Due to the steady growth in its economy, China has become one of the world’s most stable economy and the second largest in the world. This growth has been achieved as a result of strong fiscal policies and market oriented strategies by the key players in the Chinese economy. However, the country has not developed a legal reform that synchronizes the opposing political ideologies in the country. China is split between liberal ideologies and socialistic authoritarianism that forms the main limiting factor in economic growth. Most of the firms is China have had a successful performance due to their utilization of local marketing strategies. According to Chow, one of the key factors in the Chinese economy is that domestic consumption that accounts for a greater percentage of the economy (Chow Pg. 43).
China have been in one way or another found to be slowly adopting western marketing management strategies in their economy although domestic management techniques also play a major role in the management process. The Chinese culture combines uniqueness and complexities hence firms try to pay attention to these factors that directly or indirectly influence their marketing strategies. The Chinese consumers evolve at a very high rate when it comes to their consumption behavior as well as consumer tastes and preferences. This calls for market strategies that are consumer friendly for a firm to successfully survive in the highly dynamic Chinese market.
Previously, Japan was the second largest economy in the world but was replaced by China as the second largest economy in the world. Economists predict that China will become the world largest economy due to its impressive economic growth. The internal economic environment is such that domestic market controls the larger part of the economy rivaling the foreign markets.
Role of marketing
Chinese markets are known to be different from other western markets. Chinese markets are more competitive in terms of demand since the Chinese economy is domestic consumption driven. Firms is China often try to establish competitive advantage over their rivals in terms of market and asset control. It is estimated that market margins in China are likely to decrease in future due to the level of competition among the key players in Chinese market. State owned enterprises in China operate in industries that are not much affected by market forces such as the oil and the telecommunication industries.
One of the key factors that give the Chinese market the dynamisms and the complexity that it has over western market is the high competition foreign firm’s face over domestic firms. Although product innovation is not very high in China a situation brought about by intellectual property right protection, foreign firms have to be dynamic in terms of product and market management. The marketing techniques in China should combine both globally accepted marketing techniques and techniques which are tailored in the local context of the Chinese people. The four main elements to be considered in the Chinese market are; cultural dimension, cultural dynamics, cultural definitions and cultural intelligence.
Consumer behavior is the heart of the Chinese economy.Economics experts has tried to relate the Chinese cultural value with consumer behavior. Entry into the Chinese market calls for comprehensive analysis on consumer behavior with regards to economic forces as well as consumer’s tastes and preference. The market analysis should include factors such as; sales potential, social and political factors that affect consumer behavior, global and local brands as well as other economic factors affecting the same. Effective marketing strategies must include; emotional appeal, consumer preferences and product advertising and branding.
Due to its dynamic nature, the Chinese market, firms operating in the market must be aware of the different rules and regulations as well as the success factors that are present in the business sector specifically in the industries that are directly affected by government regulations. There are various analytical methods that can be used in the Chinese market to be able to identify market opportunities and threats. These analyses are regression analysis that is used to predict future economics outcomes, factor analysis that is used to evaluate key factors that define the consumer demand pattern and principal component analysis that is used to identify market segments that are directly affected by external business environment.
In-depth analysis of the Chinese market indicates that success in the market is predetermined by the ability to withstand and survive market forces. This comes with proper analysis on the production method including; industry research, product research with regards to demand, distribution channels, consumer and competitor research and social and political factors affecting the market. Research in the Chinese market however suggest that corporations in China seldom practice corporate social responsibility a situation brought about by the difference in political ideology regarding economic strategies.
Strategic Marketing processes
Although China experiences rapid growth in its economy, this comes at the expense of environmental pollution as well as an imbalance of resources between the rich and the poor. The Chinese economy does not follow the traditional free market approach instead uses the privatization approach while still trying not to interfere with government regulations in some industries in the economy. There is minimal government control in the consumer segment a situation that has led to growth forecast in consumer price index. An effective communication strategy requires sales promotion and competitive advertising strategies. Since consumers are the main driving force in the economy, strategic communication processes when applied effectively lead to a firm acquiring competitive advantage and survival in the highly competitive market.
