.

Our research contribute to the literature highlighting the factors that affect the decision to adopt a website or a social network profiles in a distant

16

country shedding lights on the adaptation standardization issue, adding some new findings in this debate specifically related to the Internet in the emerging markets. In particular, we can underline that adopting a localized website and a presence in the country-specific social media depends most of all on the context factors since the entry time together with the positioning in the market are emerged as significant factors.

Conclusion and managerial implications

Most Chinese ‘netizens’ are those who have achieved a higher income and education than the general population, thus they are more likely consumers of Italian or Western brands. So having an online presence in the Chinese market become important, most of all in these days where the Internet penetration is around 47% and it counts 642 million active Internet users among Chinese population5. Moreover the e-commerce and m-commerce are growing fast thanks to its safe payment system and delivering efficiency. They will became one of the main touchpoints for the fashion brands. As far as the luxury is concerned, consumers are increasingly comfortable to interact with this kind of brands, and they also want to make transactions online so in the next future being part of the online environment will be not a choice to survive in the Chinese market.

Our findings reveal that only the 66.67% of firms have created a Chinese website. This results can be perceived as good if compared with the 54.60% related to the 2010 Global 500 companies discovered by Chang (2011), but it is still not enough considering:

the industry. Fashion brands, and luxury brands among others, need to create strong image and Internet is one of the main tool to communicate this image in distant country where the physical presence is not that high;

in China fashion brand consumption tackle the problem of counterfeit products (Li et al., 2012), so it is important to create an official website to compete with unofficial information and brand imitations and to give the opportunity to consumers to gain the right values and associations. To avoid that Chinese consumers purchase counterfeit products unintentionally, because of the lack of brand knowledge, Internet and the social media context could be a solution to educate them.

5 http://wearesocial.com/special-reports/digital-social-mobile-worldwide-2015 [Access date: 25/01/2016]

17

Chinese people’s attitude on the web and their shopping online appetite.

Despite of their resources, Italian firms have to consider Internet as brand touchpoints at least investing on the website translation.

From our findings, we can assume that the context of the market in the entry time could affect the future online marketing strategies and this depends on the pressure companies face with in new distant markets. Companies that enter in the market before the Internet penetration explosion tend to be not online in the Chinese web, meaning that few resources have been invested on this channel. This pattern should be avoided, companies that have a long history in China should reconsider their marketing strategies as far as the Internet is concerned, since their later followers/new competitors, contrary to them, tend to invest more on their online presence. Chinese consumers use Internet every day to compare products and to buy them, so companies should not miss the opportunity to increase their visibility, especially if they already have a physical presence and they are well known by the Chinese population.

Lastly, results show that firms with smaller sales seem to be more cautious than big firms, but despite the barriers they could encounter in the online world, the use of web applications represents a big opportunity for them to drive their international expansion, since the costs of such tools are lower compared to other marketing investments.

They have to estimate the possible costs and to invest in skilled human resources, since social media management requires time and experience. However, they should not avoid such social applications, since they could obtain many advantages if they manage to use them properly. As argues by Hartley & Montgomery, (2009), the fashion system in China is still in a developing stage where workforce (i.e. photographers) is still in the process of learning to interpret the visual codes of the fashion world. New organizational models should be developed in order to cope with this situation, for example in emerging markets a way could be working with local web agencies as partner and not only as services providers because they need to educate them as far as the brand values and communication codes, but at the same time they need to be educated as far as the local culture is concerned.

The last point raising from our research that can be useful to address some implication is referred to the luxury positioning and its negative impact on social media profile creation. This is consistent with the global image that luxury brand usually want to create, but in the case of China a ‘glocalization’ approach where global brand values are incorporated into local consumption habits can be necessary due to the aforementioned characteristics of the fashion system, the Internet and the language.

18

Limitation and future research

Our research has some limitations, linked to the small and specific context considered and to the limited sample used, so findings cannot be generalized. Moreover, there are other elements which may affect the strategic choice related to the entrance in a culturally distant market, such as for example the level of business and the involvement in the market. In fact, such decisions are influenced by many different factors, all of which are potentially interdependent, and thus the effects of the single variables is not easy to isolate.

In addition, we checked only for the chinese version of the website. Another interesting future issue could be to analyze the factors that affect the adaptation - and not only the adoption or simple translation (Shneor, 2012) - of the website using the content analysis.

