MGT 321: International Business Case Study on China Market Dynamics

This case study analyzes China's economic growth and its implications for international business. The paper explores the business opportunities in China, examining factors such as low production costs, increasing purchasing power, and government policies. It discusses the strategies of companies like Best Buy and eBay in the Chinese market, emphasizing the importance of understanding Chinese culture, consumer behavior, and the impact of piracy. The study also considers the influence of Western online shopping and the need for companies to adapt to local market demands. The conclusion highlights China's significance as a major global economy and the importance of thorough market research and adaptation for business success.

Running Head: INTERNATIONAL BUSINESS 0
International Business
(Student Name)
2/19/2019

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Table of Contents
Introduction......................................................................................................................................2
Part 1................................................................................................................................................2
Part 2................................................................................................................................................3
Part 3................................................................................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

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Introduction
China is of the most prominent places to have business and it has attracted almost everyone in
other parts of world towards himself due to the business opportunities which china is able to
create from last couple of decades and the pace at which the exports are going on is increasing in
the graphical representation (Zhao, Frese and Giardini, 2010). The rapid increase in exports to
china is due to the low cost production which china is able to maintain it from decades now. It
has increased the purchasing power of the individuals living in the china. With the increase in the
exports to china there has been substantial growth in the Chinese economic front and they are
able to capitalize it from every part of the world. The china government should provide enough
opportunities to the business so that they are able to grow (Lin and Liu, 2016).
Part 1
Yes, China will be able to maintain its strong economic growth in the years to come as many
companies are willing to invest in Chinese market as they have the low cost production which
helps the business in starting off their business and gain profits almost three times. In addition to
that from last couple of decades purchasing power of Chinese has increased drastically. The
growth of Chinese is on continuing rise as compared to rest of the world. China has two major
companies with them Best Buy and eBay which has boosted Chinese economy at a higher pace
due to these companies china has taken over Japan and became the second largest economy in
short period of time the only country which is still leading is United states. Due to these
companies and others companies have increased their exports to china (Dai et al., 2016). For
example in last decade from 2000 to 2011 The United states saw its companies increasing
exports to china by 542 percent and in same period/ time frame total exports in china has
increased by 80 percent. In last few decades the graph of exports in on increasing trend in China
and they are steady as well. The policies and the regulations which china is having for other
companies or other nation is favorable which is giving them confidence to the other parts of
world to invest and take the opportunity to grow their business and helping in uplifting the
economy of the Chinese. The Chinese government need to work hard in creating business
opportunities for others to come and invest they have to regularly monitor the policies and
regulations and if required they need to modify the same (Zhang et al., 2017). Currently round 85

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percent of mainstream Chinese consumers are living in the top 100 wealthiest cities.in next
decades to come these advanced and developing cities will have relatively few customers who
are lower than the middle-and upper-income brackets by Chinese standards. The expectation is
that these consumers will be able to afford a range of developed nations’ products and services,
such as flat-screen televisions and overseas travel, making the Chinese customer much more of a
target for a wide variety of consumption. The amount of growth which china is able to capitalize
is tremendous and the government is doing every possible way to bring more business into their
country which is enhancing the business and growth as this thing will likely to continue as the
cost at which the product are being produced is very competitive and many other countries are
not able to meet the los cost production products easily, if any one of the countries tried to do it
they are not able to maintain the consistency which Chinese government is able to. Last in few
decades the cost to produce a product is merely increased but the profit margins have grown
three times which is boosting up of the business and economic growth of Chinese market (Liu
and Feng, 2016).
Part 2
The scenarios presented by Best Buy will be applicable in the future as well. The companies,
who are investing in the Chinese market need to understand its culture, buying habits, know the
requirements which consumers are having a demand of etc. Meanwhile government should also
focus on the piracy part as Best buy is of the consumer’s electronics which deals with varied
range of products and services. The company is investing in research and development for
creating new products which at times is copied or pirated in the local market and it is sold which
should not be happen as long as business point of concern is there (Wu et al., 2016). Companies
need to make awareness about their products and how it stands out from the market as this is the
only way by which Chinese consumers or customers will be interested in taking such products.
So before setting up of business in china companies need to do the research and development and
read the market carefully so that ones the product is launched sales could be achieved as per
desired goals. Yes, newly rich Chinese customers engage in the purchasing in the 2020s because
the newly rich customers have a variety of products at its display (Green and Liu, 2017). The
companies need to understand the need; wants and desire of the consumers and deal with them
accordingly as every country has its own differences in adapting to new products so companies

