Rationalfor China
China is a country located in the southeast of the Asian continent. It’s ideal location in the southeast of Asia, access to navigable coastal line and bordering about 15 countries makes it to be one of the major emerging economic markets in the world.
Evaluation of China market(relevant)
Most of China’s population is familiar to candies, including confectioneries and chocolates, and this will form a good entry ground for Haigh’s company into the Chinese market. The demand for these products is still growing steadily due to the increase in population and increase in demand for chocolate and its products by the rural community in China.
- Legal factors: Registration of a company’s legal entity, Finding distributors in the Chinese market, certification and licensing of products must be done for products to be sold in China. Other legal factors are; regulations on foreign exchange, import duties and taxes as well as labor laws compliance.
- Political factors: Lack of political stability in China, the possibility of the expulsion of foreign investors and imposing heavy taxes for foreign investors.
- Cultural factors: Diversity in culture due to a large population, taste preference and cultural requirements and values.
- Economic factors: The direct investment in China by foreign companies, reservation of foreign exchange by the Chinese government and control of inflation rates. Lack of infrastructure, such as transport and communication in some areas.
Competitive environment
Substitute products from other existing companies as well as established business competitors should be considered by Haigh’s company. Bargaining power of customers and suppliers will also provide a competitive environment. These factors will make the company come up with the most profitable approach in the Chinese market.
Barriers/risk:
- Substitute products
- Stiff competition from established industries
- Cultural setback
- Lack of infrastructure in some areas
Opportunities/motives:
- The growing demand of chocolate products
- Availability of cheap labor
- Experience in the chocolate market
- Economies of scale
According to Zeefer Consulting (2011), most of China’s population is familiar to candies including confectioneries and chocolates and this will form a good entry ground for Haigh’s company into the Chinese market. It is necessary for Haigh’s company to identify all the factors that may necessitate it to enter the Chinese market so as to maximize the return on its investment (Sen & Sally 2005, p.92). The company must also understand the cultural requirements of the people of China such as dressing, taste, food and communication styles (Chow 2007, p.22). Legal requirements such as registration, labor policies have to be considered by Haigh’s company before entering the Chinese market.
Reference List
Chow, C 2007, China’s Economic Transformation, Blackwell Publishers, London.
Sen, R & Sally, R 2005,’Whither Trade Policies in Southeast Asia’, The Wider Asian and Global context, Vol.22 no.1,pp.92-100.
Zeefer Consulting 2011, China Candy & Chocolate Industry Research and Statistics. Web.