Selling into China

Setting up production in China
1. Positive/Benefits
  1. Lower Labour costs
    1. Lower costs eg land
      1. ease of distribution
        Local expertise
2. Negeteive
  1. Reduction in quality
    1. Ethical and enviromental issues
      1. Exchange rate fluctuations
3. JLR
  1. Joint venture with Cherry automobile have plans to open a production plant near Shanghai
    1. Will hae a posotive effect on their global output
    2. 80% increase in sales
Mergers/Joint Ventures
1. Positive / Benefits
  1. Combine experise
    1. Local knowladge
      1. Shared risk
        Can be financed through equity (shareholders) and not debt (banks)
        Greater capacity
        Synergies
2. Negative
  1. Shared revenue
    1. Potential for conflict of stakeholders
      1. Cultural differences
        Partner may grow to be competitor
3. Sales of JLR models in China have risen by 80% in 2012
  1. JLR agreed to a joint venture with Chery Automobile
    1. 58% increase in Chinese sales in the second quarter of 2014, boosted by demand for the recently launched Range Rover Evoque model.
      1. Increase in local jobs
        Gives a local production base where luxery car market is on the increase
4. Starbucks Coffee will launch a joint venture with a Chinese coffee-growing company
  1. Working with local chinese farmers to produce high quality coffee beans
    1. Chinese produce helps supply starbucks' global market
5. Mergers in China results in large tax benafits
Exporting into China
1. Negative
  1. High import taxes
    1. Ethical issues
      1. Lack of market knowledge
2. Positive / Benefits
  1. Large market
    1. Growing market
      1. Spreading risk in different markets
3. E-commerce is a prime way of selling into China
  1. China’s e-commerce market looks set to be worth $296 billion in 2013
    1. online luxury sales will be worth an estimated $27 billion this year
4. Advantages of E-commerce
  1. No limitations to geographical sales
  2. Reduce in costs that can be past on to consumers giving a commpetative advantage
    1. This can be in the form of reduced personal/workers or the fact that a physical store is not needed in an e-commerce busniess
  3. Consumers have more convenient shopping and can use a 'search' box to narrow down products
  4. Travel time and cost is eliminated for the consumer
  5. Remains open with 24 hour access
5. Disadvantages of E-commerce
  1. Many goods can not be pruchased online
  2. E-commerce doesnt allow consumers to experience the product
  3. store reliability can be an issue and consumers may not want to risk using e-commerce

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Selling into China

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