While China has over a dozen food and beverage companies, Tingyi’s main direct three competitors in the food business space are First Pacific Company Limited, Uni-President Enterprises Corp (UPC), and Nissin Food Products Co. Master Kong competes with Coca-Cola Co, China’s Wahaha Group, and UPC in the Chinese beverage market. Tingyi gained a first mover advantage through entering the Chinese market earlier than its competitors. They strategically selected the most attractive regions of China and focused on big cities such as Guangzhou and Hangzhou, thus limiting the space available for subsequent entrants. Tingyi also sharpened their economies of scale, which enhanced their first mover advantage. The company owes its success to their powerful brand, their strong production efficiency, growth through the years, having selected profitable regions to focus on, and their continuous business strategy transformation. Competition is fierce however due to low switching costs for consumers as well as limited product differentiation. Uni-President Enterprises (UPC) is the second largest producer of instant noodles and beverages in China. UPC currently does not possess the strong bargaining power that Tingyi has. Their promotional strategy has also not been as effective as Master Kong’s and thus Master Kong should continue to increase their brand awareness through advertising spend. Morningstar found that UPC currently invests heavily in their fixed assets, which has affected their profitability due to a potentially low capacity utilization rate.11Additionally, their operating leverage is larger than that of Tingyi. If UPC is able to lower their raw material prices to that which Tingyi currently commands, UPC could rival Tingyi’s operational efficiency. In terms of sales volume, Figure 1shows that Hualong has the second largest value, however their focus is in the low-end product market, in which Tingyi does not compete. 15 Consumer-purchasing criteria,...
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