Business Report: Soft Drink Market Entry Strategy in China (MKT 3052)

This report offers a comprehensive analysis of the soft drink market in China, exploring the potential for market entry and export strategies. It begins with an introduction to marketing principles and the importance of globalization, particularly in the context of the crowded soft drink market in the U.S. The report then focuses on China, highlighting its growing population, favorable climate, and industrial sector as key drivers for soft drink consumption. The PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors influencing the soft drink market in China. It discusses the political landscape, economic growth, social dynamics, technological advancements, legal regulations, and environmental considerations. The report emphasizes the importance of understanding the Chinese market, selecting strategic locations, and mitigating risks associated with exporting. It also highlights the significance of market research, consumer behavior, and the competitive landscape. Finally, the report addresses the implementation of an export entry strategy, including market identification and location selection. The report concludes by emphasizing the opportunities and challenges of entering the Chinese market and offers insights into the risks associated with the export business.

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China’s soft drinks Market.
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Introduction
Marketing is the ability to create a lasting relationship with customers and at the same time
device ways in which the customers can be satisfied through selling and buying of products and
services. Due to the globalization of markets, a company should not entirely depend on the
domestic market because it will only contribute to its disadvantage. This means by all possible
means a company should consider launching its products in other foreign markets because this
will contribute greatly to the growth and expansion of the company. Considering the exceeding
crowding of the soft drinks market in the U, this report will therefore focus on the PESTLE
analysis for starting a soft drink company in China.
China is a prime market for soft drinks because of its wider scope of development and
industrialization. The population of the country has tremendously grown over the years an aspect
that increases the possibility of a wider market. The climate of the country is always hot an
aspect that will increase the consumption of soft drinks since in most cases the drinks will be
used to quench thirst (Lemoi Ping 2018 p. 23). Individuals working in the industrial sector of the
country are among the potential customers and recipients of the company’s products and services
since a majority of them work for long hours an aspect that leads to most of them to rely on the
supply of foodstuffs and drinks from the sellers. The company will therefore be able to secure a
good market for its products since it will initiate a supply system to the interested customers and
at the right time (Benjamin 2019 p. 39). Soft drinks are also associated with happiness thus in all
the occasions and festivities of the Chinese, the demand of the soft drinks will be higher an
aspect that will increase the supply. Our company will enter the China market as an exporter of
soft drinks. This entry strategy is preferred since the government in China has taken measures to
escalate local consumption and the stream of imports from other states (Journal of Business

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Ethics 2015, p. 810). These measures are identified through several government initiatives like
reducing levies on particular consumer goods and the creation of new zones of trade in Tianjin,
Guangzhou, and Fujian.
PESTLE Analysis
This is a marketing strategy or tool used to study an environment that an enterprise is
undertaking its operations in or indenting to launch its operations. In this analysis, particular
attention is given to the political, economic, social, technological, legal and environmental
factors which may have an impact to the enterprise operations.
Political
The political setting and factors helps a company to determine the extent to which the
government of the day will influence the operations of the company. This should be considered
since the government may impose heavy taxation to the company due to the fact that it is a
foreign company. The extent at which how politics and campaigns impact business should be
analyzed critically (Sun and Jiang 2015 p. 1077). For instance in the previous election the
Chinese government had put so much pressure on foreign companies that did not meet the
government requirements. Obtaining permits and a go ahead to establish soft drinks company
operations is then very important before a concrete idea is arrived at (Meyer 2016 p. 25). The
company’s, mission and strategy should be communicated early in advance to ensure the
government is fully aware and that there is no backlash with the government at the start of the
operations.

