int'l mkting/cu/171100 international marketing trend in the 21st century: a local perspective...

Int'l mkting/cu/171100

International Marketing Trend in the 21st International Marketing Trend in the 21st

Century:Century:

A Local Perspective of the Global Shipping IndustryA Local Perspective of the Global Shipping Industry

byby

Dr Stephen HoDr Stephen HoVice-Chairman, EducationVice-Chairman, Education

The Chartered Institute of MarketingThe Chartered Institute of Marketing

Hong Kong BranchHong Kong Branch

Hong Kong Branch 英國特許市務學會 ( 香港分會 )


Key International Marketing TrendsKey International Marketing Trends

• ‘The Death of Distance’ - key services can be provided remotely and yet highly effectivelyThe Death of Distance’ - key services can be provided remotely and yet highly effectively

• Location though is more important than everLocation though is more important than ever

• This results in unprecedented levels of competitionThis results in unprecedented levels of competition


Why InternationalisationWhy Internationalisation

• Globalsation of competitionGlobalsation of competition

• Product Homogeneity Product Homogeneity

• Economies of Scale Economies of Scale

• Threat to Home MarketThreat to Home Market

• Market Growth & DevelopmentMarket Growth & Development


International Market EntryInternational Market Entry

- ExportingExporting

- LicensingLicensing

- FranchisingFranchising

- Management ContractManagement Contract

- Turnkey ContractsTurnkey Contracts

- Contract Manufacturing / International Sub-Contract Manufacturing / International Sub-

constructingconstructing

- BOTBOT

-- Industrial Cooperation Industrial Cooperation AgreementAgreement

-- Contract Joint VentureContract Joint Venture

-- Equity Joint VentureEquity Joint Venture

-- Wholly-owned SubsidiaryWholly-owned Subsidiary

- - E-commerceE-commerce


Impact on Hong Kong: DistanceImpact on Hong Kong: Distance

• Our proximity to China has been seen traditionally as a Our proximity to China has been seen traditionally as a

source of competitive advantagesource of competitive advantage

• That may no longer be true That may no longer be true

- Geographical proximity per se will not confer any - Geographical proximity per se will not confer any advantageadvantage

• Our competitiveness requires the further development Our competitiveness requires the further development

of existing and new clustersof existing and new clusters


Impact on Hong Kong:LocationImpact on Hong Kong:Location

• Location is vital and here in Hong Kong businesses can Location is vital and here in Hong Kong businesses can

find assets / facilities that are world classfind assets / facilities that are world class

• To remain competitive we need to ensure that our vital To remain competitive we need to ensure that our vital

assets continue to be world classassets continue to be world class

• These assets underpin our success in major service These assets underpin our success in major service

industriesindustries


Hong Kong’s World Class AssetsHong Kong’s World Class Assets

• Our PeopleOur People

• Our InfrastructureOur Infrastructure

• Our RelationshipsOur Relationships

Financial ServicesFinancial Services ShippingShipping Other IndustriesOther Industries


Some Key Trends in the RegionSome Key Trends in the Region

• China and WTOChina and WTO

• Market liberalisation and privatisationMarket liberalisation and privatisation

• The consequence is unprecedented levels of competition in The consequence is unprecedented levels of competition in

the regionthe region

• Western global giants now have unprecedented access to key Western global giants now have unprecedented access to key

service industries in the regionservice industries in the region

• Local leading players are being acquired by these western Local leading players are being acquired by these western

rivals (eg in South Korea)rivals (eg in South Korea)


China’s Membership with WTOChina’s Membership with WTOImpacts:Impacts:

• gradual elimination of all import tariff and non-tariff barriersgradual elimination of all import tariff and non-tariff barriers

• transparency of the import / export trade systemtransparency of the import / export trade system

• open up of domestic market to US and Euro MNEs:open up of domestic market to US and Euro MNEs:

-- Banking Banking

-- Insurance Insurance-- Telecommunication Telecommunication

-- Manufacturing and Heavy Industries Manufacturing and Heavy Industries-- Retailing & Consumer Goods Retailing & Consumer Goods-- Others Others

Results:Results:

• more FDI to Chinamore FDI to China

• more reverse FDI from Chinamore reverse FDI from China


The Changing Relationship Between The Changing Relationship Between Headquarters and the SubsidiaryHeadquarters and the Subsidiary

• Traditionally, a successful foreign subsidiary Traditionally, a successful foreign subsidiary

implemented effectively the strategy determined at HQimplemented effectively the strategy determined at HQ

• More recently, the regional HQ has more say in More recently, the regional HQ has more say in

developing regional strategydeveloping regional strategy

• But now much more is requiredBut now much more is required

• Today we need entrepreneurs in our foreign subsidiaries Today we need entrepreneurs in our foreign subsidiaries

to secure world mandatesto secure world mandates


Internationalisation Strategy of Internationalisation Strategy of Shipping CompaniesShipping Companies

