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2016 | Book

The Promise of China Read chapter Read first chapter

Market Entry in China

Case Studies on Strategy, Marketing, and Branding

Editor: Christiane Prange

Publisher: Springer International Publishing

Book Series : Management for Professionals

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book compiles brand new case studies on the intricacies and market entry strategies of different companies in China. The sheer speed and scope of China’s growth makes it unique and investment opportunities are very attractive. Despite the potential, many western companies fail in their market entry strategies. This book traces the major sources of failure and uses cases to illustrate how firms can better cope with the challenging Chinese market. With a special focus on marketing, positioning, and branding, this book presents issues and solutions of both large multinationals and small niche market players.

Table of Contents

Frontmatter

Introduction

Frontmatter
The Promise of China
Abstract
Since opening up to foreign trade in 1979, China has become the land of promise for many Western companies. China has emerged as a major global player and today is the largest economy in the world. However, the economic crisis in 2008 has also affected China, with exports and foreign direct investment declining and growth slowing down. Real GDP fell from 10.4 % in 2010 to 7.8 % in 2012, to 7.4 % in 2014. Future growth will largely depend on the government’s activities to boost consumer demand, accelerate the transition to a free market economy, and engage in innovation rather than remaining the ‘low cost factory of the world’. This chapter gives a short overview on the historical milestones of China’s developments, its reform strategies, and its future ambitions.
Christiane Prange
Internationalizing to China: Challenges and Pitfalls
Abstract
For companies, the historical development of China has held many promises, but now several conditions are making life more difficult. Competition of local brands is intensifying and profits are shrinking as a result of the economy’s slowdown. Several powerful corporations have gone confidently into the People’s Republic, only to stagger out a few years later, battered, confused and defeated. Of course, no defined formula for unlocking the Chinese market exists. Companies that have been successful in meeting their goals are usually those with a thorough and in-depth market and resource analysis, a clear understanding of entry mode choices, consumer behavior and the need for an adaptive strategy.
Christiane Prange
Marketing Decisions in China: Positioning, Branding, Marketing Mix
Abstract
Before the late 1970s, marketing was of no concern to Chinese companies because they took orders from the state and fulfilled predefined production and distribution targets. Alongside economic reforms, consumer income has become higher and the middle-income market has continuously increased, thereby paving the way for foreign products that are more expensive and of higher quality. Currently, the market is rapidly bifurcating between a still large (but less affluent) mass market and a new, even bigger group of upper-middle-class consumers. Companies need to adapt their marketing strategy to these requirements, in particular branding decisions, positioning, and marketing mix.
Christiane Prange
Overview of the Book
Abstract
The following case studies in this book deal with different industry sectors, which are very attractive for foreign companies. Case studies highlight a particular market entry or market development scenario and show how companies tackled specific challenges. Each case starts with a case synopsis to introduce the reader to the problem. Several questions, tools, and overall themes help to prepare for case analysis and better understanding. Cases can be used to acquire in-depth knowledge on industries and companies as well as to discuss with interested people.
Christiane Prange

Automotive Industry

Frontmatter
Audi and the Chinese Market: A Success Story
Abstract
Audi, a major actor in the ‘premium’ car market, appears to be highly successful in China, which has become the company’s first market worldwide. The company has acquired an important experience on international markets and entered the Chinese market in 1988. Since then, Audi has continuously developed its sales in China and has also established several production facilities. Today, competition in the ‘premium’ segment is strong, and German competitors BMW and Mercedes also follow ambitious development plans in China. The Audi brand thus has to multiply its efforts to remain the market leader in this segment.
Sylvie Hertrich, Ulrike Mayrhofer
Can PSA Peugeot Citroën Succeed in China?
Abstract
The case study presents and evaluates the strategy of the French automobile maker PSA Peugeot Citroën in the Chinese market. Though PSA was one of the pioneers entering the Chinese market, it seemed to barely enjoy a first-mover advantage. As compared to competitors such as GM, the company’s performance decreased under the rapid development of the Chinese automobile market. The case study is mainly based on secondary data acquired from the company’s annual report, industry reviews, and analysis, and online articles.
Zhuomin Qin

