2010

ContentsBusiness Venture........................................................................................................................... 2

Target Market............................................................................................................................ 2

Goals.......................................................................................................................................... 2

Short-Term (year 1)................................................................................................................2

Long-Term (Year 2 -6).............................................................................................................2

Business Environment................................................................................................................... 2

Social..........................................................................................................................................2

Economic....................................................................................................................................2

Technology.................................................................................................................................2

Competition............................................................................................................................... 2

Customer Profile........................................................................................................................ 2

Marketing Strategies......................................................................................................................2

Product.......................................................................................................................................2

Promotion.................................................................................................................................. 2

Pricing........................................................................................................................................ 2

Budget........................................................................................................................................... 2

Start up costs............................................................................................................................. 2

Running costs.............................................................................................................................2

Appendix........................................................................................................................................2

Bibliography...................................................................................................................................2

Business VentureDiamond water purification is not just any equipment which provides clean water but that of health water. As China’s condition of water is of low quality and contains much impurity, it is impossible to drink directly from the tap water without water treatment process beforehand. Therefore, we hope to cater to the well-being of people living in China, in particularly Xiamen, by giving them an opportunity to possess clean and healthier water which is beneficial to health.

Even though some other companies like AmyWay had already break into the China market in terms of launching water purification system, we believe that Diamond is able to have a comparative advantage in terms of pricing and technology wise.

To start up a Diamond water purification system distributor/retailer in Xiamen, we will need an agency to help us with the paperwork. The agency we have chosen is Tannet Consulting Limited (Xiamen) (Xiamen Company Registration, Xiamen Investment Guide, Tannet Xiamen Business Setup, 1999). Tannet Consulting Limited (Xiamen) knows the business policies of Xiamen and can help us better start up our business and provide us with business ideas.

Target MarketThe country chosen would be China, Xiamen. Its population (Xiamen) is 2.43 million. Province is in Fujian (Hokkien) and GDP per capital being CNY 64,413 (USD 9,438).

The nationality of Xiamen is mainly made up by the Han Chinese (98.84%) with the remaining being the ethnic groups. Furthermore, we focus our attention on families, as we think that, every house should have a water purification system, so as to provide clean drinking water to the family

Goals

Short-Term (year 1)

1. To break even (appendix 4) We would want our company to breakeven in just 1 year, and the calculations would further explain in appendix 4

2. To Come Up With promotion plan As we enter into a new consumer market, we would still be new to their customs; hence we would do research to their consumption behaviour and come up with promotions that will be in favour to both the consumers and the company.

Long-Term (Year 2 -6)

1. To be known to at least 70% of the Xiamen families within 3 years, through government projects and publicity.

2. At the end of every calendar year, surveys in various parts of Xiamen will be taken to find out the average number of people who know about our water purification system.

3. To have a manufacturing plant in Xiamen by end of Year 5, so as to cut cost in transporting these products to Xiamen.

4. To venture out to new target market; companies.

Business Environment

SocialThe culture of Han people in China values family and kinship. Therefore, the well-being of each and every member in the household is important. The water quality in Xiamen is poor in condition and by selling our product in view of the Han’s culture; there is certainly a market for it. The Han Chinese would probably look into areas of concern over their family members’ health issues and water, which is essential for life, plays a major role.

EconomicThe Water Purification industry is rather competitive in Xiamen. Competitors such as Amyway and KWF Sci-Tech Development Co.,Ltd would be a threat to Diamond. However, in comparison of KWF Sci-Tech Development Co.,Ltd and Diamond and looking into the size of the companies, KWF Sci-Tech Development Co.,Ltd’s manpower is only around 50 staffs. Therefore, they do not have sufficient manpower and resources to meet the demand of China- a high population density. Diamond on the other hand, is well established and received several recognized awards. They certainly have the required resources to meet the demand.

Although face with the recent recession and the economic downturn, China’s recovery is acting fast and the economy is bouncing back. The household per capital is approximately RMB 1515.19. Furthermore, the competitive pricing set by Diamond would be made affordable. Given the household per capital income, it is thus feasible for the launch of Diamond water purification.

In addition, the Chinese government had also pumped in RMB 4 trillion in the water and wastewater treatment industry to encourage the growth of these industries. Therefore, entering the China market is feasible at this point in time and would be able to reap profits in the short-term.

