Tag Archives: china

Market Analysis

China Should Offer More Open And Fair Market Environment

According to China Euro Chamber of commerce’s report in 8th Septemper, chinese market barrier protection is more and more serious, the members of chamber of commerce are facing a more and more closed market, China government need to provide every market participant a fair market environment, and offer a chance for the enterprise to achieve sustainable development.

” China government have confirmed that it needs more new grow motive prower for Chinese enonomy development, and the economy frame also need to be adjusted, the twelfth 5 year development plan also mention the industry upgrade and the development of service and green economy model. ” Chamber of commerce said.

the chamber of commerce also claim that these plan is correnpond to the sustainable development target, it is also the challenge to Europe companies’ Service and green economy development, Europe companies are now facing more opportunity in chinese market.

Chairman of chamber of Euro Commerce Davide said that china show her aggressive side in the twelfth 5 years development, it also raise Euro Chamber of commerce’s expection toward chinese market, cause Europe enterprise development need the power from china’s growth.

But Davide also mention in the same time that China need to reform and open their market more deeper, and remove the market barrier. the competition can only be cultivated in this way, it can also stimulate the private company, small company and china economy’s development power.

as we know, compared with a few decades ago, Chinese market is more open. China goveronment welcome and encourage foreign company to develop their company and business in China. the friendly attitude toward foreign company provide them a lot of advantage, and as we know, China domestic company, not the small company and private company, but the Public official enterprise, they have more advantages, the resource, technology, Fund they have is far more than other private company. this is what we call the unfair market. just as the Euro Chamber of commerce say, small and private company also need more resource to develop their business.

offering an open and fair company is good for both China and Europe countries. China is the developing country which mean China need a lot of foreign companies which is have more advanced technology and mangement system to invest in China. For Europe foreign companies, China’s cheap larbor force and other kind of resource will keep their products more competitive in the market, at least it will be competitive in price.

Market Analysis

China Market Entry Strategies – Bypassing 1st Tier Cities

The first decade of reform and opening up in China saw large multi-national companies pave the way with big investments in all aspects relevant to their industries. Famous quotes such as “the risk not to be in China is bigger than the risk to be in China” from Heinrich von Pierer, the CEO of the Siemens AG from 1995 to 2005, were typical of a time when large capital investments were deemed necessary to enter the Chinese market.

As average wages have increased and consumers possess more disposable income and are willing to spend their hard-earned wages on modern products, more small and medium sized companies from around the world have entered the Chinese market importing products ranging from French cosmetics to German paint, from Ukrainian Vodka to Malaysian fruit juice.

As recently as a decade ago, entering the Chinese market was synonymous with entering the Beijing, Shanghai, or possibly the Guangzhou markets. It meant understanding the potential of a few select regional markets, as only those markets were believed to be profitable. The result has been a massive increase in marketplace competition coupled with the increased sophistication of 1st tier city consumers. New advertising campaigns continue to attract legions of curious consumers and their willingness to try new products is high; however, brand and product loyalty for many product categories continues to remain low.

Market Entry Strategy in China

The breakneck speed of the development of consumer markets in 1st tier cities such as Beijing, Shanghai and Guangzhou has led to a dynamic saturation of these markets by a constantly changing abundance of similarly-perceived products coming from around the globe. The term “dynamic market saturation” has been used to describe the high turnover of products entering the 1st tier city markets, all chasing after the same consumers although the size of the market in terms of the number of consumers remains fairly stable.

The vastness of China and the sheer size of the population mean that opportunities still abound for companies interested in entering this market. However, regardless of the product category, a passive market entrance that relies on the sheer number of potential consumers in China to flock to any and all products is no longer enough. A strategic decision-making methodology is now essential for determining whether or not to take the plunge in China.

Research in 2nd Tier Cities

Bypassing the highly competitive 1st tier markets is a viable option for many companies and can offer numerous rewards; in fact, it should be seriously considered. A recently concluded market research study carried out by Labbrand focused on understanding the feasibility of a new vodka brand to enter the Chinese market by bypassing the 1st tier markets, and identifying areas of consumption which go beyond the competitive battlefields of the nightlife and entertainment venues of the 2nd tier markets. In short, the objective of the study was to understand which vodka products from the client’s portfolio are suitable for whom, and where they are most likely to be consumed.

