Lion Nathan China is experiencing losses in the Yangtze River Delta region as a result of economic downturn, declining expected growth rate, intense competition and initial heavy investment strategy. These conditions are exasperated by a poor transportation infrastructure, multiple and various regional laws and regulations, and high import costs. Lion Nathan China must reverse their financial losses with a new strategy that will take into consideration these conditions.
Lion Nathan China initially heavily invested in the Chinese market with a joint venture with Taihushui Brewery and an establishment of a 178 million dollars world class brewery in the Suzhou Industrial Park. This large invest has been difficult to recover due to the unexpected decline in the economy and a decline in beer market growth. In addition, the investment has caused Lion Nathan China to be in a position of escalating commitment. This escalation of commitment is motivating Lion Nathan China to stay in the market despite a large profit loss of 30.1 million annually.
In China there are more than 600 breweries, however, in the Yangtze River Delta market there are 30. Lion Nathan China must complete with very established brands in both the mainstream and premium markets. Compared to Lion Nathan China`s competitors, they have a distinct advantage in profit margins as a result of their possession of the only wholly foreign production facility. Lion Nathan China`s brand diversity gives them another distinct advantage since no other competitors have such a diverse portfolio. Lion Nathan China`s brand portfolio currently consists of two mainstream beers and three premium beers. However, only with recent development of the Beck`s brand has Lion Nathan China been able to achieve the premium status. While Beck`s has brought Lion Nathan China into this premium status segment. The premium status segment in the Chinese market is one that offers the most profit potential. On the other hand, the...
Please join StudyMode to read the full document