TechnologyDue to advancement in technology, Diamond water purifier is able to kills germs and eliminates impurities up to 99.99 % up to that of the world’s standards. Also, as compared to competitors such as KWF Sci-Tech Development Co.,Ltd, Diamond adopts an efficiency energy converter which enables breaking of water molecules more effectively. This thus made absorption of water into our body more easily.With this, in terms of technology wise, Diamond has a comparative advantage above its competitors and is better able to cater to the needs of its consumers in china.

CompetitionIn Xiamen, there are not many companies selling household water purifier, but there are definitely some famous brands, like Amway, which is known for its quality product and is priced at RMB4058.225. Like Xiamen Ogle Water Purifying Technology Co., Ltd. And Xiamen Hawkeyed RO Water Purifier Inc and Xiamen Ou Weishi in which its Xiamen Ou Weishi HRO-N50F cost RMB2380 all of these are local brands, which might posse potential threat to Diamond Water Company. (Appendix 1)

Customer Profile

(Refer to Appendix )

Marketing Strategies

Product 1. For Health Conscious Families

Since water that are being dispense out from the taps in China are mostly not fit for drinking, the families might not treat the issue of having a clean drinking water at homes seriously, as According to the 2007 OECD Environmental Protection Report: China, which is a survey done nation-wide on drinking water and water borne diseases, in 2006 the water standard in most of China’s major cities did not meet state drinking water standards (Wilson Center). The number of people who die of water borne diseases in china has been increasing over the years (Wilson Center). Hence with the installation of water purification, these problems will not be a problem to the families, as the purpose of a water purification system is to have a clean drinking water.

2. Convenience A water purifier is convenient as one can immediately obtain clean and cool water once the tap is turned on. Time need not be spent on boiling the tap water and one need not

worry about not having enough bottled water or space to keep the bottled water in the house.If families were to have a better financial planning, a water purification system would be advisable, as it will be must cheaper in comparison with buying of bottled water frequently. It will be much more environmentally friendly as it exclude the usage of LPG gas, which in the case of obtaining clean drinking water through boiling water daily, will involves heavy usage of LPG gas, which in turn will be costly.

3. Main Features/benefits of Diamond water After the purification process from the diamond filtering system, it not only provide clean drinking water for the family members, but it also gives the water additional benefits that is essential for the human body. Examples would be; it will be absorbed easily by our body to enhance metabolism, Effective in cleansing impurities and toxins from our body, etc.

4. Trusted brand in Singapore. To ensure that all the claims stated, in drinking diamond water is true and real, testing were done on the water to give the consumers an assurance that, so that they will not just believe what is being told, when they were being introduced to the diamond filter. Some of the awards received would be Water Quality Association (WQA) Gold Seal Award, etc.

Promotion1. Opening Promotion

We will attract customers by having an opening promotion for the first 10 customers to purchase the purification system, they will enjoy 30 percent discount, free installation. By limiting to 10 customers, we will not incur that much addition expense.

2. Seasonal Promotions Our seasonal promotions would be according to the seasonal changes in Xiamen. During summer period, which is between April to mid June, the weather would be very hot and dry, hence we would want to encourage more people to drink clean water. They will get to enjoy a 20 percent discount on the purchase on any Diamond products during this period.

3. Promoting Healthy Water Campaign There could also be road-show showing the benefits of purified water as compared to other methods of obtaining water. The public would be allowed to try the water that

is purified as well as witness the purification process. During the road-show, special water purifier packages can be promoted and sold to encourage the Chinese to buy the water purifier at a cheaper rate.

4. Flyers

These would be given out at hotspots such as SM Mall, Zhong Shan Lu (中山路) and Fu

Wang Bang (福王邦). Famous streets and shopping mall in Xiamen to the tourist and also to the locals. This would allow our name to spread among the locals as well as the foreigners.

5. Billboard Posters and Buses In order to increase the usage of water purifiers, there should be more advertisements promoting the benefits of water purifiers. For example, there could be television advertisement promoting the use and benefits of water purification. Another example can be having huge billboards on the roads that could help to advertise water purifying products and its benefits. This would help raise the awareness about the strengths of water purifiers and in turn it could increase the number of people who would buy water purifiers.

6. Business cards or Emails To be able to keep in touch with our customers, we will request for our customers leaving behind their business cards, emails or contacting number so that we can inform them about our upcoming promotions or special discounts that we will have.