PPRREE--22NNDD

WWOORRLLDD WWAARR

AAFFTTEERR 22NNDD

WWOORRLLDD WWAARR SSIINNCCEE 7700’’SS

SSttrraatteeggiieess:: CCoommmmooddoorree AAggeennttss MMiixxttuurree ooffAAggeennttss &&

SSuubbssiiddiiaarriieess

FFoorrmmaattiioonnss:: SSiinnggllee LLiinnee OOppeerraattiioonn SSttrraatteeggiicc AAlllliiaannccee MM && AA


Product / Market Mix PolicyProduct / Market Mix Policy

Quality of service is an industrial norm:Quality of service is an industrial norm:

• Global coverageGlobal coverage

• Minimise port calls with designated cargo hub to serve minor Minimise port calls with designated cargo hub to serve minor

portsports

• Increase Frequency of sailing (e.g. 3 sailings / week - daily)Increase Frequency of sailing (e.g. 3 sailings / week - daily)

• Fast transit time Fast transit time

• Fixed date of the week departure / arrivalFixed date of the week departure / arrival


Single Shipping Line OperationsSingle Shipping Line Operations

Problems:Problems:

• Limited market coverage Limited market coverage

• Sporadic service frequencySporadic service frequency

• Transit time lengthen due to more port callsTransit time lengthen due to more port calls

• Difficult to fill up ship’s spaceDifficult to fill up ship’s space


Shipping Industry Towards SizeShipping Industry Towards Size

• The Mega Carrier PushThe Mega Carrier Push

-- P & O Nedlloyd P & O Nedlloyd

-- Hanjin Shipping + DSR Senator LineHanjin Shipping + DSR Senator Line

• Recent Merger & Acquisition:Recent Merger & Acquisition:

-- Nepture Orient Line + American Nepture Orient Line + American

President LinePresident Line

-- Mearsk Line + Sea Land Mearsk Line + Sea Land

Economies of Scale + Frequency of ServiceEconomies of Scale + Frequency of Service


Merger and Acquisition --- Mega CarrierMerger and Acquisition --- Mega Carrier

InformationTechnology- Cargo Tracking

Competitivepricingpolicy

Economiesof scale

Product/MarketMix Strategies

Commit morespace to clients

CompetentMarketing

Team


Major Shipping Lines’ Strategic AllianceMajor Shipping Lines’ Strategic Alliance

Strategic alliance Membership Major market Total No. ofships deployed

Grand Alliance P & O Nedlloyd,Hapag-Lloyd,NYK,OOCL,MISC

North AmericaNorth EuropeMediterranean SeaMiddle EastIntra Asia

297

New World Alliance APL,Hyundai,MOL

North AmericaNorth Europe

176

Global Alliance COSCO,Yang Ming,K-Line

North AmericaNorth EuropeMediterranean Sea

215

United Alliance Hanjin,DSR Senator,Cho Yang

North AmericaNorth EuropeMediterranean Sea

100

CMA-CGM & NorasiaAlliance

CMA-CGM SA,Norasia

North AmericaNorth Europe

85


Shipping Strategic AllianceShipping Strategic AllianceAdvantages:Advantages:

• Large size of shipLarge size of ship

• Economies of scaleEconomies of scale

• Control the supply of shipping space amongst Control the supply of shipping space amongst

consortium shipping lines consortium shipping lines

• Increase frequency of sailing Increase frequency of sailing

• Increase port calls Increase port calls

• Designated cargo hub Designated cargo hub

• Enhance market and coverageEnhance market and coverage

• Reduce the threat of head-on competitionReduce the threat of head-on competition

• Container Slot Sharing => reducing risk of space Container Slot Sharing => reducing risk of space

under-utilizationunder-utilization

• Possible price maintenancePossible price maintenance

• Market stablisation Market stablisation

• Long term agreement (usually 10 year)Long term agreement (usually 10 year)

Disadvantages:Disadvantages:• Internal competition amongst consortium Internal competition amongst consortium

member lines for the same cargo loaded on member lines for the same cargo loaded on the same vesselthe same vessel

• Difficult to change slot sharing / vessel Difficult to change slot sharing / vessel space contribution mixspace contribution mix

• Strategic partners must have same vessel Strategic partners must have same vessel size, capacity and speed compatiblesize, capacity and speed compatible


Cho Yang’s Internationalisation Cho Yang’s Internationalisation ProgrammeProgramme

TTiimmee SSeerrvviicceess OOppeerraattiioonnss RReepprreesseennttaattiioonn

11996611 JJaappaann SSeerrvviiccee SSiinnggllee LLiinnee AAggeennttss

11997799--11998833 NNoorrtthh EEuurrooppee SSeerrvviiccee SSttrraatteeggiicc AAlllliiaannccee AAggeennttss

