Online channel strategies under different offline channel power structures for the Belt and Road of China

ABSTRACT

This paper explores the online channel strategies adopted by Chinese manufacturers with regard to the Belt and Road. It also investigates the effect of offline channel power structures and maritime transportation costs on online channel mode selection and pricing strategies. The offline channel power structures are classified into three types, namely, Chinese manufacturer Stackelberg (MS) structure, vertical Nash (VN) structure, and foreign retailer Stackelberg (RS) structure. Furthermore, a game model is developed among the Chinese manufacturer, foreign retailer, and cross-border e-tailer to investigate the interactions among offline channel power structures, maritime transportation costs, and Chinese manufacturers’ online channel mode selection. The results show that Chinese manufacturers’ preferences for the online agency selling mode increases correspondingly with the decrease in their market position and bargaining power. Moreover, foreign retailers can obtain higher profits in the online agency selling mode under the VN structure. However, the level of profit for foreign retailers depends on the intensity of their competition with cross-border e-tailers under the MS and RS structures. Finally, consumers in countries along the Belt and Road can obtain a higher surplus in the online agency selling mode under all of the structures.