Executive Summary
China is one country that is rich with a diverse heritage and within it there are different opportunities. Any business can benefit from having transactions within the country. China was chosen as the country of expansion because it is doing well economically. Another reason for choosing the country is it has a large number of people thus it means more clients for the company and in the long run higher profits for the firm. Furthermore the country is a good place to start the international marketing; it will be a challenge for the company to create changes with such a unique culture.
When the company will expand to this country it might face different barriers. One of which is trade barriers. The country makes sure that its local companies have a fair competition with foreign companies that is why it makes sure to restrict products and services that can introduce unfair trade practices. Another thing the company might face in the country is marketing barriers. One of the barriers for the company in china is the strict policy on advertisements. This will give the company have some difficulty in creating advertisements and afterwards showing it to people all over the country. Moreover a challenge that might be faced in the country is the competitive environment. There may be challenges from different companies in the country. The company has different competition in the said country but they are not greater than the company. Although they are companies that are not yet established in the company they can still give the company small threats.
Contents
1. Introduction
2. The country chosen
3. Main body of the report
- The country chosen for expansion
- The challenges
- The marketing strategy
4. Conclusions
5. Bibliography and References
Introduction
International marketing has great significance for both the economic development of countries and the profitability of individual business firms. In the United States the strength of its economy and its world leadership position will be largely determined by the world-wide competitive effectiveness of American business. For some American businesses, survival depends on the expansion of international markets. Marketing figures strategically in the economic development of both mature and maturing economies, but this fact has long been ignored. In the emerging nations, economic development requires not only national markets that effectively link urban and rural areas, but also the creation of wider marketing activities to generate industrial production and stimulate diversified exports (1971).
Marketing occupies a critical role in respect to the development of growth areas. Marketing is the most important multiplier of such development. It contributes to the greatest needs. In the international arena, marketing plays another significant role. It extends the domain of competitive enterprise. International marketing tends to break down nationalistic and economic barriers and to encourage economic unity. In fact, the marketing philosophy, although associated with more mature economies, maybe of greater value when applied to a country with a developing economy than to highly industrialized nations (1971).For countries at various stages of development, marketing can serve different needs, since it is involved with diffusing ideas and products that have great economic and social values. It can help to create and expand markets, increase profits, accumulate capital, balance international payments, extend production facilities, exchange primary products for machinery and equipment, and develop economic competence. In the United States, the broader economic posture is that of a commitment as never before, to a policy of increasing freedom of trade among nations. Not only a major factor in people’s way of life, marketing is also one of the exportable components of American technology.
Marketing systems can be adapted to any type of economy regardless of its state of development or inclination toward regulation (Lazer, 1971). But unlike agricultural, fishing, or manufacturing technology, marketing cannot be directly transplanted from its American base to another culture. Adaptations become extremely important. It is much easier to export marketing institutions and methods to countries that have basic cultural and economic similarities. The process of adapting American marketing technology to various countries is necessarily complicated and time consuming. Yet, many examples of successful adaptations in diverse economic climates are evident. The introduction of supermarkets into Italy, Japan, and Latin America; of advertising and instalment selling into Russia; of credit purchases into Britain, and of discount houses into France are typical.
Shaped in fact by particular cultures, marketing then influences local customs and practices. Marketing activities modify the cultural and social climate by building and challenging consumer tastes and patterns of eating, housing, dress, and recreation. International marketers represent important sources of new ideas. International marketing is one of business’s significant frontiers. Even though marketing has realized its greatest development in the American environment, the impact of its concepts and techniques has diffused to all parts of the world. However, the full effect of international marketing operations is a long way from achievement. Its influence will continue to grow as increasing numbers of companies establish operations abroad (1971).
