...China research – Bullet 5 Demographics Political and legal environment in China make it very volatile for business outside of the country. China is undergoing massive urbanisation with millions (160m) of people moving from rural to urban environments. However the mass industrialisation comes with a lot of pollution costs. The urbanisation is pushing up consumption per person but also increasing income per person. Population in China is suspected to reach 1 billion by 2030. The scale and pace of China's urbanization continues at an unprecedented rate. If current trends hold, China's urban population will hit the one billion mark by 2030. In 20 years, China's cities will have added 350 million people more than the entire population of the United States today. By 2025, China will have 221 cities with one million–plus inhabitants—compared with 35 cities of this size in Europe today—and 23 cities with more than five million. For companies in China and around the world, the scale of China’s urbanization promises substantial new markets and investment opportunities. Yet the expansion of China's cities will represent a huge challenge for local and national leaders. Of the slightly more than 350 million people that China will add to its urban population by 2025, more than 240 million will be migrants. This growth will imply major pressure points for many cities including the challenge of managing these expanding populations, securing sufficient public funding for the provision of social...
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...industrialisation and it can consist of the BRIC countries, which are Brazil, Russia, India and China. Targeting an emerging market could be a good strategy. This is because if the current market the business is operating in is in saturation, it could be then justified for them to expand in to these emerging markets as this gives them an escape route away from a saturated market or if the market is in recession to allow them to maximise sales revenue and allow them to survive in a recession. This is because we see that emerging markets usually have a quickly growing middle classes with a strong economic growth meaning that they would be able to escape the worsening current market and move to sell in somewhere with a stronger economy and a larger middle class. Meaning that this middle class is more likely to have money to spend on the new businesses products or services. Also meaning that the growing middle class is resulting in a culture shift, so there could be higher demand for their products or services in the emerging market. As a consequence to moving in to these emerging markets it also means that there brand name and image is growing and becoming more well known in these new markets. We see this with JLRs move to India as the Indian company TATA motors brought JLR, with this market development strategy they then aimed their products of selling luxury cars to the growing middle class of this economy. Before they entered this market, companies that previously owned JLR could...
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...attempting to gain significant market share, the risks now outweigh the awards in China China, one of the largest economies in the world at 7.5% is continuing to grow and the population is forecast to rise higher than ever before which is a recipe for high rewards both in both the short and long term. However, using the PESTLE analysis, multinationals will understand that the environment in China is constantly changing and the risks are significantly increasing for multinationals such as wage increases which are higher than ever which is affecting the market share of some businesses due to increased costs. However businesses have to decide whether China is too big of an opportunity for them to ignore. Given the size of the Chinese economy, global brands can’t afford not to be in China in order to compete with domestic businesses in China and foreign businesses. In order to gain significant market share businesses compete by negotiating with suppliers to get the lowest costs and by increasing the demand of their products in order to achieve high revenues, ultimately leading to higher profits. However, this is increasingly becoming riskier and harder for multinationals due to rising production costs and higher wages in order to try and maintain high levels of economic growth. Foreign businesses offshore their production to China due to their low labour costs and high productivity, however China is ceasing to become a labour surplus country which is becoming a problem for some...
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...developing countries to the world economy has led to a reduction in extreme poverty. According to the World Bank, 52 per cent of people living in developing countries lived in extreme poverty in 1981. By 2011, this has decreased to only 17 percent. Large developing countries like India and China experienced rapid decreases in extreme poverty. While China experienced rapid economic growth due to globalization, it lifted 680 million people out of extreme poverty between 1981 and 2001. The significant reduction in poverty in the developing world shows the beneficial effect of globalization on poverty reduction. Globalization opened up developing countries to the world economy. Developing countries experienced substantial inflow of foreign direct investment, technological inflow and the opportunity to serve a substantial customer base in the developed countries. This led to the setting up of factories and companies that employed increasing number of workers and helped them to move out of poverty. The last few decades have been characterized by the emergence of a growing middle class in the developing countries. This has especially happened in the fast growing developing countries like Brazil and China. Over the...
