Company A’s product is engine components for engines of heavy duty trucks. Company A has decided to expand operations to an Eastern Asian company. Countries considered were China, Japan and South Korea. After careful consideration and research, the recommendation is expansion into China. The reason for this is two-fold. The first consideration is market saturation and maturity. The Chinese market is relatively young and undeveloped when compared to Japan and South Korea. There are fewer established manufacturers or distributors in China versus the power house brand names in Japan and South Korea, such as Nissan or Hyundai. Secondly, the market is robust, the economy in China is growing and is one of the largest in the developed world. Chinese consumption is at an all-time high as the economy grows and the middle class develops. This growth will produce a demand for Company A’s products that is sustainably greater than those in other Eastern markets. Finally the Chinese market values Western products in a way not comparable in Japan or South Korea. In Japan and Korea, American products are generally considered inferior and expensive. The Chinese highly value American products and will pay a premium price to obtain them.
There will be two types of customers that Company A can market engine parts to. The first type of customers are manufacturing firms that make truck engines in China and then sell the completed engines to truck makers. These firms include companies like Qingdao Seize. Company A’s specialized product will produce a higher quality component engine than currently available domestically. Company A can target the manufacturers of engines and market the product as a high end product that previously was only available to the Western market. China, with its new found wealth highly values Western products that are touted as being superior to domestically