With regards to the market size and segmentation, the Chinese market is dynamic hence easily influenced by factors such as demographic factors and forces of demand and supply. In China, global brands are proffered by a part of the population especially the younger generation while the rest of the population prefers local brands. Multinational corporations and international marketers base their marketing strategies on the factors that affect specifically the consumers. Firms should evaluate the size of the Chinese market and the opportunities and threats associated with entry into the market. The demographic factors with regards to; age, gender and geographical dispersion is what defines the Chinese market segment.
Targeting and Positioning
Positioning is one of the key fundamental factors that affect the success or failure of a marketing strategy. In the marketing process, Positioning is defined as the process in which marketers try to identify with the target market so as to create a corporate image that is competitive. The process can occur in two processes that are; re-positioning which is the process of changing the identity of a product to create a distinguishing factor from the competing products and de-positioning that is trying to change the identity of competing products. Since Chinese market is highly competitive, the process of identifying the target market and positioning gives an organization competitive advantage over current and potential competitors.
Product management is the functional aspect within the company internal structures that is mandated to forecast and plan for the lifecycle of products and services. The fundamental role of product management is that the process initiates action revolving around such as strategic and tactical planning. The first part of product management is the product planning process where the firm identifies new products and gathers the necessary market requirement to introduce the product into the market. The next process is the product marketing segment which involves product positioning and the promotional process of products and services.
China is a highly innovative market with both the international firms competing with local industries for asset and market control. With regards to the production and marketing of goods and services in China, organizations have to come up with strategies that are up to date in matters related to technology and advertising techniques. Enhanced production techniques increase output while the advertising process is presumably the most important process of organization in China. To be able to communicate to both local and foreign consumers, the advertising strategy should be in such a way that it incorporates standardization and specialization. Cultural factors play a key role in consumer behavior in China. Consumers in China respond differently with regards to beliefs, attitudes, perception, preferences and emotional appeals.
Integrated Marketing Communications
China has a high-context cultural differentiation. The main challenges that marketers encounter in the marketing process are cultural and language barriers. Some of the cultural practices and perceptions of the Chinese people are difficult to overcome. Introducing a product that violates these cultural beliefs and practices eventually leads to very poor sales arising from the product or service. An example of such a product is Cheese that is often rejected by local consumers since they associate the product with foreigners.
The main strategy of connecting with the Chinese consumers is to show them that an organization is not just concerned about their money but also their general welfare. Although the production cost is one of the determiners of price, Chinese consumers are very sensitive when it comes to consumption. This is because the high competition between firms and domestic consumption ensures standard prices in order to create customer loyalty and product preference. Key players in the business industry aim at providing domestic consumers with something positive to say concerning the goods and services they produce which is what has ensured their survival in the Chinese market.
The four segments that marketers in the Chinese market should put into perspective when carrying out the marketing process are; income, education, lifestyle and profession. There is also great geographical disparity China with large cities having very high population while the rural areas experience low population. This disparity affects the channels of distribution of goods and services to the final consumers with firms opting to employ distribution centers in the large cities and direct selling in the relatively low populated rural areas.
Organizational Effectiveness in China
Management knowledge has had a positive impact on the business practices in the China. Research has established that there is a relationship between management knowledge in the region and organizational performance. The key factors that enhance organizational effectiveness and performance are; organizational structure, infrastructural organization, technical structure and management support system. This is what has helped many firms establish themselves economically China. However, the general misconception by westerners that cultural practices from the west can be easily absorbed in the Chinese economy is what leads to failure in the Chinese economy.
Is the article up to date?
The article on market strategies, analysis, competitive intelligence and challenges in entering the Chinese market is developed in such a way that it evaluates current and future outcome of the Chinese economy. It covers current market forces that affect an organization operating in the Chinese market whether directly or indirectly. It also extensively and comprehensively covers the key driving force of the Chinese economy that is domestic consumption. This implies that current and potential investors have to come up with strategies that are both consumer friendly and locally acceptable.
Strength and weaknesses
The article is very informative in terms of market analysis in China. China being one of the world’s largest economies offers many economic opportunities for both operating and potential investors. This has led to the explosive growth that the Chinese economy has experienced over the years. The article also reviews why e-commerce has not effectively penetrated the Chinese market a situation brought about by low internet use by domestic consumers. It is found out that Chinese consumers prefer face to face transactions.
Application in Strategic Marketing
The article contributes to a wider knowledge in strategic marketing. This is because even though China has surpassed Japan s the world’s second largest economy, the country experiences many internal economic challenges that limit sustainable economic growth. These internal challenges cover for the current economic times as well as future economic outcome sin the economy. Marketing strategies in China should be in line with economic, social and legal factors that affect the market in China.