Retail Industry

Frontmatter
Marks & Spencer: A Global Expansion to Acquire Lost Momentum?
Abstract
Marks & Spencer is a global food & fashion retailer. The company is almost 120 years old and is regarded by several business scholars as the leader of contemporary management practices in the twentieth century. It was experiencing, perhaps, one of its most glorious periods during late 1990s when it was struck with the obstacle of globalization. The company seemed to be ill-prepared to tackle the challenges of international marketing but was still determined to correct the situation. The case investigates how the company can adapt to the new challenges and how to manage its business in China.
Umair Ahmed
IKEA in China: A “Glocal” Marketing Strategy
Abstract
The present case study examines a strategic issue encountered by IKEA, the giant Swedish furnish company, while expanding into the Chinese market. After years from its entrance in the Asian country, IKEA was still struggling to achieve positive finiancial results. A lack of understanding of the local peculiarities of the market prevented the company from implementing an adequate targeting strategy and occupying a strong competitive position in the market. As a consequence, the global marketing strategy adopted proved to be a failure in the Chinese market. IKEA was thus forced to reconsider not only its marketing strategy but also the universality of its business proposition.
Veronica Giunta
China’s Retailing Graveyard: A Case Study of TESCO
Abstract
Many foreign firms have entered the Chinese retail market, lured by the prospect of a rapidly growing middle class. However, difficulties arise due to the inability of retailers to truly understand the country. In 2013, Tesco announced it would partner up with China Resource Enterprise (CRE), after the retailer had tried to crack the Chinese retail market for 9 consecutive years. The case follows a series of events that led to Tesco’s eventual withdrawal from the Chinese retail market.
Pauline Cosijn

Fashion, Luxury, and Play

Frontmatter
Take the Opportunity to Pilfer a Goat: Lessons from Gieves & Hawkes
Abstract
Gieves & Hawkes (G&H), a time-honored British bespoke gentleman’s tailor expanded to China, which was a turning point in their history—not because it did not work out, but because they were by far more successful than expected. As a market entrance strategy they decided to work with a Chinese distributor. They selected the Hong Kong-based company Trinity Limited, who introduced the brand to the Mainland in 2006. In 2012 Trinity operated already operated 100 G&H boutiques in China. However, it remains open in how far their growth objectives are compatible with the changing consumer preferences. A central question for G&H is: How can they manage the trade-off between growth and exclusivity to ensure a successful development of their brand in China and beyond?
Klaus Heine, Katharina Kübrich, Jaihak Chung
HTH’s Exploration in China
Abstract
HTH is a high-end home furnishing fabrics “editor”. Since it was a subsidiary of a global famous luxury group Luxury consumption in the emerging economies, especially in China, kept growing in a relatively high speed. The management team of HTH realized that the demand was getting saturated in developed countries. They thought that it was time to explore the business in emerging economies, where the market demand grew rapidly. HTH made China their first trial. They planned to conduct a complete market research and then enter the market with effective and sustainable strategies.
Dong Bian
Master International Franchising in China: The Case of the Athlete’s Foot
Abstract
Franchising in China is a relatively new and growing phenomenon, which has gained momentum since the 1990s. Among the franchising pioneers in China are large and well-known food and beverage brands, such as KFC and McDonald’s. Less well known, but equally important, are the non-food retailing and service industries, which also made inroads in China using franchising. One such example is the case of the Athlete’s Foot Company. This American company has been a major competitor in the athletic shoes and sportswear sectors globally, made early entry into China using master international franchising, and, consequently, ran into problems indicative of the issues companies that expand internationally using franchising often encounter.
Ilan Alon
Mattel’s Second Attempt to Crack the Chinese Market: Will China Embrace the American Barbie Doll This Time?
Abstract
When Mattel entered the Chinese market for the first time, it encountered major difficulties due to lack of localization, overestimation of its brand popularity, wrong pricing strategy, and failure to understand the different perception of toys and Chinese culture in general. They failed to capture the Chinese market with the over-the-top and poorly executed House of Barbie store in Shanghai. Mattel still believes in the potential of the Chinese toy market and is therefore currently looking for a new strategy to re-introduce Barbie to the Chinese consumers.
Britt Kühne

