International Marketing Opportunities Report: China Market Analysis

This report analyzes international marketing opportunities for Southern Peninsula Wines, focusing on the Chinese market. It examines political, financial, and corruption risk factors, along with legal and regulatory requirements and trade barriers. The report discusses key market trends, consumer preferences, and target segmentation within the wine industry in China. It analyzes entry methods such as franchising and exporting, assessing their viability in terms of organizational goals, capabilities, and impact on the current business and customer base. The report also determines financial viability, including an analysis of wine consumption rates and transaction amounts, and concludes with recommendations for the most viable marketing opportunities. The report utilizes various sources to support its findings, including academic research and market data.

Running Head: International Marketing Opportunities Report
INTERNATIONAL MARKETING OPPORTUNITIES REPORT

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Table of Contents
1. Risk Factors.................................................................................................................................3
a. Analysis on the political, corruption and financial risk factors................................................3
Political Risk factors:...............................................................................................................3
Financial factors:......................................................................................................................3
Corruption factors:...................................................................................................................3
b. Analyzing the relevant legal and regulatory requirements and trade barrier...........................3
Legal requirements:..................................................................................................................3
Trade Barriers:..........................................................................................................................3
c. Discussion of the risk associated with international business cycles in terms of economic
conditions that may affect upon the market.................................................................................4
2. Marketing Opportunities..............................................................................................................4
a. Discussion of any key markets trends in relevant industry and market needs, target
segmentation and consumer preferences......................................................................................4
Market needs:...........................................................................................................................4
Consumer Preferences:.............................................................................................................5
b. Analyzing of any two methods of entry in exporting, licensing and franchising....................5
(i) Franchising..........................................................................................................................5
(ii) Exporting............................................................................................................................6
3. Viability of Marketing Opportunities..........................................................................................6
a. Analyzing of marketing opportunities......................................................................................6
(i) In terms of organizations goals and capabilities..................................................................6
(ii) Impact upon current business and customer base...............................................................6
b. Determination of financial viability.........................................................................................7
4. Recommendations........................................................................................................................8

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a. Ranking the marketing opportunities in terms of viability and likely contribution in the
business........................................................................................................................................8
Reference List:.................................................................................................................................9

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1. Risk Factors
a. Analysis on the political, corruption and financial risk factors
Political Risk factors:
Several risk factors arise from the political factors is the rules and guidelines provided in
merchandising. However, not only for China, the political risk factors are involved in marketing
for almost every country. The main problem is faced by the foreign investors is the unstable and
uncertain political environment. According to Lyu et al. (2016), Chinese community Party’s
economic reforms made a suitable opportunity for the foreign countries to invest in their market,
which in term has eradicated poverty for thousands of local people in China. Moreover, the
Chinese local companies have scope to introduce themselves to the international markets.
Financial factors:
The strict rules imposed by the Chinese Government in the business environment like MNCs
have to make tie-up with the local companies in order to make their business and enormous taxes
for the foreign investors. According to Chiu, (2016), the government has started corporate
income tax lax and money transferring facilities, which has hampered the business environment
for the foreign investors. Therefore, the local companies are getting profitable and making huge
amount of turnovers from the tie-ups with the foreign investors.
Corruption factors:
These laws and the business strategies have also introduced corruption and illegal practices in the
business markets. As the taxes are more in case of the foreign companies, the local investors are
liable to pay low tax and other issues. Besides this, they are having the same opportunities and
sharing the equal amount of profits from the business.
b. Analyzing the relevant legal and regulatory requirements and trade barrier
Legal requirements:
Since 1949, China had not constructed a suitable legal process in the national legal system in
merchandising fields. However, they have made proper business guidelines immediately after the
Cultural Revolution regarding the business law and regulatory practices. In this meantime,
companies managed to invest on China’s market due to sufficient infrastructure and distinct
rules. According to Packey & Kingsnorth (2016), it has been seen that in China’s market, there
are more trade barriers and legal requirements in the marketing fields.
Trade Barriers:

