Danes Coffee: Marketing Report on China Market Entry Strategy

This report, prepared for Danes Coffee's expansion into the Chinese market, provides a comprehensive analysis of the opportunities and threats. It examines economic and financial factors, including China's economic growth, consumer behavior, and the impact of trade agreements and tax reductions. The report also assesses political and legal environments, emphasizing the importance of adhering to Chinese regulations and building strong relationships with government entities. Social and cultural aspects are explored, highlighting the need to adapt to local customs and preferences to attract Chinese consumers. The report offers strategic recommendations based on these analyses, considering the potential impact of technological advancements and other relevant variables for successful market entry. The report highlights the importance of promotional activities, CSR policies, and understanding the nuances of Chinese business practices. The overall goal is to provide actionable insights to the company for their expansion strategy.

[Danes Coffee; Emerging in Chinese Market]

Executive Summary
Danes Coffee is an Australian coffee brand and offers range of coffee products across the
Australian market. The company is receiving great popularity across Australian market because
of its highly satisfied Australian consumers. Therefore the company is aimed to extend their
coffee chains across the Chinese market. China is contained high population rate and the demand
related to food and beverage products is pretty high in this nation. It leads the coffee company to
extend their business chain across the Chinese market through product promotions. While
emerging in the new market it is quite important to indentify certain factors such as economical,
financial, social, environmental, and technological and etc.

Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Economical and Financial Environmental Analysis........................................................................5
Political and Legal Environmental Analysis...................................................................................6
Social and cultural Analysis............................................................................................................8
Technological Environment Analysis..............................................................................................9
Conclusion and Recommendation.................................................................................................10
Reference.......................................................................................................................................12
Appendix........................................................................................................................................15

Introduction
Danes Coffee is an Australian coffee specialized and offers range of coffees to their customers.
The company is gaining great popularity across Australian market and the customers are quite
satisfied with their product quality and offerings. The company holds an interesting history such
as Paul Jackson the founder of Danes Coffee used to be unsatisfied with the bitter test of coffee
and in 1994; he decided to make the test better. So he began his journey through a flavor crusade
with his small team. In this process they used to segmented coffee into certain key elements then
again reconstructed the each component. In the year o f 1999 the group added some extra flavors
in the crusade and made the Danes Specialty Coffee House. The company contains several
chains across the Australian Market. Its recent offering includes Kenya Ndiaini, Mocha Gold,
Viking, Decaf, and etc. The even provide training for those who seeks experiences in this field.
Therefore the company is intended to extend their coffee chains across the Chinese market. As
the country is contained high population rate and the demand related to food and beverage
products is pretty high in this nation. So the company is taking this as a positive hope for their
business expansion. Danes coffee is focused to exaggerate their products offerings through
including the Cappuccino into their product list. To make the Chinese customer aware the
company decided certain promotional activities. Therefore the assignment has discussed all the
opportunities and threats that could be faced by the company while emerging in the Chinese
market. The details of the market responds have been measured by the end of the Marketing
Manager.

Economical and Financial Environmental Analysis
Economical factors play a pivotal role in business expansion therefore while promoting any new
and upcoming brand this factors are also required (Akram, et al., 2018). The major factors of the
economic environment are goods or products, services and money. Theses effective elements
lead the business to perform effectively across the global market. On the other hand, the
economical factors also include consumer demand, taxes and asset values as well. Similarly the
exchange rate, recession, inflation, interest rate, demand and supply also affect the business
growth of any company (Gorostidi-Martinez, & Zhao,2017).
The recent scenario of China embraces that in 2015, the nation’s economy expanded by 6.9
percent. The growth of imports of Chinese consumer goods has been slowed down in the year of
2014. Therefore the government of China is focusing on boosting up the domestic consumption
along with the doubling the income percentage of households within 2020. This will literately
affect the buying behavior of consumers of the nation. Chinese consumers have already
experienced the goods and services that produced and delivered by the Australian companies.
The shocking fact is Chinese citizens appreciates the product quality of Australian brands. So
while promoting the new product for Danes Coffee it will be easy to retain the attention of
Chinese consumers. Therefore the Australian Coffee company could face certain relaxation in
the tariffs and taxes while emerging in the Chinese market. Because of the China Australia Free
Trade Agreement (ChAFTA), the company could face certain reduction in tariffs (Pan, et al.,
2017). This agreement has formulated in 20th December 2015. So this could be the biggest
opportunity for Danes Coffee.
The financial factors play a crucial role in economic development and these two factors are inter-
connected. Therefore the financial factors that could affect the business growth of Danes Coffee
is its Net profit, ROIC and Cash Flow (Schüller, & Schüler-Zhou, 2017). Therefore to enhance
their business growth these factors are necessary to take account. On the other hand the Chinese
Ministry of Finance announced tax reduction to the Most Favoured Nation (MFN) tariffs. This
has placed on 1st December 2017 and allows tax reduction temporary basis on 187 products
(Tang, et al., 2016). It includes 33 food products so Danes Coffee, company could take this act
as a positive approach for their promotional purpose.