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...dwindle as industrialization begins to take hold in countries previously not seen as traditional powerhouses. Worldwide, prices have risen at a rate never before seen. With a burgeoning population of middle class workers, Asia as a whole, and China and India specifically, have fueled this pricing explosion. Research shows that the development of these former 3rd world countries is responsible for a large increase in global pricing due to the high demand for steel, oil, and agricultural products. One major industry which has been affected by this shift is the steel industry. The demand for steel along with the decreased supply has caused prices to increase by 25 to 45 percent in the US market. (Van Der Schans, 2007). Several factors have coincided to deal a damaging blow to the US steel market. Firstly, China and India have become major players in the steel industry, accounting for the consumption of over 25 percent of the worldwide steel supply. Cooney found that, “China has become both the world’s largest steelmaker and steel consumer.” (2006). China’s ability to dictate the market has led to a global shortage of structural steel, and as most people are aware, when the supply dwindles and the demand increases, higher prices are inevitable. The increased demand in China and India has caused these countries to redirect their exports in order to meet their own domestic demands. Some Chinese and Indian suppliers have halted exports completely;...
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...‘A still growing but more complex China’: Current opportunities and challenges for MNCs in China 1. Introduction 2. Challenges for MNCs as they expand their footprint in the world’s second largest economy 3. Opportunities for MNCs to operate in China 4. Comments of CEOs and news articles relating to the topic 5. Conclusion and future suggestions for MNCs to successfully compete References ‘A still growing but more complex China’: Current opportunities and challenges for MNCs in China 1. Introduction An overview of China today Relationship of China and world MNCs ‘A still growing but more complex China’ Impact of global financial crisis on the relationship China in the ranking of MNCs wish-list What does today’s China hold for MNCs 2 ‘A still growing but more complex China’: Current opportunities and challenges for MNCs in China 2. Challenges for MNCs as they expand their footprint in the world’s second largest economy “Not ‘Cheap China’ any more: costs are soaring across China Business Challenges Labor shortages; due to China’s aging problem Wage inflation; country’s ageing population has changed the cost equation abruptly Conducting Regulatory successful Challenges Rise of trade protectionism Local competitors are becoming more competitive business in the world’s 2nd largest economy is increasingly Regional ‘There is more than one China’ Differences challenging Rising consumption ...
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...Barriers to Entry For many years India was largely viewed as a country to outsource operations to reduce cost and employ highly skilled workers who wage demands were lower that domestic workers. This view of India however is rapidly changing and the country is increasingly becoming known as the world’s largest potential market for goods and services. India is also expected to become a powerhouse (along with China) of middle class consumerism over the next two decades. India’s global middle class is expected to reach 200 million by the year 2020. Growth is expected to accelerate after 2020, reaching 475 million by 2030 and adding more people than the Chinese to the global middle class worldwide. A growing middle class presents a great opportunity for our company as a fast food chain as middle class citizens are more likely to spend money on fast food and eating out. But even though India presents huge opportunities for our company, there are also significant risks and barriers to entry to consider. Barriers to entry as simply forces within the foreign company that have the potential to prevent our company from being successful there. Our company will have to have a knowledge and understanding of these barriers in order to successfully become established and grow to meet profit objectives. Some barriers into India include: 1. Infrastructure: Infrastructure in such areas as electric power, roads, and telecommunications networks has not been developed. This could pose a tremendous...
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...ISEG – MBA PROGRAM | | COURSE : STRATEGIC MARKETING | | | | MAUD KAYAT – 2C | TABLE OF CONTENTS INTRODUCTION 3 1. The Ansoff Matrix 4 2. PEST Analysis of China 5 2.1 Political 5 2.2 Economical 5 2.3 Social 5 2.4Technological 6 3. The 3 V’s Business Model 6 3.1 Valued Customers – Who to serve ? 6 3.2 Value Proposition – What to offer? 6 3.3 Value Network – How to deliver? 7 4. Marketing Mix 7 4.1 Product 7 4.2 Price 9 4.3 Promotion 10 4.4 Place 11 5. Brand Positioning 13 6. The Porter Five Forces 14 7. The Value Chain 15 8. SWOT Analysis 16 CONCLUSION 18 INTRODUCTION Caroll Paris is a French ‘fashion house’ created in 1963 by Raphael Levy and Joseph Bigio. Originally the French brand was called "Les Tricots Caroll". The brand was first known for knitwear, more precisely for Shetland woolens. Then the brand expanded its range to offer entire women’s ready to wear collections. In 1986, the brand Caroll joined the group André; now known as Vivarte since 2001. This Group owns several brands such as André, La Halle aux Chaussures, Kookaï, Liberto, Minelli… In 1994 the brand changed its name to "Caroll Paris", it opens up franchises all over France and was launch on the market stock exchange. The challenge was to become a major player in the ready to wear market. In the same time, the brand changed its positioning to become a dynamic brand that offers fashion products. Today...
