Analysis Of Denmark'S Footwear Brand Ecco Internationalization Strategy

The December 22nd news is going on.

Starting from a small town in Denmark, a small European country, through many years of international layout, it eventually established itself as the leading brand in the world footwear industry and became a well deserved global brand, thereby avoiding the collapse of the Danish footwear industry in the process of industrial pfer, thus forming the characteristics and advantages of Danish shoemaking.

The theoretical foundation of Ecco internationalization

After about forty years of development, Ecco has jumped to the seventh largest footwear manufacturer in the world, and has set up more than 4000 stores in the world. Its products are exported to 46 countries.

Its largest export market is North America, followed by Europe. In recent years, it has become the darling of the Chinese market.

By analyzing and summarizing the internationalization of Ecco, we can clearly see the imprint of the international production compromise theory.

The theory is derived from Professor Denning, a professor at the University of London. The theory argues that the reason why multinational corporations invest in foreign direct investment is determined by three factors, namely, ownership advantage, internalization advantage and location advantage.

Advantage is an advantage of enterprises, mainly from the possession of resources or other special elements by enterprises, mainly answering why pnational corporations invest in foreign countries. The advantage of internalization is that enterprises maintain the advantage of enterprises in the enterprises in order to avoid the impact of imperfect competition, and actually maintain the advantages of enterprises in the enterprises. In fact, they answer the question of how multinational companies are going to invest abroad. The pfer of ownership advantage to foreign subsidiaries and branches can gain more profits than direct sale and pfer to local enterprises, and direct investment will happen. Location advantage refers to the more favorable conditions that a country provides for foreign enterprises to invest and set up factories compared with another country, in fact, it answers the question of where multinational companies are going to invest directly. Ownership

Denning believes that the three factors that decide the foreign direct investment are interrelated and closely related.

Enterprises must have these three advantages at the same time to engage in beneficial FDI activities.

Ecco's overseas steps

According to Denning's theory, location advantage actually determines the direction of multinational investment overseas.

Because capital always flows to make more money.

For foreign investment, its standards are generally low cost, high efficiency and punctual delivery.

Especially for some labor-intensive industries, such as shoemaking, labor cost is the preferred factor, which also leads to the gradient pfer of the footwear industry.

In fact, Ecco's international investment process is also a gradient pfer.

In 1963, Ecco was a small business with 46 workers.

Three years later, its products began to export to Finland, Norway and Sweden, and exported to Russia in 1967.

With the increasing demand of consumers and the continuous expansion of the market, Danish local production has gradually failed to meet the demand, and the local raw materials and labor costs are relatively high.

Therefore, in order to reduce costs and further expand production capacity, Ecco invested in factories in South American countries rich in natural resources and low labor costs in Brazil in 1974, and began its first step in the process of globalization. In Brazil, building factories also opened up a closer source of production to the United States (North America), which is the largest export market.

However, according to the development needs, Ecco does not fully follow the cost advantage and will adopt the strategy of reverse investment.

In 1982, Ecco signed a licensing agreement with a Japanese company to produce Ecco brand shoes in Japan.

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There are two reasons for this. First, Japan has a stricter restriction on imports. Through this method, it can bypass trade barriers and avoid the problems caused by direct export products. Second, Ecco needs a market with high income and information, while Japan is in line with that requirement.

In 1984, Ecco was also close to its culture and customs, but with low labour costs and easy access to southern Europe, Portugal invested and built factories.

This not only further expands the production capacity, but also allows the production area to be directly oriented to the European market, with low labor and pportation costs, thereby reducing the sales cost of the enterprise.

Since 1990s, with the continuous improvement of Ecco company's sales ability, the company has further stepped up its pace of expanding production and investing overseas, and shifted its vision to Asian countries with abundant natural resources and lower labor costs, and set up factories in Indonesia, India, Thailand and China successively, and regarded China as an extremely important strategic position in the future development (mainly from China's huge potential market, cheap labor force, numerous talents, stable political environment and a series of preferential policies to attract foreign investment).

