MKT 221 Marketing in Chinese Mainland

Group discussion

Shandong Group

Group member

West

Ray

Kitty

Wailing

占美

晴

Marketing Environment and Development

ImplicationsImplications

• Episode 1 Episode 1 Mooncakes Back to EarthMooncakes Back to Earth • Restriction under government control in Restriction under government control in

China (planned economy)China (planned economy)

• Episode 2 Episode 2 Home Grown Brands ShineHome Grown Brands Shine • The rapid expansion of local brands. (The The rapid expansion of local brands. (The

recession of the climax period of the recession of the climax period of the foreign brands entering China in 90s)foreign brands entering China in 90s)

Q.1 Q.1

How different is China’s How different is China’s marketing environment from marketing environment from

that in Hong Kongthat in Hong Kong

1. Demographic Environment1. Demographic Environment

2. Economic Environment2. Economic Environment

3. Political and Legal 3. Political and Legal EnvironmentEnvironment

Demographic EnvironmentDemographic Environment

ChinaChina Hong KongHong Kong

SizeSize 1.3 billion 1.3 billion (urban (urban population: population: 36%)36%)

7 million7 million

Population Population distribution distribution and mobilityand mobility

‧‧Dense areasDense areas: : Sichuan Basin, middlSichuan Basin, middle and down reaches e and down reaches of Changjiang River Zof Changjiang River Zhujiang Delta, North hujiang Delta, North China Plain and NortChina Plain and Northeast Plainheast Plain

‧‧Development Development of western regiof western regionon

Relatively Relatively more evenly more evenly distributeddistributed

Economic EnvironmentEconomic Environment

ChinaChina Hong KongHong Kong

EconomyEconomy Mix of Mix of planned and planned and market market economyeconomy

Market Market economyeconomy

UnemploymeUnemployment rate (2006)nt rate (2006)

4.2% (Urban 4.2% (Urban areas)areas)

4.8%4.8%

Purchasing Purchasing powerpower

Political and Legal EnvironmentPolitical and Legal Environment

ChinaChina Hong KongHong Kong

‧‧Political reformsPolitical reforms (Polic (Policies of energy, population, fiies of energy, population, financial and taxation, etc) nancial and taxation, etc) ‧‧Relaxing restrictionsRelaxing restrictions →→promote “Justice, Open,promote “Justice, Open, Transparency” after WTO Transparency” after WTO entry entry ““ 依法治國，建設社會主義法制國家依法治國，建設社會主義法制國家””

↓↓““ 依法治國，建設社會主義法治國家依法治國，建設社會主義法治國家””

‧‧Maintaining healthy Maintaining healthy political and legal political and legal systemsystem

Q.2Q.2

What are the challenges for What are the challenges for marketing professionals marketing professionals

in China ?in China ?

Challenges for marketing professionalsChallenges for marketing professionals

• The market change very fast and fast The market change very fast and fast response is required.response is required.

~ income of people increase, demand increase~ income of people increase, demand increase

~ must have a good understanding of the markets and response quick ~ must have a good understanding of the markets and response quick to the market demandto the market demand

• The laws/regulations change constantly.The laws/regulations change constantly. ~ laws/ regulations change constantly~ laws/ regulations change constantly

~ e.g. video case: the packaging of moon cakes.~ e.g. video case: the packaging of moon cakes.

Challenges for marketing professionals Challenges for marketing professionals (Cont’d)(Cont’d)

• Different laws/regulations in different placesDifferent laws/regulations in different places ~ localization of laws and inequality.~ localization of laws and inequality.

~ need to build up relationship first with local government officials~ need to build up relationship first with local government officials

• Lack of protection of intellectual privacy from the gLack of protection of intellectual privacy from the governmentovernment

~ inadequate in laws and enforcement of laws~ inadequate in laws and enforcement of laws

~ full of fake products~ full of fake products

~ increase difficulties in the establishment and maintenance of brand n~ increase difficulties in the establishment and maintenance of brand name and the company’s fame, creditability and profit will be hurtame and the company’s fame, creditability and profit will be hurt

• Difficult to understand the market Difficult to understand the market difference and making decision. difference and making decision.

Challenges for marketing professionals Challenges for marketing professionals (Cont’d)(Cont’d)

Challenges for marketing Challenges for marketing professionals (Cont’d)professionals (Cont’d)

~China is a large country with over thirteen ~China is a large country with over thirteen million people and 56 nationalities million people and 56 nationalities

~The living standard between different part of ~The living standard between different part of China are great differentChina are great different

~More than 39% company think that China ~More than 39% company think that China have more than four market within China.have more than four market within China.