Beverages and Food

Frontmatter
TPresso: Is the Tea Machine Too Cheap for the Chinese Market?
Abstract
TPresso is an automated tea system produced by the Swiss company Monodor. It builds on the success story of Nespresso in the coffee capsule market and now introduces a high-end tea machine that uses capsules in order to make tea. Monodor was founded in 1991 by Eric Favre. Eric originally invented Nespresso coffee capsules for Nestlé in 1976, but then left the company to start his own business. Having successfully developed the idea of the tea capsule, Eric and his wife Anna-Maria decided to launch the Tpresso capsule first in China, i.e., before entering their Swiss home market. Will they succeed?
Christiane Prange
Coca-Cola in China: Will Their Brands Survive in This Challenging Market?
Abstract
China’s soft drink market has been changing rapidly. The world’s leading beverage company in carbonated soft drinks (CSD), Coca-Cola, will have to adjust their market strategies for the Chinese market, as this growth potential market will need a different approach compared to the Western countries. This case study will give a view of the Chinese soft drink market and the challenges Coca-Cola needs to face and overcome in order to continue to stay ahead in the Asian market. As Chinese consumers shift towards a healthier life style including non carbonated soft drinks such as ready-to-drink teas, juices and milky flavored beverages, the question is how the Coca-Cola Company’s number one brand can succeed and remain successful in the largest country of the world with a population of 1.3 billion?
Patricia Schnitger
Danone–Dumex in China: The First Drink of Milk
Abstract
Danone, the French food giant has a longstanding presence in China. It entered the Chinese market as a precursor as early as 1987. However, its interest into China’s infant formula market was quite recent. In 2007, Danone acquired International Nutrition Co., Ltd., which possessed the brand Dumex, one of the leading infant formula brands in Asia. Thanks to Dumex, China has become the largest market for Danone in baby nutrition, accounting for 4–5 % of its total company sales. A series of new regulations issued by the government sent a clear signal that Chinese authority was set to consolidate the infant formula industry and provide support for big domestic firms. The worsening regulatory environment and intensifying competition made Danone realize that it could no longer rely merely on Dumex. The company saw Dumex’s sales tumble as a result of the scandal.
Hua Li, Yao Chen Grenot

Summary and Outlook

Frontmatter
Preparing Business Activities in China
Abstract
Companies may encounter a variety of problems when entering China. These problems cut across all stages of environmental and marketing research (environmental, company, product, consumer, etc.) and need to be solved in order to pave the ground for successful operations in the country. A systematic analysis of environmental, corporate, consumer and marketing issues is required as a preparation. While many problems result from differences in culture, the main challenge is to understand the shift from emphasizing contradictions to balancing opposites.
Christiane Prange
The Future
Abstract
What is the future of China? For many people, this question already seems to indicate that China’s future is at risk with concerns, among others, focusing on factual slowdown, this year’s stock-market plunge, and increasing purchasing divergences between rich and poor people. The current development indicates that China’s economy is in a steady slow growth but is heading for better with an economy moving away from pure exporting and instead focusing on services and innovation. Overall developments of China’s economy evidently precede answers to the main questions of this book: What’s the future of marketing in China? What is the role of premium-branded Western products? What is the future of foreign multinational firms in China?
Christiane Prange
Backmatter
Metadata
Title
Market Entry in China
Editor
Christiane Prange
Copyright Year
2016
Electronic ISBN
978-3-319-29139-0
Print ISBN
978-3-319-29138-3
DOI
https://doi.org/10.1007/978-3-319-29139-0