Opportunity: The company could face a hue market where they could able to showcases their
range of offerings. As China holds a massive population rate so the Danes Coffee could easily
able to decide their target market. The recent reduction of tax announcement that created by the
government of China, will lead the coffee company to pay only a portion of the tax (Laws, &
Prideaux, 2017). China is the trading partner of Australia and they are involved into the trading
field from a long span of time. So Danes Coffee could face a good market experience from its
customers. On the other hand, through its new business expansion strategy the coffee company
could be able to provide job for the local people of China (Sung, et al., 2016). This could be an
effective step for the company to embraces the promotion of the products towards the Chinese
market. Therefore by emerging in the Chinese market the company could retain huge scope and
opportunities to attract the Chinese customers and investors. As the company holds a good
reputation across the Australian market and contains expertise in making coffee products so they
even could attract the retailer of the Chinese market so that could start their own business. This
way Danes Coffee could promote their bran across the market of China.
Threats: Therefore to maintain perfection and product quality of the foreign entrants to a
different nation has always been a challenging task. Similarly Danes Coffee could also face
difficulties in maintaining the products in accordance with the government rules and regulation.
As the company holds their own recipes and flavors so they could face changes in the taste while
maintaining the quality of the products according to the government’s stated percentage. This
could affect their promotional activities as well.
Political and Legal Environmental Analysis
Every nation has their own legal rules and regulation and these policies help the citizens to
prevent vulnerabilities. These legal and political ethics varies country to country. Therefore the
MNEs that belong to different nation and desire to start their new business to a different country
should also need to maintain certain rules and regulation (Liu, et al., 2015). Similarly Danes
Coffee should also need to adopt the Chinese government policies for their business purposes.
This will help she company to prove themselves an authenticate marketers. According to the
government of Chin any foreign companies that anticipate to establish business in China is
bound to maintain the ‘International Law ’. It includes certain rate f taxation and ethics for the
foreign companies. It also exhibits labor rules and incentives such as the Chinese people follows

different kind of strategy to motivate and encourage their workforce. This should also be
acquired by the new marketers. For the new marketers it is pretty essential to create a goof CSR
policy and maintain a good relation with it legal and political entities (Subramanian, et al., 2016).
Therefore the products and services that are presented by the host country must be matched with
the Chinese governments’ mentioned rate or percentile. Therefore to make the people aware
about the products and its quality promotional activity is quite required. It will lead the local
people and the legal authority to know regarding the marketing strategy of the new company.
Recently China is maintaining a positive trend for their economy development purpose and the
FDI is directly linked up with Chinese economy. So the government of the nation is participating
in ‘Foreign Direct Investments’ programs. This leads the country to allow new entrants for doing
business. From this fact Danes Coffee could be benefitted and could continue their promotional
activity across the Chinese nation.
Opportunity: By maintaining a healthy relation with government and local entities the company
could able to understand the Chinese market. Making their own CSR policy according to the
government of China, Danes Coffee could attract local employees. Therefore making the
promotional activities as per the demand of the Chinese market the coffee company could retain
the attention of the customers (Knorringa, & Nadvi, 2016). Making the effective incentive and
reward program they could able to hire the local people who could guide them regarding the
recent market conditions. Therefore China and its people have already experienced with the
Australian products and services. It has been found most of the Chinese customers appreciate the
products and services that are offered from the Australian marketers so the coffee company could
face a decorated market for their business growth (Gao, & Kerstetter, 2016).
Threats: Though the China is not new to have Australian marketers in their national markets but
Danes Coffee, is emerging in the Chinese economy for the first time. So they might face
difficulties in adopting the business etiquette and practices that are maintained by the nation.
Similarly Danes Coffee could find making an attractive CSR policy, a difficult task. As it should
be built in such a manner so that they could protect the environment and legal rules of the nation.
Thus the company at its first phase could find maintaining these activities a hassle full task.