11998855 MMeeddiitteerrrraanneeaann SSeeaa SSttrraatteeggiicc AAlllliiaannccee AAggeennttss // SSuubbssiiddiiaarryy

11998866 AAuussttrraalliiaa SSttrraatteeggiicc AAlllliiaannccee AAggeennttss // SSuubbssiiddiiaarryy

11999911 IInnttrraa--AAssiiaa SSeerrvviiccee SSttrraatteeggiicc AAlllliiaannccee AAggeennttss // SSuubbssiiddiiaarryy

11999911 RRoouunndd tthhee WWoorrlldd SSeerrvviiccee SSttrraatteeggiicc AAlllliiaannccee AAggeennttss // SSuubbssiiddiiaarryy

11999944 CChhiinnaa SSeerrvviiccee SSttrraatteeggiicc AAlllliiaannccee AAggeennttss // SSuubbssiiddiiaarryy


Why setting up own subsidiaryWhy setting up own subsidiary

• Market / Products DiversificationMarket / Products Diversification

• Element of ControlElement of Control

• CompetitorsCompetitors

• Other ConsiderationsOther Considerations


Cho Yang’s Internationalisation Cho Yang’s Internationalisation ProgrammeProgramme

1983 Hong Kong1983 Hong Kong

1992 1992 GuangzhouGuangzhou

1995 1995 DalianDalianShanghaiShanghai

TianjinTianjin

QingdaoQingdao

19961996 XiamenXiamenShenzhenShenzhen

20002000 YantianYantian

KoreaKorea

20012001 IPOIPO


Cho Yang Line’s FDI in ChinaCho Yang Line’s FDI in China

SSttaaggee TTyyppee ooff OOppeerraattiioonn SSttaaffffiinngg LLeevveell ooff CCoonnttrrooll

11 LLiiaaiissoonn ooffffiiccee EExxppaattrriiaattee ffrroomm HHKK LLoooossee

22FFuullllyy oowwnneeddssuubbssiiddiiaarryy

LLooccaalliissaattiioonnEExxeerrcciissee ttiigghhtt ccoonnttrroollvviiaa iinntteerrnneett rreeaall ttiimmee

ccoonnttrrooll ssyysstteemm


Real-Time Data Exchange through Virtual Private Network in InternetReal-Time Data Exchange through Virtual Private Network in Internet

Tianjin Office

InternetGuangzhou Office

Dalian Office

Qingdao Office

Shanghai Office

Shenzhen Office

Xiamen Office Yantian Office

Hong Kong Office

Data

Data

Data

Data

Data Data

Data

Data

Data

Data = Shipment & Accounting data


What about the Airline Industry?What about the Airline Industry?

• Joint Promotion (Air Mileage Award i.e. Asia Mile)

• Flight Connection

KLM + Air UK + Northwest Airlines

• Flight No. Sharing

CX + SAA


Airline IndustryAirline Industry

• STAR ALLIANCESTAR ALLIANCE


Cathay PacificCathay Pacific

• Cathay Pacific’s Airline Partners Cathay Pacific’s Airline Partners


Cathay Pacific’s Pending CooperationCathay Pacific’s Pending Cooperation

Cathay PacificCathay Pacific + +

American AirlineAmerican Airline

- cooperation on 70+ routescooperation on 70+ routes

- covering North & South - covering North & South AmericaAmerica


Examples from the Examples from the Banking IndustryBanking Industry

- HSBC merged with Midland Bank, now operate in 83 HSBC merged with Midland Bank, now operate in 83

countriescountries

-- Chase took over Robert Flemming before merged with Chase took over Robert Flemming before merged with

J.P. MorganJ.P. Morgan


Standard Chartered BankStandard Chartered Bank

Take OverTake Over

• Chase’s Retail BankingChase’s Retail Banking

Looking for M & A OpportunitiesLooking for M & A Opportunities

• IndiaIndia

• TaiwanTaiwan


What about the Security Industry?What about the Security Industry?Equity InternationalizationEquity Internationalization

“B” shares

“A” shares

“H” shares

“S” shares

China listed

company

China’s stock market for

local Chinese

China’s stock market for

foreign investors

“L” shares

“N” shares

Hong Kong’s Stock Market

UK’s Stock Market

ChinaChina Hong KongHong Kong WorldwideWorldwideUSAUSA

USA’s Stock Market

“NASDAQ-AMEX” Stocks (7) in HK

- Intel,- Dell, - Microsoft, - Cisco Systems, - Starbucks, - Applied Material - Amgen

Singapore’s Stock Market

Worldwide investors


Thank you !Thank you !

int'l mkting/cu/171100 international marketing trend in the 21st century: a local perspective...

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