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need to think wisely before launching of products in any of the countries. They have to study the
market carefully and then modify their products as per the consumer requirements. Often
combinations of arrogance, naïveté, and cultural misunderstanding have led many well-known
brands to fail in Chinese market drastically. The Chinese market is very sensitive in terms of
branding of the product of the consumer is satisfied enough with the advertisement then they will
be able to purchase the product provide all the questions are resolved on time and existing
customers are given preference (Mackintosh et al., 2016).
Part 3
Yes, all Western-based online shopping culture ultimately infiltrates China. But they have to
work really hard in resolving the issues which looks very small as Alibaba ownership of the very
popular Tmall and Tabao online shopping systems. Taobao’s is able to create instant messaging
system that has been cited as a main reason for its competitive advantage over eBay in China.
Basically, customers wanted to be able to identify a sellers’ online status and communicate with
them directly and easily-a function not seamlessly incorporated into eBay’s China system.
Clearly, instant text messaging is a solvable obstacle in doing business in China. The Chinese
market is very sensitive which deals in various products at very low cost for which customers are
very keen and interested hence they are very concerned for the issues, concerns they have related
to product (Cheung, 2016). They need quick resolution of their queries. Hence the foreign
companies need to keep in mind that even a small things matter in the business and it all depends
on the consumers which companies are dealing. Moreover, companies which are setting up of
their business in China needs to do research and development thoroughly as every market is
different from one another. Companies need to know the culture, purchasing habits, consumer
needs etc. In addition to it companies should be able to advertise their products in right channel
so that consumers do feel the product is worth spending for and they can buy the goods or
commodities from a particular company on a regular basis. Companies have to ensure that local
needs, demands are fulfilled in correct time frame else customers will not take much in switching
from one company to another. With all the above things said government also needs to ensure
that their policies are designed in such a manner that companies are able to do the business at
growing pattern which in turn helps the Chinese economy at growing pattern as well. Foreign
companies will need a support from government in terms of piracy as this is the major obstacle

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in growth of the foreign companies. All the research and development done by the companies in
the product gets off no use when piracy happens for their products. It generates fewer sales
which in turns generate less profit (Kwak, Zhang and Yu, 2016).
Conclusion
From the above we can conclude that China is one of the largest economies in the world and with
the rise of exports in china it has increased the economy of the china. China has become the
second largest economy by taking over Japan. China is been able to maintain low cost production
which is the unique selling point in the Chinese market. All the countries and business are
welcomed by the government. The Chinese government has created certain opportunities which
are helping in boosting the economy at steady pace. Companies need to do the research and
development of the market wisely as it will lead to losses which is not feasible for many
companies hence it is very important for the business to do some homework before launching of
their products to have a good start. Every country is different from one another likewise every
market is hence companies need to modify themselves according to the need and requirement of
the consumers or clients to have success in the market.

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References
Cheung, M. (2016) 28. the e-commerce revolution: ensuring trust and consumer rights in
China. Handbook of Cultural and Creative Industries in China, p.412.
Dai, H., Xie, X., Xie, Y., Liu, J. and Masui, T. (2016) Green growth: The economic impacts of
large-scale renewable energy development in China. Applied energy, 162, pp.435-449.
Green, C.A. and Liu, Y. (2017) A" Transnational Middleman Minority" in the Eastern
Caribbean? Constructing a Historical and Contemporary Framework of Analysis. Social and
Economic Studies, 66(3/4), pp.1-220.
Kwak, J., Zhang, Y. and Yu, J. (2019) Legitimacy building and e-commerce platform
development in China: The experience of Alibaba. Technological Forecasting and Social
Change, 139, pp.115-124.
Lin, B. and Liu, C. (2016) Why is electricity consumption inconsistent with economic growth in
China?. Energy Policy, 88, pp.310-316.
Liu, Y. and Feng, Y. (2016) Simulating the impact of economic and environmental strategies on
future urban growth scenarios in Ningbo, China. Sustainability, 8(10), p.1045.
Mackintosh, M., Channon, A., Karan, A., Selvaraj, S., Cavagnero, E. and Zhao, H. (2016) What
is the private sector? Understanding private provision in the health systems of low-income and
middle-income countries. The Lancet, 388(10044), pp.596-605.
Wu, Y., Luo, J., Zhang, X. and Skitmore, M. (2016) Urban growth dilemmas and solutions in
China: Looking forward to 2030. Habitat International, 56, pp.42-51.
Zhang, D., Wang, J., Lin, Y., Si, Y., Huang, C., Yang, J., Huang, B. and Li, W. (2017) Present
situation and future prospect of renewable energy in China. Renewable and Sustainable Energy
Reviews, 76, pp.865-871.

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Zhao, X.Y., Frese, M. and Giardini, A. (2010) Business owners’ network size and business
growth in China: The role of comprehensive social competency. Entrepreneurship and Regional
Development, 22(7-8), pp.675-705.