Business Group : Fadoua Elbrihi, JG Hervé, Sacha Milchten, Nazir Moulan & Evandra Semedo - Doing Business in Asia

Night Entertainment in Jiangsu - China

www.servicejiangsu.wikispaces.com

Business Concept

Big complex with multiples entertainment options :

• Dining

• Singing

• Cabaret Dance Show

• SPA Experiences

Folie’s - 法丽

• Strategic Brand Name in the Chinese context : Folie’s

• Location : Times Square

Business Concept

Same concept as French Cabaret :

=> Trendy Food &

Beverage concepts with

astonished live shows.

Business Concept

• Private KTV rooms fully equiped for singing and playing.

• Night clubs with large drinking offer, outstanding music and lighting.

Business Concept

SPA : Hammam, Sauna, Heated Swimming Pool & Jacuzzi

Propose Collaboration Approach

• Find the appropriate Chinese partner to open a chinese company which will be managed by a foreign management entertainment company.

• Establish strong relations with the local government in order to avoid restrictions on activities.

Pestel analysisPolitical : Need to establish strong relation with local authorities.

Economical : Chinese booming economy, new Chinese wealth. Jiangsu Province and especially Suzhou has promising potential (rich province, 6 Million people).

Social : affinity from Chinese people for night entertainment and show off environments, especially the new-rich generations.

Technology : High end technological concept, Dj equipement, Ipad for waiters, Breathtaking lighting system, last SPA, jacuzzis, sauna & hammam technologies.

Environmental : Recycling of all disposable bottles and Noise isolation. Commitement to be part of an environmental association and to pay fees in order to be considered like a «green company».

Legal : Huge effort in order to respect the laws , and special precaution concerning adulterated alcohol and teenage entrance (under 18 years old). Nevertheless, a deal with a well-connected Chinese lawyer could be necessary in so far as to make our business really legal and approved by Chinese administration.

5 forces of PorterCompetitive Rivalry : Night clubs, KTV and Spas.

=> Strong bargaining power because alternative entertainments are able to provide similar services. Our strenght is to combine all the entertainments together.

Potential entrants : Others Night clubs, KTV and Spas as others Cabaret Shows companies.

=> Weak bargaining power because of the strong investment needed to enter the market. Moreover, if a connection with the local authority is established, it could be possible to have a monopoly on the market, which could discourage other competitors to launch in this new market.

Substitutes : other Night-entertainments in Suzhou.

=> Strong bargaining power because Suzhou already offer a large range of night entertainments, even if we want to offer a new kind of entertainment, with a new experience for our customers.

5 forces of Porter

Suppliers : food & beverage suppliers for the restaurant, dress for dancers, human ressources companies for the shows.

=> Weak bargainging power because there is a lot of competitors in these sectors.

Buyers : Individual consumers

=> Depending on the success of the project. If we manage to create a competitive advantage by offering a unique and different service to our customers, they will have a weak bargaining power to us.

Authority’s roles : Strong bargaining power of authorities. They decide of everything, licences, controls... Without good relationship with autorithies, our project can’t be realized.

Questions

1) Is it crucial to open our capital with Chinese or foreigners?

2) Is it better to create a JV or a WOFE?

3) What agencies do we have to contact to recruit western

dancers?

Consulting Group

To run a cabaret business, Joint venture is the only one juridical structure agreed by Chinese government.

What are the possibilities in terms of capital and starting the activity ?

We advise to strictly follow Chinese law, even if not respected by many companies.

Before signing Joint venture agreement , a memorandum of understandings should be signed.

Consulting Group

SOLUTION YOU PARTNER STRENGH WEAKNESS

REALESTATE OWNER

Bring 100% cash from 1 up to 99% of the total capital amount

Bring 100% real estate estimated from 1 up to 99% of the total asset

Strong asset If shareholders splitting difficult to evaluate in case of speculation

Cooperative joint venture

Bring 50% of the total asset.

Bring 50% of the totl asset.

Same capital structure for each shareholder

Risky, it supposed a really good relationship with the partner.

REAL ESTATE RENTER

Bring only cash from 1 up to 99% of the total asset

Only cash too from 1 up to 99% of the total asset

Renting is more flexible than buying especially when at the beginning

Possible increase of next rents

Consulting Group

To recruit western dancers, we have to contact the current western dancers “troop” which already work in Shanghai’s night clubs.

First to avoid residential issues (visa).

Westerns dancers are very trendy in Shanghai

Troops already in the place allow to make cost savings.

JV or WOFE / Chinese or foreign partner?

Legal impossibility to create a WOFE => no foreign partner

More efficient to have a Chinese partner:

•Legal obligation

•Administrative issues

•More efficient if the partner is the owner of the place

Consulting Group

Recommandations

• Take care of the dress code , according to the law they are some restrictions .

• You cannot make a night club everywhere, respect the law and regulations.

• Be sure that you will keep control of the management. Be carful of the partner behavior.

• Keep western staff as a competitive advantage: western “savoir faire”

• Optimize the presence of foreign customers.

• No night life in time square area

• No location according to your need in this area.

Our decision

• Global entertainment industry is expected to show an annual growth of 10%

• Kept the concept as outstanding French Cabaret in Suzhou

• Adapt the model to the Chinese consumers

• Open the business through a joint-venture with Chinese partners

• Pay attention to the business risk due to the nigh life & the legal risk (controls, partnership and Government Policy changes)

• Strictly respect the Chinese law

Thank you for your attention!