7. Collaboration with the government. Government campaigns promoting water filters could be set up to enhance the public’s knowledge of water purifiers. The campaigners could go door to door to teach people the benefits and the cost efficiency of a water purifier as compared to boiling water or bottled water which is their more common way of obtaining drinkable water. This could be held in line with an environmental campaign that discourages the use of bottled water by informing the public that plastic bottles are not environmentally friendly. In addition, it is time consuming andcostly to recycle plastic.

Pricing1. Quality Pricings

Our prices will be affordable. This will make us competitive yet profitable at the same time. Our selling price will be about 130% of the cost price (refer to Error: Reference

source not found). Compared to the other purification system in Xiamen, it is steeper but, comparing to the health benefits, it is definitely worth paying for. The price would be at RMB4153.24

2. Instalment packages In order to make our product attractive to the customers, we offered them a instalment package without interest so that, families that could not afford the product by paying the price at one go could still buy the product through a 12 month or 18 month instalment programme.

Place

The first step would be the setting up of a retailer shop in Xiamen for sales of Diamond water purifier. This is to ensure minimal transportation cost is incurred. Furthermore, the fact that Xiamen is located near the sea port would make transportation of good via seaway easier and less costly. In addition, this would make it more convenient for the people living in Xiamen to have access to Diamond water purifiers as the retailer shop would be centrally located in Xiamen. In the long run, a manufacturing plant would be set up in Xiamen itself. This is to ensure smooth production and fully utilized of resources. Also, production cost would be reduced and profit would increase. Our recommended place would be a store in SM mall which is one of the biggest and popular shopping mall in Xiamen; hence this would be a great opportunity to gain recognition by the people of Xiamen

Budget

Start up costs(Refer to Error: Reference source not found)

Running costs(Refer to

)

AppendixAppendix 1

Appendix 2

High benefits

Low benefits

Low price High price

Diamond Water

Xiamen Hawkeyed RO Water Purifier

Amway

.Ou Weishi HRO-N50F

Appendix 4

Breakeven analysis

Our selling price would be a mark-up totalling to a 30% increase on the cost price of the diamond water purification system of RMB 3775.6731. This is RMB 4719.59

Start-up and Monthly expense cost up to a year would be: RMB 119200

Hence we must sell 127 units of purifiers to breakeven

Appendix 5

Selection of location

Acce

ssib

ility

Rent

al

Spac

e

Tota

l

20% 40% 40% 100%Fu Wang Bang (福王

邦)6 4 7 5.6

Zhong Shan Lu (中山路)

8 5 6 6

SM Mall 7 7 7 7

(1 being least favourable, 10 being most favourable)

Highest Score: 7 Selected Location: SM mall

Appendix 6

Start-up cost (RMB)

Item Cost (¥)Salaries 5,900

Total Rental Cost 10,000Shipment 2,500

Total: 18,400

Appendix 1

Running cost per month (RMB)

Item Cost (¥)Salaries 5,900Utilities 2,500Total: 8,400

Bibliography

China Market Entry, China Business Consulting. (2009). Retrieved April 9, 2010, from JyS China Business Service: http://jyschinabusiness.com/news/china-business-strategy-consulting-market-entry.html

China's Food & Beverage Industry Study in 2006. (2005, December 6). Retrieved April 9, 2010, from Market Research: http://www.marketresearch.com/product/display.asp?productid=1271223

Xiamen Company Registration, Xiamen Investment Guide, Tannet Xiamen Business Setup. (1999). Retrieved April 10, 2010, from Tannet Consulting Limited (Xiamen): http://www.xiamen-company.net/

Wilson Center. (n.d.). Retrieved July 01, 2010, from Wilson Center:http://www.wilsoncenter.org/index.cfm?topic_id=1421&fuseaction=topics.item&news_id=272856

Wilson Center. (n.d.). Retrieved July 01, 2010, from Wilson Center:http://www.wilsoncenter.org/index.cfm?topic_id=1421&fuseaction=topics.item&news_id=272856

Diamond Water. (n.d). Retrieved July 01, 2010, from Diamond Water:

http://www.diamondwaterweb.com/products_dew_features.html#compare

Amway purifiers. (n.d). Retrieved July 02, 2010, from Amazon.com:

http://www.amazon.com/eSpring®-Purifier-Countertop-treatment-Filtration/dp/B0039AY52W/ref=sr_1_2?ie=UTF8&s=home-garden&qid=1278604663&sr=1-2

Diamond Product Price. (n.d) Retrieved July 02, 2010, from Lelong.com.my:

http://www.lelong.com.my/Auc/Archive/DetailStd.asp?When=2009-06&ProductID=36255414