Internal support for Ecco internationalization

Generally speaking, the first enterprises to engage in pnational operations are often those who have inventions, patents or made significant technological innovations in China.

In order to occupy overseas markets and prevent copying from others, they need to establish branches in the sales market.

In order to monopolize new technology, semi manufactured products and other intermediate products, reduce production costs and avoid host country trade protectionism, they also need to invest and build factories overseas.

As a multinational company, Ecco is no exception.

Since its establishment in 1963, through a period of expanding production and exporting to foreign countries, Ecco began its internationalization development process in 70s of last century, and gradually became a multinational company with the characteristics of pursuing global market.

As mentioned before, ownership advantage is an advantage of enterprises, mainly from the possession of resources or other specific elements, including technology advantages, enterprise scale advantages, organization and management advantages, capital and currency advantages.

Technical advantage: Ecco's technical superiority is mainly manifested in the development of products and the high technology of production means. The application of industrial robots in production is a typical example.

Ecco has the world's leading robotics system and fully automated factories. For years, its development and production has been computerized.

It can be said that Ecco fashionable, comfortable and practical high quality shoes are simply impossible to produce by traditional techniques and methods.

Every year, Ecco will invest huge amounts of money in research and development of new materials, new processes and new equipment.

In 1980, for the first time, ECCO introduced the high tech -DESMS sole manufacturing machine for making soles directly into silicone shoes.

In 2001, ECCO also worked with experts from University of Copenhagen to create a revolutionary walking shoes RECEPTOR, which is closely related to biomechanics. It has been patented for its unique technology.

Scale advantage: with the continuous expansion of production scale of Ecco company and the continuous reduction of unit product cost, the company has gradually achieved cost advantages, so its efficiency of various production factors has also been fully utilized.

In addition, economies of scale also enable ECCO to make better use of pportation, communications facilities, financial institutions, natural resources, and so on, so as to achieve external economies of scale.

Organization and management advantages: Ecco is headquartered in Denmark, its R & D, control, logistics and management, sales and marketing center.

Ecco realizes the management of its overseas subsidiaries and branches through comprehensive planning, organization, control and coordination among these centers.

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Ecco's advantage in organization and management is most evident in its ability to organize and produce two networks worldwide.

In terms of production, the company is mainly to achieve low cost and overcome barriers to entry into other production areas, and it is more prominent in sales.

So far, Ecco's sales network has been around 46 countries and regions in the world, successfully overcoming and circumventing trade barriers in some countries.

Capital advantage: Ecco company's entry into overseas market is an inevitable trend.

With the continuous expansion of Ecco's domestic production and export, its strength is growing and capital ownership is increasing.

With the increasing popularity of Ecco brand, its ability to raise funds from banks and other channels is also increasing.

In order to seek higher capital gains, Ecco also has to constantly seek expansion to overseas markets.

These factors have become an important driving force for Ecco to invest abroad.

It can be said that Ecco has pferred ownership advantage to its subsidiaries and branches abroad through outward direct investment, enabling the company's ownership advantage to internalize, avoiding the adverse effects of imperfect competition in the external market on the resource allocation and operation of enterprises, and enabling the company to allocate resources with its own control procedures, so that the monopoly advantage of the company has been maximized.

The path of internationalization is not simply that products or services enter the international market. The Chinese shoe companies aspire to internationalization must choose the right international road and machine according to their own development stages and the actual situation of enterprises.

Ecco's internationalization strategy is quite different from that of LV, Ferragamo and other luxury brands. It also creates a global brand.

As there are no two identical leaves in the world, the experience can not be copied completely, the patterns can not be completely copied, but there are always some essential intersections. I sincerely hope that Chinese shoe enterprises can get the essence of the eight party in the process of going global brand, and refine it into Dan and achieve self.