Bath & Body Works in China: Market Screening
The Limited Brand markets women's and men's apparel, women's intimate apparel, and personal care products through three reportable segments: Victoria's Secret, Bath and Body Works, and Express and Limited apparel stores. The Bath and Body Works segment retails personal care products and accessories and home fragrance products under the Bath and Body Works and the White Barn Candle Company Brand names. For the fiscal year 2004, Bath & Body Works earned sales of USD 2.1 billion from an operating budget of USD 400 million (Disclosure Statement 1). The brand operates 1,604 retail stores in the United States with sales averaging USD 544 per selling square foot (Bath & Body Works 1). This paper screens China as a potential market for the Bath & Body Works brand.
Since the late 1970s, the Chinese government has been moving the economy from a predominantly centrally-planned communist system to a more market-oriented system (CIA World Fact Book 1). Today, the socialist government, as run by the Communist Party of China, has allowed more freedom to non-state organizations and companies and individuals, and opened the system to more foreign investment. As a result ChinaÆs Gross Domestic Product (GDP) has quadrupled since 1978 (CIA World Fact Book 1). In 2003, ChinaÆs economy was valued at USD 1409.9 billion, representing one of its fastest increases since 1997. Overall, China represented 3.9 percent of the worldÆs GDP, an increase of 0.1 percent over 2002 figures and the seventh largest in the world after the United States, Japan, Germany, Britain, France and Italy (ôChinaÆs GDP Ranks No. 7ö 1). ChinaÆs economy continues to expand. GPD grew 9.5 percent in the first quarter of 2005 alone (ôChina GDP Rise 9.5&ö 1).
Despite its large economy, however, ChinaÆs per capita income levels are low. ChinaÆs current per capita income is approximately USD 800 (or USD 5,300 per year (RMB 44,000)...