Entry Report to Chinese Wine Market

Topics: Marketing, International trade, People's Republic of China Pages: 19 (6014 words) Published: May 5, 2013
Executive Summary
This report discusses all of the relevant aspects relating to the entry of Dorrien Estate wines into the Chinese market. In the course of due diligence, this report outlines all relevant information required for entry to a foreign market. The uncontrollable factors such as the Chinese economy, political climate, technological, socio-cultural and legal factors are first extrapolated showing that China is the second largest economy in the world and plays an influential role in the global economy. The robust economy has given rise to high levels of disposable income, leading to increased demand for foreign products, and in particular, Australian wine. Politics and the economy are closely inter-related, with the Chinese socialist market economy being governed by the Communist party of China, which may pose certain political risks for a foreign organisation entering the market. Chinese business practices are also interwoven with socio-cultural elements highlighting that the Chinese seek to form close personal relationships with trading partners. A hybrid legal system that is difficult to navigate, coupled with difficult distribution infrastructures may pose as barriers to entry for foreign organisations. The report also delivers a market audit, showing that there is a potential 250 million consumers spread across six distinct market segments. Cultural attitudes reflect that wine is seen as sophisticated and represents images of luxury and decadence, driving consumption. Three Chinese companies hold a 90% share of the market, with the remaining 10% held by foreign entities. Distribution and transport of wine is predominately controlled by a small set of distributors who have access to on-trade and off-trade distribution channels. Foreign wine is commonly priced between AUD$14-66 per bottle, and all major competitors use a mix of advertising such as TV and print and promotional activities such as trade shows, wine competitions, in-store promotions, tastings and word-of-mouth to promote their products in the marketplace. Market entry strategies are discussed and the initial course of direct exporting is recommended for Dorrien Estate, due to low-cost and minimal risk. Marketing tactics outline that the organisation should focus on the market segments of young royals, aspirationals and Generation-X, as these market segments will have the strongest growth potential over the next 5 years. A range of four products priced between AUD$40-60 should be introduced and promoted via TV and print advertising in luxury consumer lifestyle magazines, in-store promotions, trade and wine shows and wine competitions. The report concludes with a summary of all matters discussed and makes the following recommendations to management before market entry: 1. Have a thorough understanding of macro-environmental factors that may hinder market entry. 2. Select an established and knowledgeable distributor with good access to extensive distribution channels. 3. Have a complete understanding of Chinese business practices that may adversely affect or give a great competitive advantage to the organisation. 4. Have an extensive knowledge of consumer behaviour which will lead to better execution of marketing strategies and tactics. 5. Direct export is the most cost-effective and lowest risk strategy. A strategic alliance may be favourable in the future if the product shows good signs of market acceptance.

Table of Contents
Executive Summaryiii
1: Introduction6
2: Market Attractiveness7
2.1:Relevant Political Factors7
2.2: Relevant Economic Factors8
2.3: China Current Account9
2.4: Disposable Income per Capita10
2.5: Economic Tariffs and Trade Agreements10
2.6: Relevant Socio-Cultural Factors11
2.7: Relevant Legal Factors11
2.8: Relevant Environmental and Technological Factors12
3: Market Audit12
3.1: Market Segments and Size12
3.2: Consumer Behaviour14
3.3: Distribution and Transport...
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