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...Case Study: Wal-Mart in China (2012) In 1996, China’s national economy was growing at a rapid pace. The gross domestic product reached over US$1064.4 billion, an increase of 9.7% over the previous year. To further increase and attract foreign investment, the Chinese government increased its number of experimental, special economic-zoned cities in which foreigners could operate a business. There were, however, restrictions set forward by the government, in that all foreign businesses would have to be in a joint venture or other type of cooperative agreement with at least one Chinese partner, with that Chinese partner getting a stake greater than 51%. In August 1995, Wal-Mart, the great American retain chain and Middle America success story, arrived in China, establishing a joint venture with Shenzhen International Fiduciary Investment Co, Ltc, China. In 1996, Wal-Mart opened its first supercentre and a Sam’s Club in the special economic zone of Shenzhen. In 2007, Wal-Mart acquired a 35% stake in Trust-Mart, a Taiwanese-owned chain of retail supercentres operating in the Middle Kingdom. By 2010, Wal-Mart’s presence in China grew to 189 units in 101 Chinese cities, with the creation of over 50,000 local jobs. By 2012, the company nearly doubled its presence with 370 stores in 140 cities. As the U.S. and European economies slumped in late 2011 and into 2012, the world’s number-two economy became an even more important growth market. In the first quarter of 2012, China’s...
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...Survive China’s Growing Middle Class? China’s rising standard of living and its impact on the discount retail market. Abstract This paper investigates published articles, financial information and books which discuss Wal-Mart’s recent business activities in China. The activity discussed includes Wal-Mart’s increasing impact and influence on the Chinese economy as a buyer and consumer of raw materials, a manufacturer of products, and as a retailer and employer in China. This paper discusses how Wal-Mart sources its finished products and raw materials in and from China, how Wal-Mart markets to China’s middle class, and how Wal-Mart manages China’s middle-class as both its primary customer and their source of labor in China. The intent of this paper is to provide readers with a high level understanding of how Wal-Mart is conducting business in today’s China and how Wal-Mart’s manages their exposure to the various supply chains in China, its increasing dependence on products and services sourced in China and how Wal-Mart is handling China’s growing middle-class and the nationally unionized workforce in their Chinese stores. Lastly, this paper discusses how Wal-Mart’s business strategy competes and compares with Target Stores, one of their leading competitors in the discount retailer marketplace. Keywords: wal-mart, target, china, supply chain management, sourcing, global marketplace Identification. This paper discusses Wal-Mart’s history in China and the potential...
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...NAME: TUTOR: 1. Cheap Labour China has a large unskilled workforce willing to work for low wages. In the north many farmers struggle to make an income, therefore, they are willing to move south and work in manufacturing for low wages. Therefore, despite high growth, wages have remained low. Cheap labour has also helped avoid wage inflation. 2. Government Policy The Chinese government have been keen to promote economic growth (they have been concerned about unemployment from privatised industries and agriculture). Therefore, they have kept the Yuan undervalued. This makes Chinese exports more competitive and has helped the exporting sector. The government have also kept interest rates relatively low. Low interest rates have also encouraged some irresponsible lending. 3. Raw Materials. China has good reserves of raw materials such as coal. However, for many raw materials they are net importers. This is true, particularly, for metals, oil and precious commodities.The demand from China is one of the main reasons behind the boom in commodity prices. Therefore, we could say China has experienced growth, despite having to import so many raw materials. 4. Investment from Overseas. This increases productive capacity and helps improve technological development. However, as a % of GDP investment from overseas is relatively low. 5. Education There is a growing, educated, middle class, which has enable the economy to diversify out of manufacturing. Education will be...