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Economical
From 1985 -2015, the Chinese economy has been the fastest growing in the world. But in the
recent years the growth has slowed down due to maturity and stability. In the 2017 ranking its
Gross Domestic Product (GDP) was ranked among the top 80 globally having grown at a double
digit annually (Ping Chen And Xiaojin 2017 p. 6). This means that the country is a prime
investment ground for the soft drinks business to flourish. The competition from the Coca Cola
operations in the country should also be considered so as to minimize the chances of venturing
into a viable business in a non-viable place. The prices will also be considered and compared
with those of currently running soft drinks operations to avoid selling at prices that will lead to
rejection of the products at the start. To succeed in the Chinese competitive market the company
needs to consider revising its supply strategies, prices and the general service provision so as to
win more customers.
Social
The social factors will either impact a business positively or negatively. The Chinese social
setting is business oriented. Most of the citizens are always working throughout the year except
during the one month of festivities in the whole country (Chen and Sun 2018 p. 134). This aspect
therefore gives business a conducive environment to flourish and undertake its activities. During
the festivities, the consumption of soft drinks increases since the drinks are associated with
happiness. All occasions are graced with foodstuffs in the accompaniment of soft drinks in many
cases. This therefore makes china a viable market that the company should launch its operations
in. more to this the working population always use soft drinks to derive pleasure since hard
drinks are not accepted in working places because of the outcomes that are associated with

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drunkenness. Soft drinks are referred to as social drinks where they are used in all kinds of
settings more especially when people are having personal or group chats.
Technological
Technology is so vital in promoting the effectiveness of any entrepreneurship. The Chinese
technology has dramatically grown in the recent years. This will therefore help to market the
products of the company effectively. Advertisement through the various television channels will
help the business to promote its products effectively. Working on a promotion basis and
advertising through it will attract more customers to try the new product (Urban 2018 p. 322). To
beat the odds, the company should invest a reasonable amount on the advertisement so as to
promote the company’s brand to the people who might have not used it before. The social media
platforms in the country are well utilized an aspect that will enhance easy passing of information
from the company to the people through other people. To gain much ground and trust,
advertising job opportunities will attract more people who may be interested in the various
positions thus it is easier to gain the market. The jobs should also be given to the locals because
this leads to quick spreading of the company’s brand hence securing a larger market.
Legal
Legal laws in China revolve around safety of the consumers in cases where foodstuffs and drinks
are involved, safety standards in cases where technical activities have to be undertaken and labor
laws where the Chinese people are involved as employees. For the soft drinks company to
significantly grow, it has to put into considerations how safe its products are for human
consumption. In case they are sub standard and harmful to the consumer’s health then no attempt
should be made to invest in China (Périsse 2017 p. 28). The safety standard of the workers who

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work in the technical sector should be considered by proving that the activities have been tried
elsewhere and minimal cases of injuries were reported. The standards then have to be maintained
in a bid to secure a market in the country. Labor laws have to be clearly followed without
chances of exploitation since the government will hold the company responsible for abuse. All
human rights should be put to practice in China regardless of where the employee comes from
(Si Zeng 2017 p. 53). All of them are protected by both the international and national laws.
These specifications therefore set a very good market since the employees are aware of their
rights and the employer is also at liberty to set rules and regulations to regulate his employee’s
behavior, conduct and ethics.
Environmental
The environment is always importantly considered to determine the viability of any enterprise.
Mostly in China the climate is hot an aspect that increases the viability of a soft drinks business
since most of the people will use the drinks to quench thirst. Considering this, then a company
has to ensure sufficient and continuous supply of the products so as to minimize cut off at any
particular moment because it might lead to lose of market (Li 2013 p. 71). The traditions of the
people too are friendly an aspect that makes it easy and possible to set up a soft drink company
in the country. Settling down and initiating a friendly encounter with the locals will increase the
viability of the business since customers tend to get services from where they are treated with
respect and dignity.
Implementation of the Export Entry Strategy
Market identification would be the primary strategy before launching of the export business to
China. The Library Journal (2019) alludes that, although it is a fact that China represents a big

