Comparative Country and Product Market Attractiveness: Indonesia and China Report

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Table of Contents

Political, cultural, economic, social, and technological environments
Product market analysis
Competitive analysis
Buyer analysis
Entry strategy
Reference List

Environment	Indonesia	China
Political and legal environments	-Republic system of government -Indonesia is a republic state and it has adopted a civil legal system. -The governance system is comprised of the parliamentary, executive, and legislative branches (Index Mundi2014). -Fishing in Indonesia is controlled by laws, which are set by the state. – The country’s political environment has over 9 major political parties (Index Mundi2014). – The country experiences significant pressure from social groups, trade unions, environmental, and business groups such as the Indonesian Forum for the Environment and the Indonesia Corruption Watch (Index Mundi2014). -Fishing activities in Indonesia are controlled by the Ministry of Marine Affairs and Fisheries	-China is a communist state and it has adopted an absolute monarchy system of government -China has adopted a civil legal system. -Foreign fishing companies must seek approval from the Chinese cabinet. -The country is dominated by one political party, viz. the Chinese Communist Party -No significant political opposition exists within the country.
Social and culture	-Indonesia’s culture is comprised of diverse ethnic groups such as the Sundanese 15.5%, Japanese 40%, others 44.4% (Central Intelligence Agency 2014a). -The official language in Indonesia is Bahasa. -The country’s total dependency ratio is estimated to be 51% (Central Intelligence Agency2014a).	-The country is comprised of different ethnic groups, viz. Zhuang 1.3%, Han Chinese 91.6%, and minority groups 7.1% (Central Intelligence Agency 2014b). -Mandarin is the official language in China. -China’s total dependency ratio is 37.4%.
Economic	-Indonesia’s GDP is estimated to be $ 1.285 trillion. -Real GDP growth rate of 2.5% (Central Intelligence Agency 2014a) -Rate of inflation – 7.7%	-The country’s GDP is estimated to be over $ 13.39 trillion. -Real GDP growth rate of 7.7% (Central Intelligence Agency 2014b) Rate of inflation -2.6%
Technological	-There are over 42,258, 824 Internet users in Indonesia. -User growth rate in 2014 was estimated to be 9% (Internet Live Stats2014). -Telecommunication infrastructure -the country has over 37.983 million active telephone lines -The country’s telephone system is comprised of domestic service lines and international telephone service (Central Intelligence Agency2014).	-Internet access is 46.03% of the total population. -Telecommunication infrastructure – China has nurtured a first-class telecommunication network (Reuters 2011). -There are over 278.86 million telephone lines in use. -Joint venture – major telecommunication companies are adopting the concept of a joint venture in an effort to share infrastructure and lower the cost of network development.

Product market analysis

Market	Indonesia	China
Size	-Production –in 2012, the country produced 15.2 million tonnes of seafood. -The market ranks 4^thamongst the biggest seafood producers(Global Business Guide 2015)	-Production – China accounts for over 25% of the total seafood production. -The country accounts for over 60% of the total global aquaculture production.
Growth rate	-Seafood production has increased by 4.1 % over the past two decades.	– The industry is characterized by a compound annual growth rate [CAGR] of 4.6%, which is expected to be sustained by 2018 (Cavanagh & Brann 2014).
Segments	-Indonesia is experiencing a change in lifestyle due to the high cost of living, which has been spurred by poor economic performance and the enactment of the Food Self-Sufficiency Law.	-China is experiencing a considerable increment in the number of middle-class citizens due to the high economic growth rate in the country.
Size of segment and growth rate	-Indonesians are increasingly adopting a healthy lifestyle. Moreover, consumers in Indonesia are adopting ready-to-cook food products.	-A sizeable number of consumers in China are adopting a healthy lifestyle by consuming quality brands. -Increase in the number of middle-class citizens has led to the growth in the number of citizens consuming products offered by convenience stores.
Product lifecycle phase	-Growth phase -Seafood industry in Indonesia is undergoing rapid growth due to high demand within the local and export markets (Global Business Guide2014).	-Growth stage -High demand for seafood amongst consumers is projected to drive the rate of market growth. –This aspect indicates that the market is characterised by a high growth potential.
Supply by import	Indonesia imports seafood from different countries such as Thailand 8%, Taiwan 4%, China 22%, Japan 21%, Malaysia 9% Pakistan 6%, and Australia 1% (Global Business Guide 2015).	-China imports over 500,000 tonnes of seafood per year
Source of supply	Import commodities – foodstuffs, machinery and equipment, fuel, chemicals. -Import partners – China, South Korea, Japan, Germany, Singapore, Thailand, and the US (Central Intelligence Agency 2014a).	Import commodities- aluminium, crude oil, copper, iron ore, soya beans. -Import partners – European Union, Brazil, South Africa, Japan, Taiwan, and ASEAN.
Distribution channels / infrastructure	Airports – Indonesia ranks 10^thglobally with reference to the number of airports [673 airports] Railway network covers 5,042 kilometres Major seaports include Tanjung Perak, Panjang, Krueg Geukueh, Banjarmasin and Kotabaru (Central Intelligence Agency2014a).	Airports – The country is ranked 14^thglobally with regard to airport infrastructure [507 airports] Railway network covers 86,000 kilometres. -Major seaports include Tianjin, Ningbo, Qingdao, Dallan, Shenzhen, and Qinhaungdao.

