SANY being one of the leading companies in China in construction equipment manufacturing, set out to explore other international markets. The company’s success in India, the Middle East and North Africa boosted its confidence to enter more markets. It would be important for SANY to lay out risks and benefits of entering the European Market. Perhaps this is not the right time for SANY to invest in Europe because of the recession. At the moment the Eurozone has a lot of financial stress on it. This stress can eventually lead to a financial meltdown. In fact the best countries to invest in at the moment for SANY would be in developing countries especially as the economy is booming due to a rise in middle class and heavy domestic consumption of goods.
Another problem facing the organization was customer views and opinions in the European market. With a large inflow of Chinese joining the Asian population in Europe, Chinese became important contributors to growth of the European economy. Europeans had a mixed impression and attitude towards this change. For some, it was great opportunity to earn more money by manufacturing and selling high quality products or services and for others, Chinese businesses aggressiveness in low and mid-end markets, low cost productions and operations and rapid market development worried the Europeans. In addition to this, the intensive media exposure of the quality problems associated with ‘Made in China’ products and high import volumes from China, worsened the situation. This led to stricter quotas for import, increasing number of anti-dumping cases and high technical standard requirements for low end products. At the moment SANY are investing in ‘developing’ countries so standard of goods is not posed as a problem whereas in ‘developed’ countries the standard of goods and services is expected to be higher.
Another problem that SANY may face in Europe is competing with already established global players. SANY has to think about speed in European markets. SANY may need to add more capabilities to enter this market, along with a number of corporate functions need to be designed.
SANY needs to design a business strategy for entry into a new international market. The company needs to carefully design the strategy, develop necessary capabilities and adapt to local environments effectively. It would be challenging for SANY to enter Europe as the already well positioned German PM Group will provide tough competition.
SANY will have to realign its operating model to fit into the European mold. They would have to transport Sales and Marketing managers from China to work in Europe. In addition SANY also has to recruit local European staff in all the countries where they are expanding. Apart from the technical qualifications, the knowledge of English as well as other European languages would have to be a focal point.
SANY could also perhaps enter into a joint venture with another European company in the same or related industry to make the group’s entry into Europe smoother. The partner company need not be as large as the PM Group or Caterpillar.
In order to counter the intensive media exposure SANY should launch a viable advertising strategy and company should expand their product line and increase the standard of the products. This will help stable the intensive media exposure of the quality problems associated with ‘Made in China’ products.
The company’s success in India, the Middle East and North Africa shows that it might be best for SANY to invest in developing countries especially as the economy is booming due to a rise in middle class and heavy domestic consumption of goods. It could be considered to look at more developing countries as target markets.
Considering the Chinese businesses low cost productions, operations and rapid market development, SANY should emphasize its integration skills and should improve innovation in fields such as comfort, design,...
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