Main Body of the report
The chosen country
Officially the People’s Republic of China, China is a country in East Asia, the world’s largest country by population and one of the largest by area, measuring about the same size as the United States. The name China was given to it by foreigners and is probably based on a corruption of Qin, a Chinese dynasty that ruled during the 3rd century B.C. China proper centers on the agricultural regions drained by three major rivers the Yellow River in the north, the Yangtze in central China, and the Pearl River in the south. The country’s varied terrain includes vast deserts, towering mountains, high plateaus, and broad plains. Beijing, located in the north, is China’s capital and its cultural, economic, and communications center. Shanghai, located near the Yangtze, is the most populous urban center, the largest industrial and commercial city, and mainland China’s leading port (1977). Chinese culture dates at least as far back as 3,000 years. Its main influences are probably more recent but even so it is one of the longest and most durable around. One of the most important influences was Confucianism. The three bonds of loyalty bound the society with loyalty to the ruler, filial obedience and fidelity of wife to husband. Chinese society today is thus the result of a long process of adaptation to changes in this cultural environment (2001). In the 1950s China’s Communist government began bringing a majority of economic activity under state control and determining production, pricing, and distribution of goods and services. In 1979 China began implementing economic reforms to expand and modernize its economy. The reforms have gradually lessened the government’s control of the economy, allowing some aspects of a market economy and encouraging foreign investment; however, the state-owned sector remains the backbone of China’s economy. China refers to this new system as a socialist market economy.
As a result of the reforms, China’s economy grew at an average annual rate of 10.2 percent in the 1980s and by 10 percent annually in the period of 1990–2001. This was among the highest growth rates in the world. However, the reforms also have caused problems for China’s economic planners. Income gaps have widened, unemployment has increased, and inflation has resulted from the extremely rapid and unbalanced development (2003). In 2001 China’s gross domestic product (GDP) was ,159 billion. The size of the country’s economy, which is comparable to that of Canada (4 billion), makes China a significant economic power; despite this, it remains a low-income, developing country because it must support a huge population of more than 1.2 billion. In 2001 China’s per capita GDP was just 0, compared to ,340 in Canada. Industrial activity that includes manufacturing, mining, and construction contributes the largest percentage of the country’s GDP, amounting to 51 percent in 2001. Transportation, commerce, and services together accounted for 34 percent. And agriculture, together with forestry and fishing, contributed 15 percent (2003).
China was chosen as the country of expansion because it is doing well economically. China will be a great place to start the expansion because the company will not encounter problems with the country’s economy. The country doing well economically means that people can afford their products and services. Another reason for choosing the country is it has a large number of people thus it means more clients for the company and in the long run higher profits for the firm. If the company will invest in expanding in the country more people will know of its products and services. More people knowing the company means that it will have more profits. Furthermore the country is a good place to start international marketing because it will be a challenge for the company to create changes with such a unique culture. The country is known to have a unique and traditional culture which gives some business a hard time adjusting to. The challenge for the company is initiate changes without hurting any of the countries’ culture and pride.
The challenges
Trade Barriers
China’s imports are subject to state planning and control through various means, including import licensing and quotas. China administers a complex system of import controls. Under the system, imports are classified into three categories. The first is contraband goods. These goods, which are not allowed to be imported, include articles, materials, publications of a pornographic, reactionary, or superstitious nature and gambling devices. The second group are the restricted goods. These items are subject to state planning, and an import license must be obtained before importing. The last group is the general goods. General goods include goods that are not classified as contraband or restricted goods. No import license is required to import these goods. Although the import control regimes have undergone significant liberalization in recent years, many goods are under import restriction/licensing (1999).
Trade barriers can make it difficult for the company to import the different supplies and products they need in running the business. Since the company might need supplies in order to create products; they might be forced to import supplies. There can also be instances where the company has to import their products; this can also the company losing time due to the barriers. The country makes sure that its local companies have a fair competition with foreign companies that is why it makes sure to restrict products and services that can introduce unfair trade practices.
After China’s Memorandum of Understanding (MOU) with the United States in 1994, 784 products remained under license or quota restriction, while restrictions on 340 products have been or are being phased out. Products that still require import licensing include rubber products, wool, passenger vehicles, and hauling trucks. Some 42 categories of commodities remain affected by quotas, including watches, automobiles, and motorcycles. Major problems that constitute barriers to imports are lack of transparency, difficulty in determining the appropriate standard, use of different standards on imports from different countries and different standards from domestic goods, and adoption of unique standards that differ from international standards. Imports in certain sectors are restricted. In 1994 China announced an automotive industrial policy that includes import substitution requirements. This policy calls for production of domestic automobiles as substitutes for imports (1999). An agreement between USA and Hong Kong can affect the company’s expansion into China through making the said expansion easier. Since Hong Kong is a sovereignty of China any decisions together with another country applies to both locations. The agreement between Hong Kong and US can be shared with Hong Kong thus trading can be easier for the countries and all can acquire the benefits they desire.
