Compare and Contrast the China and Japan Investment Enviornment: Market Opportunity for the Body Shop

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Compare and Contrast the China and Japan Investment Environment:

Market Opportunity for the Body Shop

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Professor: Dr. Andrew Staples

Shuyuan, Huang

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Table of Contexts:

1. Introduction
2. The Body Shop Philosophy
3. Comparison Study on Determinants of FDI in China and Japan 4. Differences of Cosmetics and Toiletries Market of Japan and China 5. Market Entry Analysis in China
6. Conclusion

Introduction:

This paper aims to provide a market entry analysis for penetrating the China market to The Body Shop based on a comparison study on determinants of FDI in China and Japan. First, an introduction of The Body Shop including the company’s history, philosophy and business expansion will be given. Then an overall investment strategy will be forming by analyzing the pros and cons of investing in China and Japan. Look deeper into the Cosmetics and Toiletries (CT) Market, an investment and marketing analysis of China comparing to that of Japan will be elaborated, for instance, comparison of beauty and personal care market potential in China and Japan, consumer behavior and major players. Based on all thee analysis and assumption that The Body Shop would enter China market soon, this paper will analyze the market entry strategies for the company into China.

The Body Shop Philosophy

The Body Shop (The Body Shop International plc) is a global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products. Founded by Dame Anita Roddick in United Kingdom in 1976, its store-based retailing business has expanded through 55 countries in the globe and subsidiaries have covered Western Europe, North America, Asia Pacific, Australasia, Middle East and Africa. However so far, The Body Shop hasn’t entered the China market. It takes a strong position on insisting their five core values: support community trade, defend human rights, against animal testing, activate self-esteem and protect the planet. The Body Shop is banned in China, because cosmetics sole there have to be tested on animals, according to Roddick.

However, things changed dramatically when it was merged by the French cosmetics giant L’Oreal in a deal worth GBP652 million, which is a big player in China. L’Oreal is planning to operate the British company as a stand-alone business within the L’Oreal Group, led by the current management team and with Anita Roddick remaining in her present role as consultant. L'Oreal boss, Jean-Paul Agon, outlines plans to more than double the number of Body Shop stores around the world from 2,000 stores to 5,000 "in a few years". [1] Also according to the article reported by Louise Prance, Oct, 2006, “Talking to the Financial Times, Jean-Paul Agon, chief executive of L'Oreal, suggested plans to develop The Body Shop brand in countries such as Brazil, Argentina and China.” [2] This indicates the attractiveness of Chinese cosmetic and toiletry market to The Body Shop.

Comparison Study on Determinants of FDI in China and Japan

Before deciding on the problem of invest or not in China market for The Body Shop, first of all I will compare the determinants of inward FDI for the two countries. There are two reasons that I compare China with Japan in terms of FDI. First, they are both apart of Asia Pacific. Second, The Body Shop has invested in Japan market but not China market (except Hong Kong and Taiwan). In this paper, the FDI will be classified into three types: 1) Market-seeking FDI; 2) Resource- or asset-seeking FDI; 3) Efficiency-seeking FDI.

| |Items |Country | | | |China |Japan | | |The level of inward FDI (Ranking of FDI |88th...
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