One of the main limitations of this article is that it concentrates much on the economic aspect of the country without evaluating other factors that in one way or another influence the market. The political aspect of the country is not fully covered considering the fact that the different political ideologies regarding the economy contribute to different outcomes in the economy. A good economy that can be able to support and sustain its growth is supported by strong fiscal policies. Most of these policies are either set by the federal government or financial institutions in the country. This means that an effective government with proper financial regulations controls market forces that may affect fragile economy. Even though China may not be termed as a fragile economy, the internal financial positions by the government and key financial institutions contribute to the growth of the economy.
Benefits to academic and practitioners
Economics academics and practitioner are introduced to a wider view and the general structure of the Chinese market. This comes along with a close analysis on the consumer segment that occupies the main part of the economy. With this information, market entry strategy can be successful in the Chinese market. A close analysis on current and future trends in the market also gives crucial information regarding the economy and its ability to withstand global economic changes as well as crisis. Current and potential investors are kept with up to date data and market forces that have a positive or negative impact on the Chinese economy.
The focus is on organizations both domestic and international operating in the Chinese market. There is also the consideration of market outcomes as a result of consumer’s tastes and preferences. As found out by Li, the difference between the Chinese market and other western market is that Chinese consumers have rather strong bond when it comes to matters regarding their culture and consumption behavior(Li pg.176).Since China is still growing economically, its marketing strategies and fiscal policies are different from those of western countries. Research has predicted that the Chinese economy will surpass the USA to become the world’s largest economy. This however will be achieved as a result of competitive domestic and foreign demand.
Despite e-commerce doing badly in China a situation brought about by low internet penetration, there has been a steady rise in internet shopping indicating that the Chinese people are slowly embracing technology. Research has also found out that the reason for the low e-commerce use is; consumer bases that prefer direct transactions, low credit card systems and poor infrastructural growth. An improvement of the said limiting factors will oversee rapid transition of China from a consumer dependent economy to a self sustaining economy. Although application of western marketing strategies is very difficult in China due to its consumers’ cultural adoption, proper application of the marketing strategy can give rise to competitive advantage in the highly competitive economy.
Strategic planning by key players in the Chinese economy is affected by the level of government restrictions and regulations in the economy. In the restricted industries, ownership is limited with investors not allowed to exceed 50% ownership rights. The organization in the restricted industries have to further employ individuals with strong human relationship, skills and connection in order to establish a market oriented framework. In that context, firms doing in China should think globally and act locally something that will help them stay close to the market as well as reduce the operating cost.
Corporate and social responsibility is the key issue that is found lacking in the Chinese economy. The government as well as key players in the economy should pay attention to this issue. This is because; the steady economic progression in China is derived at the expense of environmental pollution and other social effects. Introduction of environmental controls and policies by the government would no doubt help alleviate the problem. Chinese consumers are found to be price conservative when it comes to demand of goods and services hence consumers are very sensitive to prices. Price is found to be the determining factor in the decision making process by consumers rather than brand appearance and specification as it was previously assumed. Price awareness is also found to exist largely in industries where mass market products are included.
The Chinese impressive growth rate has led to a domestic competitive environment. This has helped the growth of small and medium enterprises in China. This growth rate has further increased international interest in the Chinese market and also the investment opportunities in the country. Foreign countries venturing into the Chinese market should pay attention to business strategies, cost structures and other factors that have enabled them to survive competitively in the Chinese market. China is the world’s fastest growing economy due to the country adopting a market oriented economy from the previously used command oriented approach.
For many years, China used a central planning system in its economic factors closing doors for the rest of the world. The late 1970s saw the transition of China from a command economy to a market economy which led the country to achieving its economic goals and objectives as well as social development. This move was further initiated by China’s desire to gain economically and financially from the effects of globalization. This however could not be achieved without China developing strategic internal policies that promoted economic integration. China is one of the countries that were able to survive economically as a result of the recent global financial crisis creating an even stronger perception of how balanced is the economy.
Chow, Gregory, The Chinese Economy, New York: World Scientific, (1987). Print.
Li, CongHua, China: The Consumer revolution, Asia: John Wiley & Sons, (1998). Print.