Western company in China-Guangzhou Case Study Solution
Introduction
The market of china has been an increasingly important and potential market for the western businesses. Despite the difficult economic climate and governmental policies along with cultural differences, the penetration of western businesses has increased in the china, mainly in Guangzhou, Shanghai, Beijing, Shandong and Zhejiang. The economy of these regions have increased in double-digits and is expected to exceed the growth of US by 2020 (Crawford, 2015).
Though the market of China seems uniform for every region, the markets differs in terms of policies and culture adaption, that creates hurdles and challenges for the western businesses to penetrate aggressively in market.In such situations most of the business look for coastal areas to start the business since the markets are geographically scattered with high rate of middle class, high income and mature markets in terms of customer behavior.
Geographical Location Benefits- Guangzhou
Guangzhou is a major financial and commercial center in southern china and holds the significant position in overall country. The city is ranked as fifth among all large and small cities in terms of Competitiveness.The major reason is the market stability and the competitive position in terms of political policy making hub and the coastal access to the region.Under the market identification analysis, Guangzhou has shown the increase in the GDP BY 8% which shows the increase in the economic activities, supported by the increase in national income and expenditure on good and services (Research, 2015). The major industries booming in Guangzhou are petrochemical, Electronics, Textiles and automobiles. Though the entry into the petrochemical industry is restricted by the Chinese governmental policies and requires high bureaucratic approvals for the license, the western companies find it easy or relatively easy to enter through the electronics or textiles industry into Guangzhou(Hedley, 2014).
Western company in China-Guangzhou Harvard Case Solution & Analysis
Market parameters and Restrictions
The company selected to enter the Guangzhou market is Electronic based. Such business will have certain competitiveness and opportunity in the market due to increased market GDP which has increased from 11.7 in 2009 to 1679 in 2014.This also shows that the per capital income and the market growth rate has also moved in the positive directions, making the business profitable.In addition to this, the per capital disposable income has also increased in the Guangzhou market, making the customers to spend more on durable goods and services. The company will have increased number of sales in the futures since according to the trend the population of the region has increased from 8.32 million to 12.3 million in 2013 from 2008 respectively (Kroeber:, 2013).The increased population depicts the opportunity of increased consumption in the market.Lastly., the consumer base in Guangzhou is rational and mix, due to the coastal region, the city has multi-type of consumers ranging from the local Chinese to tourist to other residents. This makes the market an attractive platform as any product or service can work and progress due to highly diversified market needs and preferences (Xinhua, 2016).However, the market is also posited to the certain restrictions, that includes the quota system in business,any business entering in the Chinese market should have certain amount of Chinese partnership that protects the local businesses. In addition, there is import restriction on the electronic products along with the restriction or barrier of hiring the right set of employees in the organizations.Since the culture and value differ in the market, the maintenance of same culture and value in the western company remains a challenge. Lastly, china has “first-to-file” policy in the market that means any Chinese business can register the patent for a business even if it is not the original producers or manufacturer. The particular trend is a restriction for the business, since it threatens the western businesses to establish the competitive edge in the market where the preference is put to Chinese manufacturers. Also, there are distribution restrictions in the region, which mean that the company cannot distribute the products outside of Guangzhou and would require the new process and legislation to operation other regions or nearby cities.Such restriction hinders the progress of the western businesses since the local businesses receives the competitive edge of operating in allover china in limited cost as compared to western business units. (LI, 2017).Hence in order to enter the Chinese market, the western business needs to develop the alliances in shape of JV, partnerships or mergers &acquisitions to promote and sustain the business in the market........................
This is just a sample partial work. Please place the order on the website to get your own originally done case solution.
Related Case Solutions & Analyses:
Walt Disney Co.: The Entertainment King
Super Project
Moncton Flight College
House of Tata: Acquiring a Global Footprint
Cocoa Petes Chocolate Adventures (Abridged)
Sandvik Coromant Recycling Concept
PEPSICO’S TURNING POINT: ESTABLISHING A ROLE IN A SUSTAINABLE SOCIETY
CASE ANALYSIS: USEC INC
General Electric after GE Capital
AutoZone
