China is seen as a “hot” market. Why is the Chinese market attracting so much attention, and are there other markets that may be better locations for investment?

A

As countries mature economically, the channel structure seems to approximate that of China. Retailers become larger and more efficient and introduce self-service. But these channels must be altered to suit the environment. A supermarket in Japan or Italy is not the equivalent of one in China. Wholesalers often serve as sources of capital as well as sales institutions. The principal vehicle for extending markets is innovation, which demands considerable investment in, and exploitation of, research-and-development expenditures. American management can expect its current international market positions to be eroded. American business will eventually face the fact that it will be driven out of many markets it helped to create. Markets for labour-intensive products or for standardised commodities that are keenly sensitive to prices, such as steel rods and nails, do not offer increasing opportunities for firms. Research-intensive products, however, designed to develop new markets do.

As for the host country industry, the years 2007 and 2006 became more profitable for Chinese companies and industry as a whole after the abolition of textile and clothing quotas among WTO members in 2005. According to the article in Middle East Finance and Economy, the estimated average growth rate of the Chinese mainland market in 2006 was 22%. The multinational structure is really a state of mind that affects marketing decisions. It conceives of markets as a spectrum of opportunities rather than a sharp dichotomy between domestic and foreign alternatives. It envisions a world business system that recognises the dynamics of market change and incorporates subsystems that are equal rather than subordinate to the American unit. And it makes decisions in terms of the total global system.

The acceptance of a multinational philosophy of business means that research and development, new products, and new methods of doing business must be designed for specific areas. It recognises that differences in social, economic, political, and legal environments limit the mobility of total company resources. For Chinese business, it underscores the transcendence of national boundaries and the necessity of doing business with countries in varying stages of economic development. It also implies that business can become one of the least nationalistic of all institutions.

Below there is a SWOT analysis about opportunities to enter the Chinese market based on its strengths and weaknesses in addition to the threats that the company might experience in the new market.

Strengths of the Chinese market:

  • China is a large market to penetrate and benefit from.
  • Strong clothes and underwear products and services – a large number, variety, and combination of clothes and underwear for women, men and kids.
  • High-quality materials to produce clothes and underwear.
  • High-quality and innovative technology are used to produce competitive.

Weaknesses of the Chinese market:

  • The company is new at the international markets at all and at the Chinese market particularly.
  • Inadequate market information.
  • Lack of transparency, poor enforcement of intellectual property rights, non-science-based quarantine measures, customs procedures, administrative import requirements, burdensome technical regulations and standards and conformity, and restrictions on the mobility of business people.

Opportunities of the Chinese market:

  • Being the most efficient and innovative marketer of branded quality apparel for Australians gives hope, financial basis and competitive advantages to expect the same or similar success at the international markets, such as China.
  • Further development of the website and online picture and video presentations of products oriented for the Chinese customers.
  • Growing Chinese economy and stability of its currency gives successful basis penetration into the market and further development.

Threats in the Chinese market:

  • Growing international competition.
  • China’s orientation on exporting textile and clothing products more than importing.
  • Continuing problem of low pricing for textile and clothing products, which Chinese consumers are used to giving preference to.
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Academic.Tips. 2022. "China is seen as a "hot" market. Why is the Chinese market attracting so much attention, and are there other markets that may be better locations for investment?" January 13, 2022. https://academic.tips/question/china-is-seen-as-a-hot-market-why-is-the-chinese-market-attracting-so-much-attention-and-are-there-other-markets-that-may-be-better-locations-for-investment/.

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