Moreover, Internet can be adopted in internationalization strategies not only as a marketing tool to enhance the involvement of firms operating in a foreign market, but also as a distribution channel for companies that are not physically present in the country: this refers to the e-commerce trend, which is another key aspect of the Internetalization phenomenon. Thus, it could be interesting to analyse the differences in the adoption of Internet and social media for these two different purposes.

More research on this topic is needed in order to highlight other antecedents of the adoption of a local presence in distant markets. For example analyzing the motivations to adopt the Internet or focusing on the individual analysis level, so applying a behavioral theories such as the Theory of Reasoned Action or Technology Acceptance Model.

References

Anderson C. (2010). In The Next Industrial Revolution, Atoms Are The New Bits. Wired.com, 1-13: http://www.wired.com/magazine/18-02/ [access date 09/08/2014].

Becker, K., Nobre, H., & Kanabar, V. (2013). Monitoring and protecting company and brand reputation on social networks: when sites are not enough. Global Business and Economics Review, 15(2/3), 293-308, http://dx.doi.org/10.1504/gber.2013.053075

Belch, M., & Belch, G. (2014). Advertising and Promotion: An Integrated Marketing Communications Perspective. McGraw-Hill Education.

Berthon, P. R., Pitt, L. F., Plangger, K., & Shapiro, D. (2012). Marketing meets Web 2.0, social media, and creative consumers: Implications for

19

international marketing strategy. Business Horizons, 55(3), 261–271. doi:http://dx.doi.org/10.1016/j.bushor.2012.01.007

Bingley, S., Burgess, S., Sellitto, C., Cox, C., & Buultjens, J. (2010). A classification scheme for analysing web 2.0 tourism websites. Journal of Electronic Commerce Research, 11(4), 281-298.

Bulearca, M., & Bulearca, S. (2010). Twitter : a Viable Marketing Tool for SMEs ? Global Business and Management Research: An International Journal, 2(4), 296–309, http://dx.doi.org/10.4018/ijom.2013100104

Chang, H.-J. (2011). Multinationals on theWeb: Cultural Similarities and Differences in English-Language and Chinese-LanguageWebsite Designs. Journal of the American Society for Information Science & Technology, 62(6), 1105–1117. doi:10.1002/asi.21515

Chao, M. C., Singh, N., Hsu, C.-C., Chen, Y. N., & Chao, J. (2012). Web Site Localization in The Chinese Market. Journal of Electronic Commerce Research, 13(1), 33–49.

Cho H., & Tansuhaj P. S. (2013). Becoming a Global SME : Determinants of SMEs’ Decision to Use E-Intermediaries in Export Marketing. Thunderbird International Business Review, 55(5), 513–530. doi:10.1002/tie

Chu S., Kamal S., & Kim Y. (2013) Understanding consumers' responses toward social media advertising and purchase intention toward luxury products, Journal of Global Fashion Marketing, 4(3), 158-174, http://dx.doi.org/10.1080/20932685.2013.790709.

Constantinides, E., & Fountain, S. J. (2008). Web 2.0: Conceptual foundations and marketing issues. Journal of Direct, Data and Digital Marketing Practice, 9(3), 231–244. doi:10.1057/palgrave.dddmp.4350098

Cooke, M., & Buckley, N. (2008). Web 2.0, social networks and the future of market research. International Journal of Market Research, 50(2), 267–292.

Crampton T. (2011). Social Media In China: The Same, But Different. China Business Review, 38(1), 28-31.

Cui, A. P., Wajda, T. A., & Walsh, M. F. (2015). Luxury brands in emerging markets: a case study on China. Enterpreneurship in International Marketing, 25, 287–305. doi:10.1017/CBO9781107415324.004

Dahnil, M. I., Marzuki, K. M., Langgat, J., & Fabeil, N. F. (2014). Factors Influencing SMEs Adoption of Social Media Marketing. Procedia - Social and Behavioral Sciences, 148, 119–126. doi:10.1016/j.sbspro.2014.07.025

Daniel, E.M. and Grimshaw, D.J. (2002). An exploratory comparison of e-commerce adoption in large and small enterprises, Journal of Information Technology, 17(3), 133-47. doi:10.1080/0268396022000018409

20

Del Aguila-Obra, A. R., & Padilla-Meléndez, A. (2006). Organizational factors affecting Internet technology adoption. Internet Research, 16(1), 94–110. doi:10.1108/10662240610642569

Dholakia, R., & Kshetri, N. (2004). Factors Impacting the Adoption of the Internet among SMEs. Small Business Economics, 23(4), 311–322. doi:10.1023/B:SBEJ.0000032036.90353.1f

El-Gohary, H. (2010). Expanding TAM and IDT to Understand the Adoption of E-Marketing by Small Business Enterprises: An Empirical Investigation. International Journal of Customer Relationship Marketing and Management (IJCRMM), 1(3), 56–75.