Social and cultural Analysis
Social and cultural etiquette has a strong impact on business expansion. Especially for those who
are new entrants for the nation. The new marketers should be well versed regarding the social
and cultural factors so they could be able to avoid the practices that the nation mat find offensive.
Or an example it could be stated that the government of China follows strict laws against the
bribery activity and this includes providing gifts as well (Ruhanen, et al., 2015). So while
making the promotional plan for the new product offering such as Cappuccino Danes Coffee
should pay attention to this factor. Similarly most of the Chinese people appreciate black and
white color as their formal attire. Therefore Chinese people maintain deadlines and perfection in
their work and the main intention of maintaining these practices so that they could avoid delays
and experience more productivity. On the other hand, it has been also noticed that the citizens of
China mostly values Chinese language and expects the new entrants to use minimum Chinese
words while making any proposals (Zhao, et al., 2016). Here the Danes Coffee should adopt the
practices so that they could attract more customers towards their recent offerings. Therefore the
employees of China generally believe the business hours should be 8.00 am to 5.00 pm including
Monday to Friday. Chinese people appreciate conversations that are related to art, scenery,
landmark, climate and geography whereas they strongly avoid political topics. This could help
the coffee company to create their adverts and campaign accordingly. Most of the people of the
very nation call their colleagues and friends by taking their last name. By analyzing the above
mention factors it could be stated that Danes Coffee could face challenges in the first phase to
adopt the Chinese tradition but as it has a good impact on their business growth so they should
acquire it as soon as possible.
Opportunity: Danes Coffee could adopt the social and cultural practices in terms of attracting
Chinese customers. It will help them to reduce labor conflicts and lead them to find investors for
their business growth (Schau, et al., 2017). Similarly obtaining those practices the company
could establish good brand reputation.
Threats: As the company is an Australian brand so they might face difficulties in maintaining
the exact tradition in accordance with their Chinese competitors.

Technological Environment Analysis
Technological environmental analysis refers the external factors that are somehow connected
with business operations. While using these technology as a tool for the business expansion
company should also follows the rules and regulations of the nation. So that violations could be
prevented. China is technologically sound and maintains strong technological inclusion in their
business purposes (Wang, 2016). Some of the mostly used social media portals are WeChat,
Baidu Tieba, Youku Toduu and others. Through these social medial platforms Chinese people
hares their comments and feedbacks. Similarly organizations hold their own portals so that they
could allow the customers to shop and visit their shop virtually. Companies are often found
promoting their brands and products through utilizing these social media platforms. Earlier
WeChat did not provide permission to the companies for advertising but recently the WeChat
started allowing organization for their promotional purposes (Anderson, & Sutherland, 2015).
Figure 1: Graph of Social Media Users in China (Source: Appendix: 1)

From the above mentioned graph it could be stated that Chinese people are deeply connected
with their social media application (Lv, & Spigarelli, 2016). Similarly organization, those are
allowing the local people to visit and shop through online platforms facing high volume of
customer involvement.
Opportunity: Through these platforms Danes Coffee could be able to promote their brand and
new product offering. It will help the coffee company to attract high volume of customers in the
real time. It will help the company to plan cost effectively and through the brand promotion the
Danes Coffee could understand the demand of their customers. These social media platforms has
been featured in such a way so that users could make comments and feedback whenever the
desires. Evaluating those comments the company could understand the reaction of the customers
towards the recent launches (Zhu, & Sarkis, 2016).). Using the social media platform the
company could identify their top competitors across the Chinese markets. These social media
platforms will also allow Danes Coffee to detect the marketing strategy so that they could make
better marketing strategy to attract more consumers.
Threats: While emerging in the Chinese market Danes Coffee could face difficulties as well
such as the nation is already well versed in the technological field so adopting the technological
practices could be a time consuming task for them (Kuang, et al., 2018). Similarly through
promoting and sharing the recent products updates through the social media platform could lead
vulnerabilities for the company. Before disrupting the Chinese market through social media
platforms the company should understand the Internet security law of China, so that they could
avoid external and internal risks.
Conclusion and Recommendation
The following report has been created based on the international promotion and sale of recently
launched products of Danes Coffee. As the company is situate in Australia and planning to
extend their new business across the market of China so an analysis has been conducted. To
retain a detailed overview of the new market, it is quite necessary to conduct a market research
(Wei, et al., 2016). Hence the report added all the essential descriptions that are required for the
promotion of the new product. The company has extended its product offerings through adding
Cappuccino in to their product list. While emerging in the new market it is quite important to

indentify certain factors such as economical, financial, social, environmental, and technological
and etc. Therefore the details of the mentioned factors have been explained profoundly
according to the coffee company. As the nation is containing huge population rate so attracting
customers could be easy for the company. Therefore it could be recommended that utilizing the
social media platform the company could be able to maintain a cost effective promotional
activity. This will also help them to attract the attention of the maximum customers of China.
Therefore the possible threats for the company could be defined as the necessity to adopt the
social and cultural approaches that are maintained by the other Chinese company.

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