-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
How far is China Really?
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
1,347,350,000
313,967,000
4.3 3.85
1,210,193,422 MASSIVE MARKET
POTENTIAL relative to US
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
Maddison (2003) China 118 Years US 2000 p/capita India 5000
Years US 2000 p/capita
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
Tier 1
Tier 2
Tier 3
Tier 4
2 7 9
60 63 15
330 125 27
800 700 105
< $20 000
$10 000 to $20 000
$5 000 to $10 000
> $5 000
India- relatively small number of
consumers that can afford global brands
Huge group - unlikely customers anytime
soon
Much larger number of consumers but
less attracted to global brands
Massive group loyal to local customs,
habits and local brands
70%
Shoprite close doors in Mumbai (2010) after 6 years of
unsatisfactory growth.
According to CEO Whitey Bason the groups shops in Africa show a
drop in sales of 4.3% (R3605 million) SA sales increase in same
period by 11.9% and profits by 17.5%
nearly 100 multinationals respondents reported that they had
overestimated market potential China for their products or
services
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
E.g. Mobile phones (per capita income between $2000 and $3000
pa)
Chinese per capita income $ 8,382 vs $3,694 for India.
Thus China market 2.26 x > India.
2005 Estimate
Country Mobile Phones/1000 people Population Mobile Phones
China 65.8 1,347,350,000 87,577,750
India 3.5 1,210,193,422 4,235,677
Market potential China > India 20.7
Source: Ghemawat (2008)
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
SA India Brazil China
Growth Competitiveness Index (104) 58 55 57 46
Business Competitive Index (103) 55 33 38 42
Corruption Index (145) 121 90 59 71
Multilateral
Absolute Differences
India
Brazil
China
SA
Bilateral
CAGE
Relative Differences
CAGE
CAGE
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
Economic System
Political System Legal System
Institutional context
In-formal institutions
Formal institutions
Human Resources
Capital Resources
Natural Resources
Technology Resources
Entrepreneurial Resources
Resources Context
Suppliers
Substitutes
New Entrants
Industry structure
The Firm
Competitors
Customers
Market structure
Topics
Culture Administrative Geographic Economic
-
Prof AJ Smit (UNISA)
Index Leadership in practice
End Topic
Institutional context
Industry structure
Market structure
Resource Endowments
CAGE X
CAGE Y
CAGE Z
There is no SPACE outside CAGE space
Using CAGE distance captures the relative differences and
similarities between countries
The CAGE framework is most valuable when applied at the industry
level
Applications:
Understanding the liability of foreignness
Comparing; competitors, markets, industries, institutions at the
firm level
Differences between countries still matter
very much!
