Entering the Chinese Consumer Market

Entering the Chinese consumer market may be risky but ultimately lucrative. With Hong Kong coming back under Chinese control in June of 1997, the Chinese consumer market is bound to experience some ups and downs. In depth understanding of not only the economy, but also the cultural and political terrain will be the mandatory for interested foreign investors.

The advance of foreign capital into Chinese retail markets is bound to cause changes those markets. The Chinese entrepreneurial experience lags behind more Western consumer driven economies. Until recently, Chinese demand for consumer goods outstripped supply. Producers would focus on suppliers, not consumers. Manufacturers rarely felt compelled to search for customers outside their home territory. In other words, national brands with customer loyalty are largely unknown in China (Yatsko, 1996, 70).

The Chinese economy is still centrally controlled and largely driven by 5-year plans. The combination of slowly loosening economic controls and inadequate infrastructure has created a difficult situation. While foreign investors see great potential in the Chinese market, things are not yet at anything near full capacity. Even Thakral Corp. which seems adept at dealing with the emerging Chinese market consumer electronics market, admits that continually learning how to penetrate that market is their first and main concern. Thakral sees reta

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ld all over the world. Chinese leadership is also interested in having multinationals invest, in order to acquire capital and provide jobs. Yet there are many difficulties involved in this in a country where corporate culture is almost completely estranged from manufacturing are many. In the case of Boeing, flaws in assembly were linked to inspectors who overlooked errors rather than correct the mistake. Multinationals are finding a long and convoluted path to success in China, compounded by the fact that state-owned suppliers are more interested in who does what, rather than on how well the job gets done. Becoming established in China in many cases requires a revolution from the ground up. While Western management is quota driven, management in the PRC has been customer driven ("No Pain, No Gain", 19954, 45). The rewards of becoming established in China can be great. Consumer goods in China net gross margins of 18-25 percent, as opposed to nearly 10 percent in America. Because the Chinese love a quality product it has become clear that the first step toward success is advertising ("How and Why to Survive...," 1995 64). According to Hong Kong based market research firm Frank Small & Associates, foreign brands in Beijing
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Approximate Word count = 2742
Approximate Pages = 11 (250 words per page)

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