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...1.0 Introduction Burberry was founded in 1856 by Thomas Burberry,which is England's luxury brand. Burberry’s classic plaid (Figure 1) and the prorsum knight icon (Figure 2) are Burberry’s symbol. Burberry’s continuity product - trench coat (Figure 3) has a long Product Life Cycle and seasonal products are mainly reflecting the season's popular style trends (Moore & Birtwistle, 2004). Burberry products are divided into three categories, which are Burberry Prorsum, Burberry London, Thomas Burberry and Burberry blue and black label (Figure 4). Burberry gained customer loyalty and target profits through the use of different price range to meet its consumers’ needs. 2.0 Success of Burberry Burberry can be said to be successful by their outstanding financial performance. Burberry’s annual review 2012-2013 (2013) states that Burberry has opened 25 new stores from 2012 to 2013, 19 stores out of 25 were in emerging markets such as Hong Kong. The revenue has decreased by 15%. However, the retail and wholesale gross profit margin and net profit margin has increased to 70.6% and 17.8% respectively, which shows persistent improvements over the past 5 years (Figure 5). 3.0 Marketing Strategy Phan et al (2011) showed that Digital Marketing is Burberry’s core marketing strategy, which involves the interactive publicity, digital interactive fashion shows. Burberry used 60% of its marketing budgets on digital technology and started digital marketing since 2009. The photo-sharing site...
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...of the sales for designer handbags were counterfeit, (totaling up to $700.2 million lost from the global economy.) They were later seized. Along with the handbags were the following eight categories: Watches/Jewelry Electronics/Parts Pharmaceuticals/Cosmetics/Personal Care Shoes Movies, Compact Discs, Music Downloads Classes & How People Spend. “Many assumptions regarding the Chinese middle class market are untrue. For one, it’s not as large as many think. And its disposable income is not a sound guide to estimating sales…” In 2008, China’s population exceeded 1.3 billion people who were separated...
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...the Mckinsey Global Institute (MGI), in 1985, 99 percent of the household lived on income less than 25,00 reminbi, or $3019 per year. An estimated 116 million people in china were living less than $1 a day, by 2004 this number has been by 53 percent to just under 54 million. This has been a historical achievement in one generation. Chinas pro-market reforms and integration into the global economy has enabled China to achieve such success. As real average disposable income for households has grown 3.2 times over the past 20 years to 25,348 renminbi today, china has developed a structure of distinct income levels and the rise of the middle class. Even though there remains a huge income gap between the rural and urban population. The disposable income for people living in the rural and urban population is increasing. The diagrams on the right depict the rise in their disposal income level in urban and rural households. Due to the rapid pace of urbanization in China, the annual disposable income per capita for urban households is climbing from 1, 701 RMB in 1991 to 17,175 RMB in 2009. This is equivalent to an 10 times increase. As for rural households, similar trend can also be spotted - a 5.1 raise in annual disposable income per capita to 5,153 RMB in 2009. Subsequently, it can also be observed the growing income and purchasing power of the population in both rural and urban households indicating the improvement in...
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...Saab becomes Chinese should it rename? • Vladimir Djurovic, president at Labbrand, suggests the name might not work well in China. “We have already found in previous research projects on car brand names, that names with this term were not a favourite choice in China because they are a little too spiritual”. • Given both Labbrand’s expertise and MG’s experience, the acquisition might be the perfect opportunity for repositioning the Saab brand, especially if the product line were to change. However this move is not risk-free. • Saab’s name “萨博” is widely recognized by the Chinese audience, so renaming might mean losing loyal customers. To solve this Vladimir Djurovic, president of Labbrand, believes that “instead of renaming, Saab could consider developing a better tagline to fit the Chinese market and make the brand more vivid in the imagination of Chinese consumers”. Chivas Regal Trademark Case • Chivas Brothers failed to establish that the spirits brand was “well-known” in China before the registration of Chivas Regal clothing in 2003, which would have been grounds to deny the application.Before the 2003 registration by the Wenzhou squatter, Chivas Brothers (the brand owner) had registered the marks in a number of Classes, including 33, which includes alcoholic beverages. However, just because a brand owner registers the mark in one Class this does not automatically protect against other registrants for different goods/services or for products in other Classes. The...
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