Foreign Brand in China

Topics: Starbucks, People's Republic of China, Coffee Pages: 11 (3911 words) Published: December 17, 2012
1.Literature Review
China has become world’s second largest economy after the United State. It has become the world’s fastest growing major economy. As the result of that, the market of china became the most attractive place for the foreign brands. Actually, there are many brand had already be succeed in china. According to many economists, KFC was the most successful brand, which has more than ten years’ experience. “China is the most important market for KFC. “ said by David Gill (the CEO of KFC in United state). , "KFC is still seen as a foreign brand but it's a foreign brand with local characteristics." “One of the many mysteries of modern marketing is how KFC, a once rather lack-luster American fast food brand, outperformed all competitors and in particular arch rival and world market leader McDonald's, to become the biggest restaurant chain in China.” Said by the John (business news 2009) Another brand such as Starbucks and Carrefour had their own approach in china. According to Peter(2010), Carrefour has become more stronger and experienced than chinese competitors in the market. The other brand Starbucks has set more than 750 outlets in china. 2. Introduction

China is the big piece of cake for every foreign company.
The economic reform opened China market to the outside world and improved the standard of living of average Chinese people. In late 1978 China began implementing economic reforms to develop and modernize its economy. The reforms have gradually rebuilt a new economic system, which is referred as a socialist market economy, by lessening the government’s control of the economy, allowing some aspects of a market economy and encouraging foreign investment. As a result of the reforms, China’s economy grew at an average annual rate of 10.2% in the 1980s and by 10% annually in the period of 1990-2001. This was among the highest growth rates in the world. As the result of this more and more people want to enter to china in defferent ways. There are some major methods for foreign brand came into china market. 2.1 How did the foreign brand come to china?

(1) Creating a website (2) Establishing International locations (3) importing and outsourcing (4) Exporting (5) Countertrading & Bartering (6) Relying on Trade Intermediaries (7) Creating Joint ventures (8) Foreign Licensing (9) International Franchising Importing and exporting are the most common and traditional ways for foreign firms to go globalization. They buy the resources from china and supply the final product and service back to the china market. Rather than sell their products or services directly to customers overseas, some companies enter chinese markets by licensing businesses in other nations to use their patents, trademarks, copyrights, technology, processes, or products. In return for licensing such assets, the small company collects royalties from the sales of its foreign licenses. Licensing is a relatively simple way for even the most inexperienced business owner to extend his reach into global markets. As the result of this, foreign licensing enables a small business to enter foreign markets quickly, easily, and with virtually no capital investment. Joint venture is a good example of new method to go into china. Joint ventures, both domestic and foreign, lower the risk of emerging global markets for small businesses. They also give small companies more clout in foreign lands. In a domestic joint venture, two or more small businesses form an alliance for the purpose of exporting their goods and services abroad. It is popular among the big companies in the china.

3.The case about KFC
3.1 The successful experience of KFC

The KFC is the good example to show how the foreign brand get into china market combine with these different methods. There is no doubt that China has become the highest-growth market of Kentucky Fried Chicken. Seventeen years after opening the first KFC outlet in China, KFC has celebrated its 1000th...
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