London Metropolitan UniversityCourse: International MarketingReferees: Marina Lindl

International Marketing in China

C A S EA recent survey in China of 4000 urban children aged 7-12 showed:

90 % wanted to be more intelligent

81.3 % dreamed of international travel

61 % wanted space travel

60.2 % wanted to be more beautiful

MARKET OPPORTUNITIES FOR WESTERN COMPANIES THAT TARGET CHINA’S CHILD POPULATION?

Source: Module Booklet International Marketing 2009 Autumn Semester

I. Social Cultural Environment II. Target GroupII. Country BriefIII. Cultural Environment IV. OpportunitiesIV. Conclusion

A G E N D A

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIES

S O C I A L C U L T U R A L:

• Culture is the sum of total of the learned behaviour of a group of people that are generally considered to be the tradition of that people and are transmitted from generation to generation. Culture refers to the cumulative deposit of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations through individual and group striving.(Hofstede, G. 1997)

SOCIAL CULTURAL TARGET GROUP

C H I N E S E C U L T U R E :

• GUANXI:

In literal terms, this central concept in Chinese culture means ‘relationships’ or ‘connections’.

•CONFUCIANISM:

Emphasis is placed on the concept of relationships and the elements of responsibility and obligation. This Chinese philosophy remains a vital cultural

factor in the development of Chinese society and is still effective in Chinese business culture today in the preservation of surface harmony and collective good. Source: Wellings (2007)

•FAMILY VALUE:

The family remains as a very important centre of every Chinese. Moreover the family is always taken into account when a decision is made.

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

CHILDREN AGED BETWEEN 7-12 LIVING IN AN URBAN AREAS:

(1) SPENDING POWERaverage pocket money of a 12 year child: 21.1 Yuan = £ 1.88 per week

(2) PESTER POWERDef.: “Children's ability to make their parents buy something or do something for them

by continual asking until the parents agree to do it” Source: AllWords.COM (2009)

(3) CHANGE AGENTSchildren are the first one to try new products

(4) ACCESS to better healthcare, education, a wider choice of careers aspire to than their parents

(5)However, they have MORE PRESSURE due to the fact that they are the “only child” Source: MarketResearch.com (2007), Kotabe/Helsen (2004), McNeal /Yeh (2003)

Source: Kotabe/ Helsen (2004) Global Marketing Management

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

C O N S U M E R M A R K E T :

- World largest population with over 1.3 billion people Source: Globalegde.com (2009)

- In 2006, approx. 312 million Chinese under the age of 15 Source: MarketResearch.com (2007)

- Fast growing economy- Growing middle class Source: Uno Wider (2006)

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

I N F R A S T R U C T U R E :- In 2008 a £354bn stimulus plan involving spending on infrastructure Source: BBC News online (2008)

B A R R I E R S F O R I N T E R N A T I O N A L T R A D E :- Corruption, protectionism and red tape - Example: Government controls the media, therefore also controls advertising

rates. Therefore the cost of reaching consumers is higher than in Western Countries Source: Economist.com (2009)

CHINA CAN BE CATEGORIZED AS AN EMERGING MARKET: Source (Waldhauser 2007)

- According to Russel/Miller (1998) there are following advantages available to a company: reduced effects of market saturation

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

WHY SHOULD WE LOOK AT THE SOCIAL CULTURAL ENVIRONEMNT:

Consumer

makes decisionsBUYING - BEHAVIOUR

& NEEDS

CONSUMPTION CHARACTERISTICS

CULTURE:shared values , religion, language

of Society

influences

PINPOINTS MARKET OPPORTUNITIES

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

From “Geert Hofstede Cultural Dimensions,” by G. Hofstede, 2006, Copyright 1967-2003 by Geert Hofstede.

INDEX WORLD AVARAGE

CHINA ANALAYZE

Power distance (PDI)

55 80 (high) Authority play an important role , consumer will follow the adaption behavior of their leaders and will adopt products by their superiors

Individualism (IDV) 24 15 (low) Collectivist society, emphasize on Qualities such as loyalty, interdependence, conflict avoidance and identification with the group Decision will be made in consensus with the group, Network Marketing is important, Group consensus and conformity to family preference rather than to individual choice

Masculinity (MAS) 50 55 (high) Statues, Success, Money, achievement values are prevailed, demonstrating achievement is by having the latest and most novel product, hoping that new products bring success and ultimately higher status in society

Uncertainty Avoidance (UAI)

64 40 (low) Chinese People are innovative, entrepreneurial , easygoing & risk taking , responsive in coping with future changes and new product

Long-Term Orientation(LTO)

45 118 (LTO) Tend to have values that centre around future thrifty , perseverance & Persistence, Ordering relationships by status and observing this order,

HOFSTEDE’S 4+1 DIMENSIONS for Analyse of China’s Culture:

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

HALL’S LOW AND HIGH CONTEXT Theory for Analyse of China’s Culture:

• Communication is Implicit, indirect • Business and work habit is Relationship oriented, rewards based on seniority• Loyalty and responsibility, Group conformity, harmony• Hierarchical, respect for authority, gender roles• Logical, sequential, Problem Solving

Source: de Mooij (2005), Hollensen (2004)

China is a High Context Society

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

LIMITATIONS OF HOFSTEDE AND HALL’S THEORIES:

• China is a huge country in size and population and differs in his traditions and values from region to region. This theory is not able to indicate regional differences.

• The culture of country changes over time, either by internal or external influences and it is not possible to capture changing trends by these theories.

• Five Dimension and scores were not determined in a consumption context and not able to make meaningful predictions about consumption pattern

• Hofstede collected data through questionnaires, which have their own limitations and accuracy.

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

C H I N A A N D E D U C A T I O N

Education in china is a very large-scale enterprise

The world’s largest school system with 1.1 million schools,13 million teachers and 204 million full time students

Of the 204 million students, 146 million are in grade 1-5

School and the quality of instruction vary enormously, though the overall quality is rather low, some students receive an excellent education

China has approximately 900,000 primary schools

Children enter the first grade at age six and one-half must attend school for five years(Thomas,F,1982)

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

C H I N A A N D E D U C A T I O N Since 1980’s ,with peoples living standard improved remarkably and the number of families with only one child increasing thanks to the implementation of a family planning policy, young parents in china have been paying ever greater attention to the early education of their children.(Xihaohuan, 2002)

The system of education in China is demanding and often begins at a young age. Chinese culture is a collectivist one and often depends upon informal chains of communication.

Levy (2003) explains that learning in China takes place in classrooms. Even where technology such as television or software is used it tends to be heavily instructor lead.

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

R I S I N G O P P O R T U N I T Y

Great potential for income generation for Western organisations by providing e-Learning for China.

The Chinese manufacturing economy is booming and education is a highly regarded commodity.

There is a shortage of quality education provision in China, and a shortage of trained teachers.

It is anticipated that Western universities and training companies are already in the process of creating such services.(Friesner T.)

COUNTRY BRIEF

CULTURAL ENVIRONMENT OPPORTUNITIESSOCIAL

CULTURAL TARGET GROUP

Growing economy – growing customer base – growing spending power

This is the opportunity for Western companies to expand their business

However, they have to consider the Cultural dimensions of China

before introducing new services or product to Chinese customers

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