Beth1983 --
I'd actually looked into answering your earlier question but what
seems as if they might be simple questions sometimes are much more
complex. For example, in exporting beer to China, a significant cost
is transportation -- and I couldn't find adequate resources to show
how costly it would be to ship "barley water" to China.
MARKET OPPORTUNITY
-----------------------------------
A quick look at a popular atlas provides information on the risk and
opportunity of marketing beer in China:
The CIA World Factbook's section on China notes that the country has a
population of 1.3 billion -- roughly 5 times the population of the
United States. The population is 86% literate, making it open to
marketing efforts my consumer goods companies such as Anheuser-Busch
or Miller. Though per capita income is only $4,400, it's already at a
level where consumption of beer and spirits becomes important -- and
per capita income is growing at the rate of 8%, offering the potential
of a major consumer society.
In addition, the agricultural base of China offers raw materials for
beer production, with ample rice and barley -- and even some hops
production:
China Business Window
Xinjiang Changji Horticultural Farm
http://www.c-b-w.com/company/horticulture/
MARKET RISK
------------
The market opportunities are offset by risk in the legal sector.
China's economic history is one of socialized industries. As the CIA
Factbook also mentions, the country's laws are "a complex amalgam of
custom and statute, largely criminal law; rudimentary civil code."
That, plus enforcement issues, have made it difficult to protect
intellectual property and trademarks.
Ownership issues are also a changing area, one where initially Chinese
control was mandated. This Anheuser-Busch page on Chinese investment
shows how that is changing and how that American company is taking
advantage of joint ventures to provide a local presence:
Anheuser-Busch
"China"
http://www.anheuser-busch.com/overview/ABIIChina.htm
FIRST MOVER ADVANTAGE
-----------------------
It's long been known that market share gives the leading supplier
significant advantages in costs, which lead to advantages in
profitability. Closely tied to that idea is that advantages go to
early entrants in a market who are able to overcome obstacles and
build a defensible position. That alone is a reason to attempt to
gain share rapidly in the Chinese market -- perhaps initially by
importing, then quickly moving to reduce costs through local
production.
Marketingterms.com
"First Mover Advantage" (undated)
http://www.marketingterms.com/dictionary/first_mover_advantage/
WORLDWIDE SCALE ECONOMIES
---------------------------
Consumer beverage companies have been among the first to use the
worldwide concern with sports to build close ties with sports. You'll
note the close ties that Anheuser-Busch has already established with
U.S. and Chinese Olympic teams in their article. It's useful today
but will have significantly more impact when Beijing hosts the 2008
Summer Olympics.
Sports marketing has been one investment that allows companies a
global scale, significantly reducing per unit marketing costs. This
article in Yahoo India (reprinted from Business Week Online) is a good
indication of how prevalent sports marketing is to consumer companies,
despite some initial hiccups in China:
Yahoo India
"Sports Marketing in China is No Slam Dunk" (Sept. 9, 2002)
http://in.biz.yahoo.com/030908/129/27o88.html
ADVANTAGES TO THE U.S.
-----------------------
While the profit benefits to a brewer such as Miller or Anheuser-Busch
are direct, the benefits to the United States are more indirect:
? interaction with a country which is seeing the benefits of economic
liberalization
? opening of new markets -- not simply for beer but for software,
entertainment and American aerospace products
? a broader understanding within China of the types of legal
structures that it needs to be part of the world economy.
? a diplomatic ally which is highly interested in trade and the
political stability that is required for it. In situations such as
the current tense negotiations with North Korea, this can be extremely
helpful.
Google search strategy:
"Anheuser-Busch" + China
China + CIA Factbook
"first mover advantage" + marketing
beer + "sports marketing"
Best regards,
Omnivorous-GA |
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