~The market and income between agriculture ~The market and income between agriculture society and city are difference.society and city are difference.

• Difficult to identity and understand their Difficult to identity and understand their target grouptarget group

~Under the rapid development in economic, ~Under the rapid development in economic, society and politicalsociety and political

~Great difference purchasing habit between ~Great difference purchasing habit between younger and older younger and older

Challenges for marketing professionals Challenges for marketing professionals (Cont’d)(Cont’d)

• Difficult to get the real market dataDifficult to get the real market data

~Most of the date are unreliable~Most of the date are unreliable

~It is because:~It is because:→→the market and population are too large and the market and population are too large and

too differencetoo difference→→the quality of researcher may not good the quality of researcher may not good

enoughenough→→the research method may not mature enoughthe research method may not mature enough

Challenges for marketing professionals Challenges for marketing professionals (Cont’d)(Cont’d)

Q.3Q.3What unique strengths are What unique strengths are

characteristics of successful characteristics of successful marketers in China?marketers in China?

1) 1) MulMulti-national companies (ti-national companies (MNCMNCs s ))

A.A. MNCs are more far-reachingMNCs are more far-reaching

- focus on the establishment of proper focus on the establishment of proper management systemmanagement system

- local firms only focus on the short term local firms only focus on the short term sales and end user promotionsales and end user promotion

1) 1) MulMulti-national companies (ti-national companies (MNCMNCs s ))

B.B. Possess huge capitalsPossess huge capitals, including high, including high quality quality and experienced human resources and and experienced human resources and lateslatestt technology technology

- e.g. Nokia developed 3G in China- e.g. Nokia developed 3G in China

1) 1) MulMulti-national companies (ti-national companies (MNCMNCs s ))C.C. Right strategiesRight strategies use long term brand strategiesuse long term brand strategies speedy entryspeedy entry

- use eastern china as a base and extend - use eastern china as a base and extend into the western chinainto the western china

- e.g. Wal-mart has now also entered - e.g. Wal-mart has now also entered northeastern region and Xiannortheastern region and Xian

1) 1) MulMulti-national companies (ti-national companies (MNCMNCs s ))localizationlocalization

-adapt to the Chinese business -adapt to the Chinese business environmentenvironment

-e.g. Wal-mart , Carrefour relocated their -e.g. Wal-mart , Carrefour relocated their global purchase center to Chinaglobal purchase center to China

Successful MNCs - PepsiSuccessful MNCs - Pepsi• its Chinese communications are highly its Chinese communications are highly

localizedlocalized

• In the west: Use international sports stars & In the west: Use international sports stars & pop musicianspop musicians

• In china, combine the use of international In china, combine the use of international sports stars & pop singers from greater chinasports stars & pop singers from greater china

• Consumers appreciate & respond toConsumers appreciate & respond to

Local FirmLocal Firm

• Plenty of capitalPlenty of capital• Listed company e.g. Listed company e.g. 蒙牛蒙牛• Invest a lot in promotion Invest a lot in promotion • e.g. TV advertisemente.g. TV advertisement• TV programTV program• invite celebritiesinvite celebrities

• Supported by the Chinese governmentSupported by the Chinese government• e.g. e.g. 匹克 匹克 and and 飛亞達 飛亞達 participant in aerparticipant in aer

ospace industryospace industry• 伊利 伊利 one of the sponsors one of the sponsors of 2008 Olympic Gamesof 2008 Olympic Games

• Joint hand with other global enterpriseJoint hand with other global enterprise• e.g. e.g. 蒙牛 蒙牛 with Arla Foods ambawith Arla Foods amba• Lenovo with IBMLenovo with IBM

reputationreputation• capital and resourcescapital and resources• learn from others learn from others • competitivecompetitive

Q.4 Q.4

How do you foresee the state How do you foresee the state of marketing practices in of marketing practices in

China?China?

Future state of marketing Future state of marketing practices practices in China in China • 1. Service marketing1. Service marketing

• 2. The expansion of local brands2. The expansion of local brands

• 3. CRM 3. CRM

• 4. GRM4. GRM

• 5. Internationalization (Multinational 5. Internationalization (Multinational Company)Company)

• 6. Social Enterprise6. Social Enterprise