Sasa International's Entry Into the China Market

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Executive Summary
In the midst of China cropping up as a hidden dragon, every firm that plans on foreign expansion is tempted into penetrating China out of all the optimization competitive advantages provided. Being one of them, SaSa, a listed well-know cosmetic chain store that stands alone in Hong Kong, has already taken action. Our report is to analyze SaSa’s business expansion in China. The background part reveals how SaSa has been turned around, originating as a small open-shelf retailer and her development over the past two decades. Then we will go into the details of the qualities of SaSa International, which generally concerns her strong parallel shipment capability, covering a wide variety of brands and products. Following these is the institutional contexts of Hong Kong, which throw light on SaSa’s magical success. Strategic options available to SaSa will then be discussed, with the focus on expansion in China. The institutional variables and environment in China are then looked into and compared to those of Hong Kong, followed by a detailed analysis on why SaSa has gone down in China. Last but not least, recommendations are put forward for SaSa to maximize her shareholders’ benefits.

Introduction
Stepping into 2008, it has to be the year of China. There is the Beijing Olympics, there is the snowstorm, there is the rapid appreciation of the currency and there are a lot of reforms and macro-controls. No matter what, China provides intriguing opportunities for foreign firms to invest and develop business in. Every business and corporation would like to ride on the trend of China’s development to boost their positions in the world. Despite all the advantages to pursue profit in an emerging country, there are obstacles that stand before investors politically and culturally in China. At times, it may seem to be too critical to speak for or against China’s policy and condition for running business, but it is interesting how businesses accommodate and some, retreat. In this project, we are going to analyze the business of SaSa International Holdings Limited, a local cosmetics retailing and beauty service- providing company. The eminent success of SaSa domestically has lured it into expanding to Hong Kong’s motherland China. Having spotted the opportunities China offers, Sasa’s founder Mr. Simon Kwok set off for China in 2005. However, it was failure that followed, after a couple of strategies and actions. After all, is SaSa stranded in the wrong road to enter China or would it be better off if it did not go north at all? This is going to be discussed in the undermentioned report.

Background
First established in 1978, Sasa has transformed from a housing estate cosmetic store into a renowned international enterprise. Listed in The Stock Exchange of Hong Kong Limited in 1997, SaSa International Holdings Limited is chosen as our target for analysis in this project. This cosmetics retailing and beauty service giant has already established a firm leading position and is becoming a largest agent and retail chain of cosmetics and beauty products in Hong Kong. Their mission is to become a dominant provider in cosmetics retailing and beauty services in Asia, in the hopes of further business expansion outside Hong Kong. So, why has SaSa been so successful in developing its cosmetic kingdom? Parallel good, which is all it counts. Let us now look at SaSa’s scope of business. The company lays heavy emphasis on the concept of "one-stop cosmetics specialty store“. Over 400 international brands and over 15,000 cosmetics make-up, fragrances, skin care and hair care products are sold in numerous SaSa stores. Apart from retail business, SaSa also invested in different areas for diversification such as SaSa.com where shoppers are able to purchase beauty products online. Health and beauty clubs, namely Philip Wain and SaSa Beauty+ are also established to provide beauty services. Such a wide range of products and services has...
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