The scope of the study included a semiotic analysis of baijiu (1.) codes, video ethnography, and qualitative consumer focus groups with regular drinkers of baijiu and other alcohol in Chengdu, Shenyang and Wuhan. The focus groups were organized in restaurants together with a meal in order to allow for a thorough product tasting. The following key points were addressed in the consumer market research:

* General understanding of spirits and consumption habits,

* Consumption occasions (specifically for hotels, restaurants and cafes),

* Vodka category understanding,

* Brand name test,

* Taste test ,

* Packaging design test.

The project was completed with a brand positioning and strategy workshop to develop a compatible positioning of the brand for China.

Semiotic Analysis

The semiotics phase consisted of identifying the positioning of different Baijiu brands, the main codes used in communication and an analysis of various bottle styles currently found in the market place. The semiotic analysis identified the key axis for positioning in China. For Baijiu brands, codes used in communication were positioned along an axis ranging from power and achievement to universalism, tradition and heritage to hedonism and stimulation. The bottle designs were classified from power and status to universalism, from classical to modern, as can be seen in the diagrams below.

Data Collection and Recommendations

The focus groups revealed that in comparison to their 1st tier city counterparts, knowledge of foreign alcohol was limited among small city consumers. Foreign alcohol types were not differentiated, for example many participants did not know the difference between vodka and wine. Perceptions regarding drinking occasions and behaviors also varied. Within Chinese liquors, consumers would often buy the most expensive baijiu to have a drink with their boss, but purchase an inexpensive liquor to enjoy with their friends. With regards to foreign alcohol, beer was considered to be a casual drink that could be enjoyed with friends over dinner, whereas wine, specifically red wine, was considered more sophisticated and romantic. Foreign hard alcohols were associated with clubbing and being cool and trendy.

The idea of having a glass of whisky for enjoyment was not present among respondents. Purchases of foreign alcohol were based mostly on promotion and availability, while the reasons given focused on wanting to be trendy or garner the admiration of peers.

Information from the video ethnography and consumer focus groups also helped refine the client’s understanding of the target consumer and how they can best be engaged. Further recommendations included key areas identified as requiring improvement, namely the product name and packaging. The semiotic analysis also offered clear findings regarding dominant and emerging packaging and bottle codes.

Labbrand also made several comparisons and recommendations regarding potential distribution channels of interest for or client. By focusing on consumption occasions and locations, new restaurant types currently not considered a priority by major foreign brands were identified as potentially viable for introduction of the clients Vodka brand. For example, a vodka brand could develop a partnership with a Western-style restaurant positioned mid-market managed by a Chinese single proprietor. Premium alcohol brands are unlikely to target this type of outlet, yet a lot of consumers could be reached through this restaurant channel.

Conclusion

There is a vast amount of information available regarding Chinese consumers; however, most of these studies often forget to mention that their research was limited to a few 1st tier cities and possibly some quantitative statistics provided by the statistics bureau of China. A major learning for our client was that their understanding of the Chinese market and the results from the research were unique and required them to re-evaluate their market entry strategy. 1st tier and 2nd tier consumers are very different. Product understanding, market exposure, needs and expectations will be different in different product categories. Only through a well-formulated brand strategy based on comprehensive market understanding can brands, large or small, domestic or foreign, hope to build brand equity to succeed in the long run in China.

(1.) Baijiu (c��e�’; pinyin: báijiC”), is a Chinese distilled alcoholic beverage. The name literally means “white liquor”

Market Analysis

China Emerges as Worlds Fastest-Growing Automotive MEMS Market

Driven by the aggressive implementation of vehicle safety and pollution mandates, China has emerged as the world’s fastest-growing country for sales of automotive microelectromechanical systems (MEMS), according to a new IHS iSuppli Automotive MEMS Market Brief from information and analysis provider IHS.

China’s automotive MEMS market is expected to expand to $387.9 million in 2015, up from $194.3 million in 2010. This equates to a five-year compound annual growth rate of 14.8 % significantly higher than the worldwide average of 9%. “MEMS are a key enabling technology to improve the safety and reduce carbon emissions in motor vehicles,” commented Richard Dixon, senior analyst for MEMS and sensors at IHS. “With China’s car sales booming and its sensor usage soaring, the country’s automotive MEMS market is set for world-leading growth through the year 2015.”

Car market gets back in gear
The expansion of the global automotive MEMS market is being fueled by a revived passenger vehicle industry, which is projected to rebound from the economic slump. Production of passenger cars for the Chinese market is set to increase to 22.2 million units in 2015, up from 16.3 million in 2010.

Overall, China will remain the world’s third biggest user of automotive MEMS sensors during the five-year period, ahead of Japan and a collection of countries under the designation “Rest of the World.” North America will continue to lead the space, followed by Europe. Global automotive MEMS revenue is forecast to hit $2.9 billion in 2015, up more than 50 % from $1.9 billion in 2010.

