Bath & Body Works in China

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

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e, it has reduced its tariff rates eight times since 1991; the current average rate for most products now sits at 16.5 percent (ô2002 National Trade Estimateö 1). In addition, the government has also reduced the number of products subject to import quotas, expanded trading rights for Chinese enterprises, and increased the transparency of its licensing procedures (ô2002 National Trade Estimateö 1). Nonetheless, ChinaÆs import and investment policies remain extremely complicated and expensive for some industries. A review of the entry barriers for products in the cosmetics industry demonstrates the many ways ChinaÆs political and legal forces can serve as entry barriers to foreign investment. Entry Barriers for Imported or Foreign Cosmetics Despite the move to open ChinaÆs market to foreign investment, some government agencies still adhere to the traditional policy of protecting local economies against foreign competition by erecting technical and indirect barriers to trade (ô2002 National Trade Estimateö 1). Government officials in different sectors will often apply relevant legal provisions inconsistently, particularly in non-competitive industrial and emerging economic sectors (ô2002 National Trade Estimateö 1). Moreover, provin
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Approximate Word count = 7024
Approximate Pages = 28 (250 words per page)