What Determines the Success of Direct-selling Firms in China’s Healthcare Industry?

Abstract

From 2006 to 2018, a total of 91 direct-selling enterprises received licenses from China's Ministry of Commerce (MOFCOM). Direct-selling sales accounted for about 50% of the healthcare market in 2016. Other market shares are occupied by drug stores, E-commerce and retailers. Six out of the top eight companies in sales in this industry are direct-selling companies. There is a research gap for finding the inside drivers of direct-selling companies being more successful in healthcare industry compared to traditional company in terms of their sales. This dissertation provides constructive suggestions for developing a successful direct-selling healthcare business in China, which will help direct-selling companies to grow sustainable in China, help the traditional companies to recognize its competitive advantage gap with direct-selling companies, and help Chinese government to grow healthcare industry and address its employment problems. This dissertation aims to explore the main inside resources and capabilities of the direct-selling (DS) enterprises in the nutrition and healthcare industry which caused them to perform better than companies in traditional channels (TC) from the internal resource-based view (RBV) and dynamic capabilities (DC) perspective. Executive interviews served as the research method for this dissertation. The concluding chapter integrates insights from literatures and interviews to outline five important factors (social factors, organizational behavior, marketing, strategy, and information technology) together with corporate culture which leads direct-selling companies to be more successful in the healthcare industry than traditional companies. One of the most important findings is that healthcare companies require different resources and capabilities when they are at different stages of their life cycle. The five resources and capabilities have different degrees of importance in affecting the performance of direct-selling companies and traditional companies during their early stage, development stage and mature stage. One conclusion that needs to be emphasized is that strategy plays a key role in affecting corporate performance. As regards strategy, 90% of the interviewees agreed that corporate culture is the most important explanation for a company’s better performance. It is a foundation for all corporate functions and activities including financing, operation, investment, and other activities. It affects who the company is going to hire, retain, and develop in the organization. It also attracts customers with similar beliefs, values, and visions. China has a population of 1.4 billion today. How to provide wellness to such a huge population and generate job opportunities for such a large population are challenges faced by the Chinese government and people. This research discusses policy implications by explaining key factors in developing a successful healthcare business in China. For example, direct-selling as an important marketing channel in the Chinese healthcare industry can provide millions of jobs and protect people from pandemics and other diseases.

Date of Award	1 Aug 2023
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Bryan Lukas (Supervisor)