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A study upon the textile industry in China’s market reported that the strategies regarding import
and export of textile products, the processing of those products in foreign countries and selling
them in local markets and exporting raw materials has come up with lots of trade barriers.
Therefore, the companies are facing a huge amount of losses from the business at that particular
time. According to Wibowo & Wilhelm Alfen (2014), from 2001 onwards, China has managed
to overcome the strict rules by taking membership in World Trade Organization (WTO). They
have reduced the tariff rate and the corporate tax to 9.8 percent in 2015 compared to 15.40
percent that was in 2001.
c. Discussion of the risk associated with international business cycles in terms of economic
conditions that may affect upon the market
China’s economic growth has been come out as the second largest economic growth for the
world’s economy immediately just after the US. According to Hammoudeh et al. (2013), the
financial crisis and the relevant disasters in the USA, recession has affected the economic growth
in their market. The currency value has fallen down below a certain level, which is a threat to the
foreign companies to invest in the china’s market.
2. Marketing Opportunities
a. Discussion of any key markets trends in relevant industry and market needs, target
segmentation and consumer preferences
Market needs:
There are some key factors involved for the Southern Peninsula Wines Company to invest in the
China’s market. The Mainland China is one of the largest markets for imported wine. According
to Taylor (2014), there are almost 47 million of upper-classed drinkers of wine in China.
Therefore, the company can target those areas of the China’s market where the consumption rate
of wine is much higher. This may help to grow the disposable income and increased number of
consumers of wines made by Southern Peninsula Wines. According to Gobinda & Haider
(2014), the customers are also being interested for purchasing wines as gifting purpose and for
this purpose; they are selecting the high budget red wines. Therefore, wine companies have to
make a proper judgment regarding the supply in the stores. Besides the normal quality of wine,
Southern Peninsula Wines has to also supply high priced red wine in the popular shops in China
so that customers get a range of wines to choose. In the meantime, there is a continuous growth
of customers for red wine of fruit flavored with lower tannin and acidity. There is bulk of

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customers who is going after the wines with aromatic sense. Proper aromatic wines like
Riesling, Sauvignon Blanc, and Chardonnay are the top of the list in people’s choice. Therefore,
the wine company has to supply these particular brands at sufficient rates to meet the market
demand and to be popular company in China’s market. According to Petrou & Thanos (2014),
the consumption rate has gone high for the law few years in China at a rate of 45-50 percent.
Especially the young generation and the upper-middle class family is the prime customer for this
product.
Consumer Preferences:
The preferences are varying from different parts of China. The people from the eastern region
prefers earthy, rich reds, the western region is selecting the elegant flavored, soft style drinks.
The northern people are choosier. According to Dimic Orlov & Piljak (2015), they prefer bold,
drier reds while the southeastern people are voting for the smoother and red style wines.
Therefore, Southern Peninsula Wines have to make a suitable marketing analysis to judge the
choices of the people regarding the wine consumption. The company has selected number of bars
and restaurants in China and started to supply the most preferred wine to those centers.
According to Chen et al. (2015), it has been seen that people are going to accept the screw cap
for wines at a low budget than the red wine. Consumers prefer red wines for occasional purpose
but in normal days, they are selecting low cost wines. This analysis has come out with the entire
demand and helped to prepare the cost-benefit analysis for the wine companies. Apart from this,
the customers are interested to buy wine online and to be delivered to their houses. This practice
is being popular since last couple of years and the companies has started logistics supply chain to
meet the customer’s demand. Although, the price is going up to get the product directly in the
houses, customers prefer it (Li Liu & Jiang, 2015). Eventually, the transportation facilities are
getting more priority by the wine companies and they are making separate logistics for the
supply process.
b. Analyzing of any two methods of entry in exporting, licensing and franchising
(i) Franchising
Southern Peninsula Wines may also franchise wine schools in major portions across China.
There are several good reasons for the wine companies to invest in those schools as the market
strategy along with the proper business planning is implemented. According to Flint Golicic &