Marketing barriers
One of the barriers for the company in china is the strict policy on advertisements. The country has a very traditional culture. It rejects advertisements that violate the country’s certain traditions and beliefs. This will give the company have some difficulty in creating advertisements and afterwards showing it to people all over the country.
Competitive environments
Nowadays, changing competitive environments are forcing companies in almost every sector to re-examine their organizational form. There seems to be a growing consensus among managers that the path to future forms of organizing leads away from traditional prescriptions advocating top-down control, rationality, and hierarchy. Managers and practitioners are heralding flexibility as the new hallmark of organizational excellence. Moreover, the business literature on organizational change is replete with prescriptions and directives with regard to the design and management of new organizational forms. Characteristics of such new forms seem to include flatter hierarchies, decentralized decision making, greater tolerance for ambiguity, empowerment of employees, capacity for renewal, and self-organizing units (1999). When talking about competitive environments these are the different competitors the company has to face. The company has different competition in the said country but these competitors are not yet established in the company thus the company can still gain a better stature against the competitors. The company given the right strategy and techniques can outdo the competition in the country. The competitors have only been in the country for a small amount of time and they have not established themselves and they are on the process of adjusting.
Marketing Strategy
In large corporations the principal marketing functions precede the manufacture of a product. They involve market research and product development, design, and testing. Marketing concentrates primarily on the buyers, or consumers. After determining the customers’ needs and desires, marketers develop strategies that are designed to educate customers about a product’s most important features, persuade them to buy it, and then to enhance their satisfaction with the purchase. Where marketing once stopped with the sale, today businesses believe that it is more profitable to sell to existing customers than to new ones. As a result, marketing now also involves finding ways to turn one-time purchasers into lifelong customers. Marketing includes planning, organizing, directing, and controlling the decision-making regarding product lines, pricing, promotion, and servicing. In most of these areas marketing has overall authority; in others, as in product-line development, its function is primarily advisory. In addition, the marketing department of a business firm is responsible for the physical distribution of the products, determining the channels of distribution that will be used, and supervising the profitable flow of goods from the factory or warehouse ( 1967). Building useful customer profiles usually involves putting together a large body of information.
Information about customers that may be important in planning marketing strategy can come from several sources, including suppliers and channel members, marketing research, and company personnel with market connections. Further, building customer profiles can be complicated by the fact that separate profiles may be necessary for each market segment in the product-market structure. Therefore, it is essential to systematically gather and record information that will be integrated into the customer profile (1994).
In marketing a product, service or a company strategy is used. Using a strategy counters the problem that might be encountered. There are different marketing strategies that the company can use in expanding in the country. One is through initiating soft opening in the country. The company can start transaction in the country and opening experimental branches in the country. By doing this the company can see the different problems that they might encounter and they can observe how the people will accept the new company’s products and services. Another marketing strategy that the company can use is different advertisements in the television, and internet. By doing this, even before the company gets to expand in China; people in there will be able to recognize the company and what it does thus the company can acquire the different benefits that it desires. Lastly a marketing strategy that the company can use is initially merging or tying up with companies already established and popular in the country. Merging involves letting the other companies sell some of the companies’ products or having joints wherein both companies have their products sold. In doing this the company can use the popularity of the other companies and introducing themselves to the local consumers. By engaging in such endeavour the people can have first hand experience of the firms’ products.
Conclusion
The country was chosen because is it has a large number of population thus it means more clients for the company and in the long run higher profits for the firm. The country is a good place to start the international marketing. Major problems that constitute barriers to imports are lack of transparency, difficulty in determining the appropriate standard, use of different standards on imports from different countries and different standards from domestic goods, and adoption of unique standards that differ from international standards. China makes sure that its local companies have a fair competition with foreign companies.
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