China - BUSS 4 AQA

• New range of products to suit the needs of Chinese Market
  • Including Pork (main meat source) and fish and noodle dishes instead of just chicken.
  • Menu varied by region of China
• Hired local staff who knew the market
  • Reduces cultural and language barriers when trading and establishing brand.
• Entered the market early. 
  • Identified 16 key cities and expanded rapidly
• Created its own distributtion system to ensure it could rely on supplies to support exapnding number of stores.
• Emphasis on staff trainging and management training.
• KFC owned the outlets rather than franchising them (different to models used in US).
  • Gave them greater control of outlets which became a source of information about local/regional customer needs.
• Deliver locally, helpful for office workers who don't have time to go out for lunch etc. 

Numbers:

Average of one new outlet a day, objectives to open 15,000

Has a 2:1 ratio more stores than McDonalds (who were less successful)

• Opened in Shanghia in 2008
• Failed to take into account the needs and tastes of customers
• Customers were put off by prices
• M & S made their products "too chinese" and aimed more towards the "older generation of china who don't spend money on clothes".

HERProject - used to appear socially responsible.

• Aimed to educate female employees on hygiene etc. to avoid sickness
  • results in less absenteeism
  • Improved welfare and living standards for employees

However...

• Primark doesn't own their sweatshops (like many other companies) so they aren't technically responsible if some goes wrong.
• Banglesdesh Fire - workers were locked into factory and couldn't escape (health and safety faults and management faults)

• Heavily reliant on Chinese imports
  • fluctuating exchange rates could affect profits
• Imports from China subject to import tariffs, which increase cost

Guangxi - the chinese model of "relationships" which influences how business is conducted

Ebay and Guangxi:

• Ebay's business model didn't allow for buyers and sellers to communicate and build a relationship, meaning that the Chinese didn't trust using the website in order to make purchase.
• Ebay didn't understand the market which led to failure in China

• Used same Western Branding
• Used Same product which had proved successful in Western Markets.
• Beef Burgers didn't appeal to Chinse considering beef is rarely eaten and pork is the main source of protein. 

• Failed to see the digital camera evolve and missed out on the market, are still catching up, especially due to fast moving technological market and being behind. 

• Lacked Scale and underestimated chinese consumers. 
• Chinese customers prefer to use "guangxi" and know the person they are trading with. 
  • meaning that customer would shop at local shops rather than stores. 
• Had 9 years of losses and struggled to build scale due to competition.
• Eventually went into a joint venture for chinese knowledge and expertise of market. 

• Sales fell for 5 years consecutively
• Cultural differences and strong competition led to failure

• Accused of price fising in Chinese baby milk market

• Translated brand name to Chinese so it was easily understandable to market.
• Luxury Western Brand

• Gives any profits to giving countrys without clean water clean water. 
• Different to other water bottle companies who exploit local communities

• Accused of using child labour and working them long hours.
• Three chinese factories run by Pegatron Group violated standards set by Apple.
• Overtime was mandatory during busy periods.
• Dormitory rooms housing up to 12 people, insufficient fire escape routes and fines for behaviour such as "failing to tuck ones chair after eating" and "absense in unpaid meetings".

• Diaper brands with a CSR interest
• Give vacinations to children in poor countries for every packet sold
• Good brand advertisment and promotion
• Creates brand loyalty

• Formed a joint venture with a Chinese Automobile company
• Enabled the designing and building of cars specifically designed for the chinese market.
  • Help maximise sales
• Government would allow them to sell their cars in the chinese market rather than companies who want to sell in china but don't operate a factory in china. 

• Growing middle class and higher class can afford more luxury items. 

• Hit hard by IP infringements due to laws not heavily preventing this. 
• Patent application from foreign firms in china are "blocked" whilst chinese firms are approved in as little as 9 months. 
• Cost Dyson £10m a year in legal costs
  • dysons pre - tax profits of £40m could have been double if not for copies of their hoovers. 

• Accused of condoning payment by local staff of bribes to secure contracts
• But, GSK was investigated by police and it found that executives weere funelling money to travel agencies to facilitate bribes to doctors and officials to boost the sale of its medicine.