Mr. Chung Yong, President of Samsung China Headquarters (SCH) was trying to integrate various business units in China into a single Samsung which differ from the prior in 1995 that each business activities had been conducted separately by each business units that mean done base on its own business strategies. At that time, he was considering about marketing strategies for color TVs which had been very important products in China market. So, he had to make the immediate decision on the market segment and product line whether SCH should cover all market segments and product lines or focus on low-end market segment with limited line of products or target on high-end market segment? THE CHINESE ECONOMIC ENVIRONMENT IN 1995
The Macro Environment
China was centrally planned socialist economy so that it caused the huge gap between the stated plans and actual ability of government to manage and control the economy. This is the most important issue of foreign firm to operate in China. Therefore, it led to outside economic interactions of government formal economic plan. Moreover, the smuggling and piracy were also important in China.
Competition Among Governments: Self-Interest versus National-Interest
There was high degree of competition among both central and local levels because of scarce resources and incomplete planning system that make government tent to compete with each other to protect their scarce resources. The self-interest competition among government caused another form of competition which called "regional blockades" which might make an effort to achieve the project. The government authorities created barriers to block competition which so called "market trespassing". It occurred after the high level of intervention that creates more distribution channel. So, the firm will set up production bases in at leas two places.