Market expansion vs. intensified competition: Overseas supplier’s adoption of blockchain in a cross-border agricultural supply chain

Abstract

Imported agricultural product is not necessarily of higher quality than local product (e.g., pork containing ractopamine). Therefore, to improve brand image and increase market share, many overseas suppliers have adopted or are planning to adopt blockchain, where the production process without ractopamine can be securely monitored and tracked by customers. In this paper, we formulate the overseas supplier’s tradeoffs among the cost of blockchain adoption, the expanded market potential, and the intensified competition with the local supplier. Both the overseas product and the local product are procured and resold by a common e-tailer such as JD Worldwide. We compare the profits of all the supply chain parties to identify the “win–win–win” opportunities if the overseas supplier adopts blockchain. Interestingly, we find that the e-tailer tends to determine high procurement prices for both the overseas and the local suppliers if the former’s cost of blockchain adoption exceeds a unique threshold. With mild competition and low blockchain adoption cost, both the e-tailer and the overseas supplier are better off with blockchain, but the local supplier’s preference is just on the contrary. Therefore, “win–win–win” situation does not exist, while Pareto improvement between the overseas supplier and the e-tailer can be expected if the overseas supplier adopts blockchain.