China may well be the strongest of the world's emerging markets, and certainly a number of Western companies are considering China as an appropriate market for long-term expansion. For some companies, such as Disney (which recently announced that it would be building an amusement park in Hong Kong), the capital investment required to enter the Chinese market is significant. But other companies, particularly those which manufacture consumer goods, find that China is simply a largely untapped market in which their goods and services can be sold. This research examines the Chinese environment and structure which would support the marketing of toothpaste and toothbrushes to the region by the Colgate-Palmolive company.
Despite China's strong economic performance, the country continues to face problems. The set of price stabilization measures announced by the government during the last quarter of 1994 were based on the reintroduction of a broad scale of price controls and other forms of administrative guidance. Although these controls led to a reduction in inflation, monetary policy remained loose, with M2 growth accelerating to 35.9 percent through the end of the first quarter of 1995 ("Country Commercial Guide: China," 1999, p. 3).
Since the beginning of China's efforts to stabilize its economy in mid-1993, Chinese authorities have been reluctant to pursue tight macroeconomic policies that might lead to a sharp economic contraction. At the core of the government's monetary and fiscal problems remains the issue of state enterprise reforms. Despite the crippling financial costs of support for state-owned enterprises, there is still little to suggest that the central government is prepared to risk the labor unrest which might follow any serious effort to tackle the problem.
In China, foreign companies are not permitted to directly engage in trade other than marketing goods they have manufactured in China. Searching for an ag...