Competitive analysis

Competitors	Indonesia	China
Presence of competition	– Numerous companies deal with seafood in Indonesia	–There are over 26 commercial fishing companies in China.
Type of competitors	The industry is characterised by local and foreign firms.	The seafood industry in China is dominated by a number of local and foreign firms -The government does not restrict entry of foreign firms; however, they are required to adhere to the country’s legal stipulation.
How many competitors	The Indonesian seafood market is characterised by innumerable competitors that serve the local and the international seafood market.	China has innumerable commercial seafood fishing companies.
Major competitors	Major commercial fishing companies in Indonesia include Anguilla Indonesia Corporation, Ansen, Aquarium Indonesia, Asiakrab, Bargus Sardines, Blue Ocean International, CV, Kas, CV Kharisma Shrimp, CV Pandapotan, CV Bojong Indah Exports (Trade-Seafood Industry Directory2015).	China’s commercial seafood industry is dominated by a number of firms such as South China Aquatic Company Limited, Baiyang Aquatic Group Incorporation, H.W International Company Limited, Zhangzhou Yanfeng Aquatic Product & Foodstuff Company Limited, Forest Brothers Seafood Company, Sea-Star Aquatic Food Company, Unison Group, and Zhejiang Huangguan Foodstuff Company (Central Intelligence Agency2014b)
Foreign or locally based	-Competitors are foreign and locally based	competitors are foreign and locally based
Positioning strategies	-Competitors are increasingly adopting the concepts of differentiation by focusing on high-quality seafood products.	-The industry players in China are increasingly adopting differentiation strategies and focusing on offering customers high-quality seafood.

Buyer analysis

Buyer	Indonesia	China
Buyer behaviour	-Consumers in Indonesia are experiencing income recession due to an increase in unemployment over the past two years. -Most Indonesians have experienced a decline in their income due to the recent recession (Global Business Guide 2015).	–China has experienced a considerable economic growth, which has led to increment in purchasing power amongst consumers.
Target market and segmentation strategies	– The seafood market in Indonesia is comprised of customers belonging to diverse income group. -Only 11.7% of the total population is below the poverty line	–Segmentation dimensions – demographic, behavioural, geographic, and psychographic segmentation. -With reference to demographic segmentation, Austral Fisheries will segment the market based on age and income level.
Consumption rate	-Consumers in Indonesia are progressively developing a culture of seafood consumption. -Seafood consumption in Indonesia is estimated to be 21kilograms per person every year.	-Seafood consumption is expected to increase to 35.9 kilogrammes per year by 2020(The Fish Site2013)
Trends in consumption	–Commercial seafood product companies in Indonesia have not fully optimised the market potential.	-The Chinese are progressively inclining towards consumption of product safety and hence their demand for quality seafood.
Behaviour	–Most Indonesians are increasingly considering seafood as the most valuable source of protein.	Consumers in China have become more conscious of taste and quality in their consumption process. -Increase in the consumers’ purchasing power has led to a considerable change in consumer behaviour. -Consumers appreciate ready-to-cook and frozen seafood.

Entry strategy

The above analysis shows that the Chinese seafood market is more attractive as compared to Indonesia. In its quest to enter the Chinese market, Austral Fisheries should adopt a number of market entry strategies. Some of the strategies that the company’s management team should consider include:

Direct exporting – at the initial stages, Austral Fisheries should adopt the concept of direct exporting. This strategy will enable the company to gain optimal knowledge of the Chinese market. For example, the firm will be in a position to understand the prevailing market dynamics, hence minimising the likely business risks in the Chinese market. Subsequently, the firm will be in a position to adjust its operational strategies optimally, hence promoting the likelihood of attaining market success.
Foreign Direct Investment – from the PEST analysis above, it is evident that the Chinese government does not restrict foreign companies from entering the country’s commercial fishing industry. Thus, Austral Fisheries should adopt the concept of foreign direct investment. However, the firm should ensure that it complies with the rules and regulations implemented by the Chinese government.

Reference List

Cavanagh, M & Brann, D 2014, China free trade agreement a pearler for Australian seafood industry, Web.

Central Intelligence Agency: The world fact book, Indonesia 2014a, Web.

Central Intelligence Agency: The world fact book, China 2014b, Web.

Global Business Guide: Agriculture; Indonesia’s aquaculture and fisheries sectors 2015, Web.

Index Mundi: Indonesia government profile 2014, Web.

Internet Live Stats: Internet users by country; Indonesia internet users 2014. Web.

Reuters: Research and markets: China-telecommunications infrastructure and forecast 2011, Web.

The Fish Site: South China catching the trend in sustainable fisheries production 2013, Web.

Trade-Seafood Industry Directory: Seafood Indonesia 2015, Web.

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