Case Study – the Demise of Foreign Competitors in the Chinese Beer Industry

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In the case, background in 1990’s China Government open beer market to foreign investor. China is a huge, future potential market, a lot of foreign brewers enter to the Chinese market and making multi million dollar investment on production facilities as well as labor market. However a few years later most of the foreign brewers were still running at loss. On other hands the local brewers with untrained management, problematic human resource and poor quality product and weak marketing capabilities was winning in this beer wars. We would use PEST framework to evaluate the China beer market whether is affricative for foreign investments, what the strength of local brewers are and why foreign brewers are lost.

In 1990’s China government open for foreign investment, which including the local beer industry. Also the China government has offer lowest level of taxation rate 19% for beer retails compared with Korea – 53.5%, Australia – 52.8% and UK – 44.6%. In 17-Sep-2001 China was accessed to in the World Trade Organization. 1 Many of restrictions that foreign companies have at present in China will be eliminated, also implemented the TRIPS (Trade-related Aspects of Intellectual Property Rights). The government is allowed improved competition from the breakup of state monopolies. WTO membership opens access to those restricted markets, it makes consolidation of leading state-owned industries going to restructuring. Greater role for the private sector. Increased access for foreign companies and products and strongly reduced the protectionism in some key sectors. In foreign trade and exchange control, China government also relaxation on the trade policies, capital flow, as well as easing of the tariff and non-tariff barriers. In financing segment, China government has put efforts to put state-owned banking system on more commercial and open financial sector to foreign participation. In 2003 – 2005 government continuing efforts to rid state...
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