Eriksson, K., Johanson, J., Majkgard, A., & Sharma, D. D. (1997). Experiential Knowledge and Cost in the Internationalization Process. Journal of International Business Studies, 28(2), 337–360. doi:10.2307/155258

Farrar L. (2012). Brands Rush To Tap China’s Web Boom. Women's Wear Daily, 203(36), 1-1.

Gandolfo A., Lupi L. (2014). Social network branding: la politica di marca nell’era delle reti sociali digitali, Mercati e Competitività, Vol 2., 151-175, http://dx.doi.org/10.3280/mc2014-002008.

Garvin, D.A. (1993). Building a learning organization, Harvard Business Review, Vol. 71, pp. 78-91.

Godey, B., Pederzoli, D., Aiello, G., Donvito, R., Wiedmann, K., & Hennigs, N. (2013). A cross‐cultural exploratory content analysis of the perception of luxury from six countries. Journal of Product & Brand Management, 22(3), 229–237, doi: 10.1108/JPBM-02-2013-0254.

Harris, L., Rae, A., & Grewal, S. (2008). Out on the pull: how small firms are making themselves sexy with new online promotion techniques. International Journal of Technology Marketing, 3(2), 153–168, http://dx.doi.org/10.1504/ijtmkt.2008.018862.

Hartley, J., & Montgomery, L. (2009). Fashion as consumer entrepreneurship : emergent risk culture, social network markets, and the launch of “Vogue” in China. Chinese Journal of Communication, 2(1), 61–76.

Jahn, B., & Kunz, W. (2012). The Role of Social Media for Luxury Brands—Motives for Consumer Engagement and Opportunities for Business, Identitätsbasierte Luxusmarkenführung, Springer, 221–236, http://dx.doi.org/10.1007/978-3-8349-4060-5_14.

Johanson, J., & Vahlne, J.-E. (1977). The Internationalization Process of the Firm-A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8(1), 23–32, doi: 10.2307/254397

Johanson, J., & Vahlne, J.-E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of

21

outsidership. Journal of International Business Studies, 40(9), 1411–1431, doi: 10.1057/jibs.2009.24.

Johanson, J., & Wiedersheim-Paul, F. (1975). The Internationalization Of The Firm — Four Swedish Cases. Journal of Management Studies, 12, 305–322. doi:http://dx.doi.org/10.1016/S0304-405X(00)00069-6.

Kim, A. J., & Ko, E. (2010). Impacts of Luxury Fashion Brand’s Social Media Marketing on Customer Relationship and Purchase Intention. Journal of Global Fashion Marketing, 1(3), 164–171, doi:10.1080/20932685.2010.10593068.

Kraus, S., Meier, F., Eggers, F., Bouncken, R. B., & Schuessler, F. (2016). Standardisation vs. adaption: A conjoint experiment on the influence of psychic, cultural and geographical distance on international marketing mix decisions. European Journal of International Management, 10(2), 127–156. doi:10.1504/EJIM.2016.074468

Li, G., Li, G., & Kambele, Z. (2012). Luxury fashion brand consumers in China: Perceived value, fashion lifestyle, and willingness to pay. Journal of Business Research, 65(10), 1516–1522. doi:10.1016/j.jbusres.2011.10.019

Lowe N., & Alistar N. (2012). A Precarious Business. Communication World, 29(6),30-32.

Ma, L. (2013). Electronic Word-of-Mouth on Microblogs : A Cross-cultural Content Analysis of Twitter and Weibo. Intercultural Communication Studies, 3, 18–42.

Mangold W.G., & Faulds D. J. (2009). Social Media: The New Hybrid Element Of The Promotion Mix. Business Horizons, 52(4), 357-365, http://dx.doi.org/10.1016/j.bushor.2009.03.002.