Currently the largest automotive MEMS applications in terms of unit shipments are airbags, followed by silicon MEMS manifold absolute pressure (MAP) sensors needed for engine management. However, TPMS will outpace airbags in 2015.

One other application, electronic stability control to help prevent skidding in vehicles, is currently underpenetrated in China and will remain so unless there is a government mandate. Official government recommendations have set a national standard in China for TPMS, which should have come into effect during July but will ramp up in mid-2012. China is adopting TPMS ahead of Japan with an eye to the practical benefits that can be derived: The feature in vehicles not only saves lives but affects the environment, as correct tire pressure results in better mileage and less carbon emissions. China’s prominent role in implementing TPMS for its vehicles will accelerate the global TPMS market to a fitment rate of 73 % by 2015.

By next year, more high-end vehicle models in China will be equipped with TPMS ahead of other mandates, such as adaptive front headlights, brake assist and adaptive cruise control, IHS research indicates.

Market Analysis

Threatens And Chances For China Plush Toys in EU Market

Advantages and disadvantages of China toys markets will be introduced in the following article.

Advantages
Chinese plush toys production industry has developed a set of producing modes and traditional advantage. Numerous toys producing companies have trained a large number of skilled toys producing labors. In addition, many years of toys exporting experiences are fundamental to Chinese toys producing industry. Logistics and exporting agents also become important factors for Chinese plush toys exporting.

The material of plush toys is simple and is less limited on the aspects of safety and environmental protection compared with other kinds of toys. From 2005, EU released its new laws on the toys. Just due to the new policy, the cost of electric toys exported to EU market increased by 15 percent. However, plush toys were not affected by the policy.

Disadvantages
First, most Chinese plush toys are often classified as low-level and only earn low profits. Toys produced in China are often seen as cheap goods with low added value. Although Chinese plush toys take up a large amount in EU market, the whole industry doesn’t get what they should deserve.

Second, technological backwardness and simple toys classifications
Compared with large international toys companies, Chinese toys companies are small in size and just employ the traditional processing equipments. In addition, Chinese plush toys designing ability is weak on the whole.

Third, lack of well-known plush toys brands
Due to narrow strategic foresight, Chinese toys haven’t developed their own features and brands, especially compared with Teddy Bear and Snoopy dogs.

Forth, ignoring the toys information on the international toys market
Till now, Chinese toys industry pays little attention on the news and information about international toys market. Therefore, the toys producers cannot change the producing plans and would suffer from a large loss from the market.

Opportunities
Even if there are disadvantages for Chinese toys industry, there are opportunities for the whole Chinese toys industry. Under the difficult situations, Chinese plush toys industry would be forced to upgrade the whole industry.

The elevation of toys exporting threshold would eliminate some small Chinese toys producers and provide more room for some large toys producers.

Market Analysis

Volvo Looks to Expand Market Presence in China

The Swedish car brand Volvo recently announced that it will invest over US$10 billion in the emerging Chinese market and build up more factories to reach a higher sales target in the next five years.

As a foreign brand acquired by the Chinese auto company Zhejiang Geely Holding Group last year, Volvo did not present a very desirable sales record in 2010. Under new ownership, the company is hoping to raise the total sales in China from last year’s 39,000 to 200,000 vehicles by 2015. It also disclosed the plan to increase the amount of dealerships from the current 106 to 220 in next five years.

Volvo hopes to benefit from its new Chinese owner while selecting the new locations for its manufacturing plant. The company plans to locate one of its future factories in Chongqing, where Geely also has a plant established. The two brands will be sharing manufacturing services, including infrastructure and logistics.

Another new Volvo factory will stand in Daqing, a city of Heilongjiang Province in Northeastern China.

Although enjoying a number of benefits by being a Chinese company in the Chinese market, Volvo CEO Stefan Jacoby told CNN in an interview that the brand images of Volvo and Geely have little in common.

Both Jacoby and Geely’s board chairman Li Shufu agree that the two car brands target different customer groups. While Geely is designed for the low-end market, Volvo defines itself as a luxury brand with major competitors such as BMW, Audi and Mercedes.

Seeing China surpass the United States to become the biggest auto market by sales in 2009, and realize another 33 percent increase in car sales to 13.7 million vehicles in 2010, Jacoby admitted that Volvo has lost the early-bird advantage in China. However, he hopes the pairing of the famous European company and the young upstart Chinese brand can help Volvo catch up in the competitive, yet profitable market.