doing business in china: opportunities and challenges
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Doing Business in China: Opportunities and
Challenges www.ePowerPoint.com
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China: Astonishing Numbers and Changes Foreign trade volume: $3.87 trillion USD in 2012 Foreign exchange reserve: $4 trillion USD in Mar
2014 GDP : $9.24 trillion in 2013. GDP increased 10.4% in 2010; 9.3% in 2011;
7.7% in 2012, 2013 2001 WTO membership, 2008 Beijing Olympics Game 2010 World Expo in Shanghai
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The China Opportunity Tremendous opportunities in various
industries High growth rate A large population Growth of middle class and rich Backward technologies Unmet consumer demand Cheap labor and raw materials
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Challenges of Doing Business in China
Inefficient distribution Lack of transparency Fast changing consumption patterns Strong competition Contract sanctity Over supply/capacity Protecting intellectual property rights (IPR) Corruption Bureaucracy
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Misconceptions about China’s Market “If every Chinese buys a piece of my
products, my production could last many years.”
“China has a large population. Even if a small percentage of Chinese buys my products, that would constitute a very large market.”
“Chinese consumers always prefer foreign made products.”
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Course Frame Part 1: Recognizing the Bases
for Marketing Management
Part 2: Assessing Market Orientation and Customer Value
Part 4: Offering, Delivering, and Communicating value(Product/Pricing/Placing/Promotion strategy)
Part 3: Choosing Value(Market segmentation
targeting & positioning)
Marketing EnvironmentCustomer Value/Relationship
Consumer BehaviorBusiness Market
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The marketing conceptand the development marketing in China
Part 1: Recognizing the Bases for Marketing Management
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AMA defines Marketing as an organization function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
What is Marketing ?
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Market System
Industry(a collection
of sellers)
Market(a collection
of Buyers)
Goods/services
Money
Communication
Information
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The Production-Oriented
The Product-Oriented
The Selling-Oriented
The Marketing-Oriented
Consumers prefer products that are widely available and inexpensive
Consumers favor products that
offer the most quality, performance,
or innovative featuresConsumers will buy products only if
the company aggressivelypromotes/sells these products
Focuses on creating, delivering, and communicating
superior customer value to target markets
Marketing Philosophy
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The development of the market system in China since 1949 1949-1979: A central-command economy
Marketing: politically as 'decadence' or economically as 'unnecessary and useless'.
1980-1991: urban industrial reform started (reducing mandatory plans and replacing them with guidance plan) Marketing: enthusiasm tempered by nervousness
1992-: 'Socialist Market Economy‘ Separation of government bureau from the control of
enterprises Development of new markets (commodities, finance and
capital, labor and technology) Marketing: gradually accepted
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Historical Development of Marketing Thoughts in China
Market Research 1923 U.S. —> 1988 China Marketing Conception 1957 U.S. —> 1982 China Market Segmentation 1956 U.S. —> 1992 China Consumer Behavior 1967 U.S. —> 1995 China Service Marketing 1980 U.S. —> 1998 China Relation Marketing 1983 U.S. —> 1998 China Global Marketing 1983 U.S. —> 1996 China Brand Equity 1989 U.S. —> 1994 China Customer Satisfaction 1989 U.S. —> 1995 China Marketing Communication 1993 U.S. —> 1996 China Internet Marketing 1990’s U.S. —> 1996 China Customer Relationship Management 1996 U.S. —> 1998
China
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Marketing : extensively used in all aspects of life. Advertising: preliminary indication of marketing. Growth of Market Research Industries Development of Product Quality and Quantity Product innovation Branding Service Marketing Consumer Satisfaction Internet Marketing Guanxi Marketing Logistic System Competition Growth of Private Sectors Globalization of Chinese companies
New Trends of Marketing in China
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Developing Market Strategy
3 characteristics of Core Competence: • significant contribution to perceived consumer
benefits; • can be applied in a wide variety of market; • difficult to imitate.
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Strategic Planning, Implementation, and Control Process
Measuringresults
Diagnosingresults
Takingcorrective
action
ImplementationPlanning
Corporateplanning
Divisionplanning
Businessplanning
Productplanning
Organizing
Implementing
Control
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Corporate strategic planning
Definingthe Corporate
Mission
A corporate mission should address the questions:
What is our business? Who is the customer?What is of value to the customer?What will/should our business be?
: “We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers”.
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Corporate strategic planning
Definingthe Corporate
Mission
Establishing Strategic Business
Units (SBUs)
AssessingGrowth
Opportunities
A SBU: 1. Can be planned separately;2. Has its own competitors;3. Has a manager responsible for
strategic planning.
: Beauty and grooming, household care
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Intensive Growth Strategies: Ansoff’s Product/Market Expansion Grid
4. Diversification2. Marketdevelopment
NewMarkets
1. Marketpenetration
Existingmarkets
Existingproducts
3. Productdevelopment
Newproducts
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Business Unit Strategic Planning
Business
missionGoal
formulation
Strategy formulati
on
Feedback and
control
Program formulation
and implementatio
n
External environment (opportunity
& threat analysis)
Internal environment (strengths/weaknesses analysis)
SWOT analysis
• Cost leadership• Differentiation• Focus
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SWOT Analysis of P & G’s Business in China
StrengthLeading market positionStrong brand portfolioSignificant R&D and marketing investmentRobust cash productivity
WeaknessIncreasing instances of product recallsExcessive dependent on major supermarket chainsHigher product pricesLack of China’s market insights and reluctance to change
Opportunities Urbanization and growth of rural marketThe growth of middle classIncreased investment in manufacturing capacities in ChinaAcquisition to expand portfolio
Threat Counterfeit goods Low consumption of household products per familyStrong competition : Unilever and Hengan Rise of private labels Commodity cost , currency exchange rate
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SWOT analysis
Assignment 1: Baby-first
S W
O T
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