Home Depot failed in its attempt to enter China and it's important to take a deeper look into why this happened. Foreign firms that enter China must first develop a business strategy that is catered to the specific target country, and if it doesn't work that is okay, but you must at least then be adaptable to change that strategy, but firms should always try to show respect and blend in to local culture. Background China expects its urbanization rate to rise from 47.5% in 2010 to 51.5% by the end of 2015, according to the 12th Five-Year Plan (Xinhua News Agency, 2011). Clearly, the Chinese economy is booming and China is quickly urbanizing. Investment analyst Meyers (2011) stated that a home improvement company such as Home Depot is very sensitive to positive economic growth, especially the growth in housing and urbanization areas.
The low cost of labor in China would cause Korea’s position being the lowest cost provider to be a position that was in danger. The Korean government at this point was discontinuing subsidies and export credits to Korean manufacturers and at this time the Korean products which had been the low end market Strategic Planning In 1995, production of color TV sets in China was starting to hit a high volume. It was estimated that 16 million sets were produced, including two million that were exported to Europe, North America, Africa, and Australia. At the time, the Chinese government felt its production of color TVs were fulfilling their expectations in regards to demand in export and domestic markets. As 1995 ended, the Chinese color TV market was the second largest behind the United States and the third largest behind NAFTA and EU in regards to unit sales.
Most US Senators feel that the revaluation move was too small and that China needs to allow the currency to increase in value, especially since 2.5% pales in comparison to the RMB’s predicted undervaluation of 30-40%. China is keeping its 0.3% percent daily trading band against the dollar, which means that even with this move there will not be a lot of volatility in the currency pair. China has many reasons to want to revalue their currency. The revaluation also makes imports cheaper for China. This comes at a critical time when commodity prices are rising.
The original focus of producing low cost products resulted in a cheap image of Samsung in China and led to a loss of US$210,000 in 1998 for its Suzhou division. The 1997 Asian economic crisis led to Samsung shifting its focus towards higher quality products. Samsung realised they could not compete with the Chinese manufacturers in terms of low priced products. In order to remain competitive in China, Samsung shifted its marketing strategy to one based on “selection and concentration”. After 1997, the focus was on the 10 major cities in China including Beijing, Tianjin, Suzhou, Shanghai and Guangzhou.
This effect on the Chinese economy is quantified through China’s emissions, which in 2010, was 8,286 million metric tonnes, 35% higher than the next uppermost emitter, the United States. China is also home to 16 out of 20 most polluted cities in the world. Consequences for not cleaning up the environment will not just be a health crisis but an economic one. The Chinese government is now recognising and addressing the environmental problems which have occurred due to both rapid economic growth and industrialisation. It has set targets which aim at reducing pollution levels with $6.6b committed in spending in order to achieve such targets.
During the last 15 years China has received between US $60-100 billion in FDI projects annually and represent over 4 percent of GDP compared to that of India whose inflows from FDI have been approximately US $5 billion and less than 1 percent of GDP (Bosworth & Collins, 2008). China’s inflows are incredibly extensive to agree that has not been attained by any other developing economy. Cheap labour and a potential huge domestic market have made china he preferred investment destination of foreign companies (Kumar & Worm, 2011). And with all of these FDI, access to global markets is promoted and bring the accumulation of technology and management skills (Bosworth & Collins, 2008). China’s success involving FDI is partly due to the policies surrounding it.
By learning from its defeat in Germany, Walmart has been able to make progress in its strategy to expand into the Chinese market, which also has a substantially foreign political and cultural environment. Along with its financial capability, advanced supply chain management capability, and information technology capability, Walmart adapted its business strategy to align itself with the local taste. For example, Walmart sources about 95% products locally and hires Chinese citizens to manage its stores. Due to the heavy pollution and poor safety management, Chinese customers are concerned about the quality of products made in China. Walmart developed private label brands priced 10%-40% cheaper than national brands which positively impacts Chinese customers by providing them with high quality products and low prices.
As of 2008, when Apple was first introduced into China it did not pass over as well as we thought, even though China is a coveted market. Apple’s market share is lower than 8 percent in China for media players, much lower than 1 percent of PC’s or the cell phone market share. Although Apple done really well with the launching of the iPhone in 70 countries, it sad to say that China is not included within those countries. The company has been unsuccessful in landing a deal with any of Chinese carriers. The higher produced, lower ended products do excellent in China, while the luxury brands succeed in Beijing and Shanghai.
Its been noted that Samsung often releases their new phones during months that Apples sales ar... ... middle of paper ... ...ved shares. It had been noted “around a third of the world’s handsets are sold in China to half a billion people, yet only 12% of these phones are made by apple” (UK DailyMail). The article had go one to describe that an iPhone cost around the same as an average persons month salary who resigned in a urban area. If Apple wants to continue to prosper above Samsung in the international smartphone market, the company will need to make advances in the Chinese market place. In 2013 China was Apples second largest market, which gives the company room to improve.
Due to a strong domestic demand for cars in China, car manufacturers are expected to sell 13 million cars this year. China is expected to overtake United States as the world’s No.1 car market next year. As the car export market is still being affected by the global economic downturn, China carmakers have been focusing on the Mainland China market which is more attractive. The expected growth is more than 50% and this trend will continue next year as per some forecast. The stimulus package, provided by the Chinese government in cutting consumption taxes on cars with small engine capacity and giving small car purchase subsidies to villagers, helps the car industry.