Mathews, S., Healy, M., & Wickramasekera, R. (2012). The Internetalisation of information, knowledge, and interaction components of the firm’s internationalisation process. Journal of Marketing Management, 28(5-6), 733–754, http://dx.doi.org/10.1080/0267257x.2011.560887.

Morgan-Thomas, A., & Bridgewater, S. (2004). Internet and exporting: determinants of success in virtual export channels. International Marketing Review, 21(4/5), 393–408, doi: 10.1108/02651330410547108

O’Reilly T. (2005). What Is Web 2.0. O’Reilly.com, 1-5Okonkwo, U. (2009). Sustaining the luxury brand on the Internet. Journal

of Brand Management, 16(5-6), 302–310, doi: 10.1057/bm.2009.2 Öztamur, D., & Sarper, İ. (2014). Exploring the role of social media for

SMEs : as a new marketing strategy tool for the firm performance perspective. In 10th Interntional Strategic Management Conference, Vol. 150, 511–520. doi:10.1016/j.sbspro.2014.09.067

Pariyar, A., Murakami, Y., Lin, D., & Ishida, T. (2014). Content Sharing in Global Organization : A Cross-Country Perspective. In 2014 ASE

22

BigData/SocialInformatics/PASSAT/BioMedCom Conference, Harvard University, December 14-16, 1–10.

Perri, A., Checchinato, F., & Colapinto, C. (2013). The hidden costs of going global: insights from firms’ entry into foreign markets. Working Paper Series. Department of Management, Universita Ca’ Foscari Venezia.

Petersen, B., Welch, L. S., & Liesch, P. W. (2002). The internet and foreign market expansion by firms. MIR: Management International Review, 207–221, http://dx.doi.org/10.1109/emr.2003.24941.

Rao, S. S., Metts, G., & Monge, C. A. M. (2003). Electronic commerce development in small and medium sized enterprises: A stage model and its implications. Business Process Management Journal, 9(1), 11-32, http://dx.doi.org/10.1108/14637150310461378.

Rogers, E. (1983), Diffusion of Innovations, The Free Press, New York, NY.

Samiee, S. (1998), Exporting and the Internet: a conceptual perspective, International Marketing Review, 15, 413-26, http://dx.doi.org/10.1108/02651339810236452.

Shneor, R. (2012). Influences of culture, geography and infrastructure on website localization decisions. Cross Cultural Management: An International Journal, 19(3), 352–374, http://dx.doi.org/10.1108/13527601211247099

Sinkovics, N., Sinkovics, R. R., & Jean, R.-J. “Bryan” (2013). The internet as an alternative path to internationalization?, International Marketing Review, 30(2), 130–155. http://dx.doi.org/10.1108/02651331311314556

Strugatz R. (2012). Social Media's Issue: Does It Drive Sales? Women's Wear Daily,204(47), 1.

Upadhyaya, P., & Mohanan, P. (2009). Electronic marketplace adop- tion: A case study of manufacturing SMEs. The Icfaian Journal of Man- agement Research, 8(6), 30–40.

Vescovi T. (2011). Libellule sul drago: modelli di business e strategie di marketing per le imprese italiane in Cina. Padova, Cedam.

Vescovi, T., Checchinato, F., Disegna, M., Gazzola, & P. Wang Z. (2013). Do country of origin and brand translation methods really matter in the Chinese market? Journal of Marketing Trends, 2, 25-34

Walczuch, R., Van Braven, G., & Lundgren, H. (2000). Internet adoption barriers for small firms in The Netherlands. European Management Journal, 18(5), 561–572. doi: 10.1016/S0263-2373(00)00045-1

Walczuch, R., Van Braven, G., & Lundgren, H. (2000). Internet adoption barriers for small firms in The Netherlands. European Management Journal, 18(5), 561–572. doi:10.1016/S0263-2373(00)00045-1

23

Yeniyurt, S., Townsend, J. D., & Talay, M. B. (2007). Factors influencing brand launch in a global marketplace. Journal of Product Innovation Management, 24(5), 471–485. doi:10.1111/j.1540-5885.2007.00264.x

Yu L., & Asur S., & Huberman B.A (2011). What Trends in China Social Media. The 5th SNA-KDD Workshop’11 (SNA-KDD’11), August 21, 2011, San Diego CA USA, 1-10.

Zhan, L., & He, Y. (2012). Understanding luxury consumption in China: Consumer perceptions of best-known brands, Journal of Business Research, 65(10), 1452–1460.

24