Discuss the Future Consideration for Nike in View of the Changing Market/Business Environment in South Korea, China and Taiwan and Give Your Recommendation/Ideas/Thoughts for the Same.
Discuss the future consideration for NIKE in view of the changing market/business environment in South Korea, China and Taiwan and give your recommendation/ideas/thoughts for the same.
Some of the market conditions found in Taiwan, South Korea and China were: 1. Development and production start up time: The time taken for production and development was four months in South Korea and eight months in China. 2. Quality: A grade to B grade ratio was 99:1 in South Korea, 98:2 in Taiwan and 80:20 in China. 3. Quantity: Taiwan produced 1 million pairs a month, South Korea 2.25 million and China 100 000(with current capacity for 180000). 4. Raw material sourcing: Taiwan and South Korea sourced 100% of their raw materials domestically whereas China imported 70% of the material. 5. Financing: South Korea and China provide their own financing and had a straight trading arrangement with NIKE; China required compensation trade. 6. Transportation: Shipping time from Taiwan and South Korea was 20-25 days whereas from Shangai it was 35-40 days. 7. Labour cost: as a percentage of total cost was about 30% in Korea, 20%in Taiwan and 10% in China. 8. Landed cost: for a pair of shoes in South Korea was$7.86 and in China it was $9.86.
As per the figures observed in the market conditions given above, it can be seen that Nike’s growth in China has not been as high as expected by the company. This can be attributed to the following factors: 1. Changing business environment: The Chinese leaders had said that the country was open to foreign investors and had also said that they would keep their commitments. This ideological shift was favorable to private and foreign investors but many traditionalists within the Communist Party were reportedly disturbed by it. 2. Joint ventures: This form of foreign investment was favored by the Chinese authorities. A foreign investor’s participation could not be less than 25%. Technology contributed was to be truly
Some of the market conditions found in Taiwan, South Korea and China were: 1. Development and production start up time: The time taken for production and development was four months in South Korea and eight months in China. 2. Quality: A grade to B grade ratio was 99:1 in South Korea, 98:2 in Taiwan and 80:20 in China. 3. Quantity: Taiwan produced 1 million pairs a month, South Korea 2.25 million and China 100 000(with current capacity for 180000). 4. Raw material sourcing: Taiwan and South Korea sourced 100% of their raw materials domestically whereas China imported 70% of the material. 5. Financing: South Korea and China provide their own financing and had a straight trading arrangement with NIKE; China required compensation trade. 6. Transportation: Shipping time from Taiwan and South Korea was 20-25 days whereas from Shangai it was 35-40 days. 7. Labour cost: as a percentage of total cost was about 30% in Korea, 20%in Taiwan and 10% in China. 8. Landed cost: for a pair of shoes in South Korea was$7.86 and in China it was $9.86.
As per the figures observed in the market conditions given above, it can be seen that Nike’s growth in China has not been as high as expected by the company. This can be attributed to the following factors: 1. Changing business environment: The Chinese leaders had said that the country was open to foreign investors and had also said that they would keep their commitments. This ideological shift was favorable to private and foreign investors but many traditionalists within the Communist Party were reportedly disturbed by it. 2. Joint ventures: This form of foreign investment was favored by the Chinese authorities. A foreign investor’s participation could not be less than 25%. Technology contributed was to be truly