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Level of competition
In comparison to developed nations, China is not saturated marketed. Existing markets do not offer the quality and service advantages that advanced nations offer. Latent markets also exist in certain parts of the country. Vast areas remain unexploited, and foreign investors who understand China’s incipient demands will likely meet their needs. The country has no national market, and its retail sector is still dominated by many small stalls and street vendors.
Competition from big-box sellers is not as intensive as it is in rich nations. Furthermore, firms compete based on price rather than product features. Most Chinese citizens are still poor hence their purchasing decisions will be determined by the most cost-effective item available (Tingchi et al. 362). However, an increase in affluent citizens is causing an appreciation of foreign-made commodities, especially in urban areas.
Psycho, cultural, geographical closeness
Chinese consumers are not very different from UAE consumers. Most of them are conservatives who care about saving face. Additionally, they will not tell market researchers the truth about their products, so foreigners need to observe their behavior to understand it (YeSheng and Yan 50). The country is not too far from the UAE, as such, investors will not need to spend a lot of resources when transporting commodities to China. On the flip side, the Chinese are proud of their language and use it both formally and informally. A business person from the UAE would need to learn the language or rely on a translator’s goodwill.
Potential of future demand
In the future, the market potential in the country will likely keep growing. As the US and other western counterparts try to recover from the global economic crisis, many of them will minimize expenditure. Conversely, the Chinese government may encourage greater expenditure following an increase in export revenue streams. It will make the market quite lucrative to foreign investors. Numerous affluent Chinese buyers are also developing a taste for high-end products. These individuals trust foreign-made products as they are perceived to have a higher quality. Such consumer segments will likely grow (Walters & Samiee 101). Furthermore, infrastructural support may support future foreign investment greatly.
Projections for the future growth of the Chinese market seem promising, but plenty of obstacles still exist for foreigners doing business in this nation. Acquisitions and buyouts are rarely done transparently (Delloite 3). The government controls managerial requirements, and most policies are designed to protect local businessmen over foreign players. Political, social, and economic environments may sometimes disenfranchise foreign investors.
First, the judiciary system tends to favor locals; additional requirements for starting foreign-owned businesses are quite complicated. Counterfeits are common and prevalent in almost all industries in the country. Furthermore, cases of bribery, extortion, and smuggling have pervaded various sectors of trade in this nation. High tariff charges on imported commodities make them artificially high and uncompetitive.
Nonetheless, there is a large amount of capital to use for one’s business. It is easy to find the material and infrastructural support to make and sell products in China. The lack of a national market may make it difficult for foreign traders to do business there as they have to tailor product features to the segmented local market. In essence, a foreign investor should approach the Chinese market with caution. It holds a lot of promise only if the concerned trader studies the market effectively, tailors his products to their needs, and learns how to work with locals.
Delloite. China consumer report. 2009. Web.
Tingchi Liu, Matthew, Huang Yu-Ying & Jiang Minghua. “Relations among attractiveness of endorsers, match-up, and purchase intention in sport marketing in China.” Journal of Consumer Marketing 24.6 (2007): 358 – 365. Print.
Walters, Peter & Saeed Samiee. “Marketing Strategy in Emerging Markets: The Case of China.” Journal of International Marketing 1.1 (2003): 97-106. Print.
YeSheng, Shirley and Ma Yan. “China and the United States: Market Connections and Trade Relations.” International Journal of China Marketing 2.1 (2011):45-57. Print.