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Signori (2016), the overseas countries have made it a habit to invest and franchise those schools
so that they get familiar with the local market and understand the demand. In this context,
Chinese government has started to implement laws and regulations so that foreign investors find
it a easy way to be aware about the condition of the wine industries in China (Chen et al. 2016).
(ii) Exporting
China has signed up with different countries like Chile and New Zealand for exporting of
products. The China-Australia Free Trade Agreement (ChAFTA) was signed on 17 the June,
2015 and was activated from December 20, 2015. According to Chan et al. (2014), this
agreement helped Australian companies to make business deals in Chinese market and the main
profitable industry was the wine industry. After the activation of the regulatory framework
GB15037-2006- National Standard for Wines, the exporting facility has gone up for the wine
companies in China. They have pledged to maintain the supply by water and air transports to
meet the local demand and to continue the business.
3. Viability of Marketing Opportunities
a. Analyzing of marketing opportunities
(i) In terms of organizations goals and capabilities
The main goal set up by the Southern Peninsula Wines Company to make the market for their
product and to be profitable. Therefore, they have to consider some facts like improving the
quality, better supply chain and understand the customer’s demand. According to Benáček et al.
(2014), this will lead the company to be popular among the local people and automatically they
will adapt their wines. In this prospect, Southern Peninsula Wines Company can make a tie-up
with the local wine companies to be familiar with the market for couple of years. It can be also
possible that, the Australian company introduced a new flavored wine, which was not tasted by
the local customers. This bold step will identify the capabilities of the company in business field.
(ii) Impact upon current business and customer base
Southern Peninsula Wines being a new company in China’s market, they will have to face many
challenges in their business. Not only the Chinese customers, have they also had to gather
sufficient information regarding to their competitors. People used to prefer Mainland china brand
and it has the lion share in the wine market. Therefore, this new Australian company has to face
the toughest challenge. According to Bekaert et al. (2016), it takes sufficient time for the new

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company to understand the nature of the wine market and the preference of flavor, according to
this they have to plan the marketing strategy.
b. Determination of financial viability
There are several factors are involved for Southern Peninsula Wines company to start a business
in China’s market. It seems to be challenging the company to create their own identification in
the wine business, as the cost involved is much (Bo Liu et al. 2014). Besides this, the risk factors
also have to take into consideration because it directly affects the business outcomes.
Figure 1: Analysis of the wine consumption rate
(Source: Mintel, 2016)
The above figure describes the cost benefit analysis for the wine consumption for the last few
years. It can be seen that the consumption rate is increasing by the years for both retail market
and individually. Therefore, the wine industry has seen to be the profitable business over China’s
market. The rate per liter of wine has also gone down from 2014 onwards which indicated that
the wine companies are being profitable by the business.
Figure 2: Transaction amount for wine sales
(Source: MARKETLINE)

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The turnover in the Chinese wine market was around US$ 38.5 billion in 2015, which is
expected to rise by 17.43 percent by the end of 2016. The value will be US$ 45.2 billion in the
end of 2016. The market value has been increased by 19.7 percent for the last five years and is
estimated to touch US$ 70 billion by the end of the decade. The consumption has also increased
for the last five years around 45 percent, which indicates that the future of wine industry in China
is in safe position and it will maintain the GDP for the country. Therefore, this data analysis will
help the new Australian company to start business with small amounts, which will return from
the investment (Bekaert et al. 2014). However, the joint venture with the local popular wine
companies will also help them to investment bulk amount in wine market. As per the reports and
the data analyzed, the percentage of gaining profit is higher than that of half of the investment
amount.
4. Recommendations
a. Ranking the marketing opportunities in terms of viability and likely contribution in the
business
Based on the assessment of market analysis, there are sufficient scopes for the wine industries in
China’s market. The feasibility study indicates that the rate of alcohol consumption and the
market investment in terms of dollars will keep on increasing by the upcoming years. Therefore,
the chances of Southern Peninsula Wines company to make their market and return on
investment from the business is positive. According to Ameyaw & Chan (2015), they have to
face challenges from the local people whether they adopt their products id there, in the context
the joint venture with local reputed company is a wise decision. They have to make suitable
changes in the conventional business strategy and to offer lucrative discounts to attract people in
their products. The supply as well as the delivery chain management has to be better than the
existing system and the turnover must be in bulk amount. This practice will develop goodwill for
the company, which will accelerate the business development process.

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