China Report

报告ref 1

International Retailing

China Report LO2

For

Alan McCorkindale

By

Angela Graham

                                                中国

Contents Page                                        Page Number

Cover Page                                                 1

Contents Page                                                 2

Introduction                                                3

Question 1                                                 4

Various factors which can influence a retailer’s choice of market entry

Question 2                                                5-6

Mode of entry         

Question 3                                                7

Secondary Data & Primary Research in China

Question 4                                                                   8-9

Segmentation & positioning strategies

Question 5                                                                   10-11

Adapt & fine tune Retail Marketing Mix

Question 6                                                                12

Recommendation

References                                                                 13

Introduction

Opportunities and challenges faced by retailers considering China as their next destination. Report will include market entry methods, segmentation and positioning strategies, retail marketing mix and recommendations based on the report information.

Question 1

Various factors which can influence a retailer’s choice of market entry.

Risks

China is starting to open their economy in several areas but there are still restrictions on foreign company’s operating in large areas of the economy, so it is advisable to seek appropriate legal advice before entering any contract. In the past couple of years’ new legislation and regulations have been implemented leading to many obstacles to setting up a business in China, for example joint ventures are recognised as domestic entities and arbitrated in China. If in breach of Chinese law, it is directors and managers that would face liability.  Although China’ economy continues to double in size it is not a high-income country.

Costs

China has a complicated licencing process for retailers who want to set up a business and it can be a slow and costly process. On the other hand, the government support developing business formats in e-commerce with grants & funding and oversea companies could tap into lucrative opportunities.

Corporate Attitudes

Health & Safety procedures are not as important in China as elsewhere in the world and corrupt business deals with government officials is an everyday occurrence. UK laws are strict when it comes to corruption and most large companies have rules and regulations referring to this. Being head/manager of a company in China has responsibilities to employees which would not be the case in other countries, for example, socializing out of work hours with employees, sponsoring events that all can take part in taking, a general interest in employee’s personal lives.

Ref 2  

Question 2

There are numerous of ways in which a company can enter a foreign market. No one market entry strategy works for all international markets. There will be several factors that will influence the choice of strategy. The following strategies are the main entry options open to a retailer.

Franchising – a long-term cooperative relationship between two entities—a franchisor and one or more franchisees. It is based on an agreement in which the franchisor provides a licensed privilege to the franchisee to do business.

• Works well for firms that have a repeatable business model (eg. food outlets) that can be easily transferred into other markets.
• The business model should either be unique or have strong brand recognition that can be utilized internationally.
• But the company may be creating a future competition in the franchisee.

Joint Ventures - a strategic alliance where two or more parties, usually businesses, form a partnership to share markets, intellectual property, assets, knowledge, and profits.

• A form of partnership that involves the creation of a third independently managed company, (the 1+1=3 process.
• Two companies agree to work together in a market, either geographic or product, and create a third company to undertake this.
• Risks and profits are normally shared equally.

Organic Growth – strategy that involves strengthening a company using its own energy and resources. This approach to company growth is slower than others, but it has relatively low up-front costs, making it an attractive option for small-business owners who want to expand their companies but don’t have large amounts of liquid capital.