The essay sample on Nespresso China dwells on its problems, providing a shortened but comprehensive overview of basic facts and arguments related to it. To read the essay, scroll down.
There was a case of McDonald’s in Beijing who were forced out of their property by the government during the contract period (China unique, 2013). This spells an unstable working environment for newspapers. ECONOMIC FACTORS Economic factors include, Unemployment rate, exchange rate, inflation, interest rate, consumer discretionary income, labor cost. Unemployment: According to the ministry of human resources and social security of the PRE, there has been a significant decrease in unemployment rate in China from 4.
0 in the last quarter of 201 3 to 4 percent in the second quarter of 2013 (Trading economics, 2014).
This will increase salaries and wages due to scarcity of labor as only few of the population are unemployed. Similarly, Chinas inflation rate as reported by National Bureau of Statistics of China was at 2. 50 percent in January 2014 (Bloomberg business week Jan.
2014). This has caused a reduction in unemployment and an increase in wages. This might mean an increase in sales for western brands like newspapers and luxurious brands. According to ban and company luxury goods purchases has slowed down by percent as Chinese shoppers now do their usury shopping abroad (Ban and company 2013).
This might not be too good for foreign companies in china but it shows how passionate Chinese are for luxury brands. Chinas GAP were recorded at 7. 7 percent (9. 4 trillion USED) in the fourth quarter of 2013. (Bloomberg business week Jan. 2014) The above information shows that China’s economic environment would promote and facilitate business activities. (Trading economies, 2014). Lower unemployment rate implies high purchasing power of customers. Inflation will affect newspapers because suppliers fall demand more. High interest rate means high return on investment.
The higher consumer’s discretionary income, the higher their purchasing power especially for premium products like the newspapers brand. POLITICAL FACTORS. Factors present in the political environment include Political Stability, government involvement, trade barriers (tariff and non-tariff) Political stability: The three decades of reform in china has led to both a political and social landscape. (China daily Feb. 2014). China has a unique form of political risk which is a constant battle between the central government and local government over applicable laws.
For Nosiness, this stability and a clear understanding of local law would guarantee a stable business environment in the long run. Government involvement: The purpose of this is to protect domestic firms. (Protectionism). Government may impose barriers (tariff and non-tariff) on imports or foreign investment in order to protect domestic industries and to reduce competition. Although china has continuously opened its market for foreign investors, it has also place restriction on some foreign businesses in certain industries. For instance the restriction on American producers of autos, beef and steel into its market.
Therefore many firms are capitalizing on the power of the internet by doing series of online rumination. (Adage, 2013) Online retail sale according to Bloomberg, went up by percent last year (adage, 2013). The surging internet purchase indicates that Chinese consumers are moving away from bricks and mortar outlets for their shopping. Opportunities of online CRM and sales include; Wider reach. Using the internet, newspapers can keep up with a large number of its customers on a daily or weekly bases. Advertising.
Newspapers can also use the internet to advertise its product to millions of customers at the same time. This could be cheaper to operate too. Segmenting purposes. The record of customers and their previous purchase can help newspapers in automatically segmenting it customers based on purchase history Feedback and adjustment. Customer feedbacks is very important as these information can be used in making services or products better. Despite the attractive and promising nature of using the internet, investors and firms should also consider the drawbacks of using the internet for sales and communication.
The Chinese government recently just imposed a new law regarding e- Commerce in China. The law stipulates that real names registration of sellers n third party platforms, strict seven days return policy, and also online payment market place must safeguard users privacy. (Pace net services, 2014) Another report says the government is imposing a law where all consumer to consumer online trading would have to register for a business license and also pay taxes (China daily, 2014) Legal system. There are different legal restriction and regulation from government and regulatory bodies.
Payment environment: the cash payment culture of the Chinese creates difficulties for online shopping. International credit cards are not accepted in most online hops. There is unavailability of credit card payment in most transactional websites. The online payment system in china is still at an infant stage. Logistics network environment: there is a restriction on foreign investment of logistics companies. Limited choices of delivery therefore, much more time is spent on delivery (kit, 2007).
QUESTION THREE Despite the large number of internet users I personally would recommend that newspapers adopt another marketing strategy as it will be very harmful to assume that the newspapers club would work in the Chinese market. From ireful observation of the forces at work in the Chinese market environment, can say that there is high level of government protectionism and regulation on internet businesses (Commerce) that tends to favor Chinese owned firms and businesses. Report has it that not only were a lot of websites blocked in china, there were also a Chinese replacement.
Sites blocked include Backbone, yahoo, Google, twitter, Youth etc. According to report, the British newspaper The Guardian along with The New York times and Bloomberg news has been blocked in china for over a year. Motives for this act remains known (Taipei Times, 2014). Newspaper’s use of the internet is limited as not so much can be achieved due to interference by the government therefore using the internet could hinder performance as there is too much interference from the government.
Newspapers should adapt its marketing mix to overcome the current situation of internet insecurity so as to reduce reliance on the internet. Though the internet can be used to position the newspapers brand image in the minds of the consumers for sales, or advertising or customer relationship but it won’t be wise business decision to apply the newspapers club concept in China because the government can decide blacklist them just like the case of Backbone.
Newspapers should create more awareness about its brand to the Chinese public especially the less educated ones explaining the difference between house coffee and the newspapers brand Lastly, since there is already a tea drinking tradition amongst the Chinese population, newspapers should consider a local adaptation which involves offering other kinds of hot drinks so as to have a variety of products for it ever growing tea drinking customers.