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probable market for overseas produced goods and services, it is likewise essential to understand
where such openings are and a means of accessing them. This can be very challenging, and
therefore, our company needs to conduct in-depth investigations on who the consumers of soft
drinks are and where they can be found.
Selecting the location of our company in China is likewise a vital aspect of the export entry
strategy implementation. For instance, our company should consider setting up branches in
Guangzhou, Beijing, and Shanghai since they are densely populated with persons of income
levels above the standard national normal. This is because higher populations imply broader
markets hence more significant profit margins. However, it is crucial for our company to take
time plotting out the potential consumer location, researching any regional supervisory blocks
that could hinder market penetration into particular areas, and understanding how channels of
distribution differ in various places (Corral 2018, p. 12).
Wei (2016) suggests that the mode of the entry selected does not matter when it comes to
carrying out market research. In-depth market study should come before any ultimate decision by
our soft drinks company, on how and when to enter the market. Our company should analyze
past market trends and weigh the pros and cons of joining the China market as an exporter of soft
drinks. For example, our company should look into the reports that companies who are exporters
to China have presented before to get accustomed to how the export business does in China.
Risks Associated with Exporting Soft Drinks to China
Since China has surpassed the leading world economies including the United States in Gross
Domestic Product, it is impossible to overlook such a great market. However, with its
threatening Communist regime, it is an unapproachable market to enter. At the same time, China

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is still a commendable market for our soft drinks, provided our company satisfies its submission
needs (Huang and Yao 2018, p. 804). Possible risks to be faced by our company in its business
venture in China are discussed below.
Following the codes of practice in China could be instead trying for our soft drinks company that
is used to doing business in the U.K. Ahi, Baronchelli, Kuivalainen and Piantoni (2017) assert
that the reason that China's government has changed numerous times in the previous few years,
with an excess of divisions and ministries, does not encourage any more assurance. For instance,
becoming an exporter to China needs customs registering authorization, which has a waiting time
and strict obligations to acquire? For every lot of soft drinks exported to China, too much formal
procedure has to go with it. That may comprise documents such as evidence of source, a notice
of lading, statements, and company details of the producer. As a producer of soft drinks,
particular firms need a China Compulsory Certification (CCC). Foreign assessors will visit our
soft drinks company to check if it lives up to the specifications put forward by the China Quality
Certification Center. For a company such as ours which produces soft drinks categorized as food
items, there are severer marking necessities.
Even though China is a developed giant for overseas exports, the regime still wants to sustain its
local market. That is why the Communist party has put forward industrial strategies that restrict
the entrance of foreign products. It could be hard for our business to export soft drinks to China
since certain firms similarly receive direct grants from the government to remain buoyant. The
most common instance is the automatic car manufacturing grant, which gets approximately
$9,000 for every vehicle manufactured (Masiero, Ogasavara and Risso 2017, p. 108). Customers
likewise receive enticements to buy Chinese products, which could be in the form of money or
include fast ways via its paperwork. Such issues would make it hard to get a profitable market

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for our soft drink business in China. A majority of such strategies are aimed at intimidating
overseas companies like ours in the conviction that we quit on our projected expansion to China.
According to Wei (2016), the growth of English as the chose business language globally
increases, understanding and being able to communicate in Mandarin when exporting our soft
drinks to China is crucial, not only for our prospect client relations but for logistics and transitory
of cargo through customs as well. Our lack of knowledge in Mandarin would be our downfall in
exporting our products to China. Additionally, learning a new language takes time and resources
which may not be cost-effective for our company.
Tax charges could be a barrier for a business such as ours that is yet to penetrate the international
market to export to China. Value Added Tax (VAT) and consumption tax are assessed at the
point of importation. The standard VAT degree varies from 9.9% to 15.9% for particular
products (Corral 2018, p. 12). China levies a tax on a majority of imports. The charges are
estimated based on the transaction cost of the products. The sum comprises packing costs,
shipping, insurance payments, and any extra overhaul costs sustained before the products reach
the consumer. Exporting our soft drinks to China is a risk since the taxes would bleed our profits
as most of the benefits would be spent on fees and related charges.
Rewards Associated with Exporting Soft Drinks to China
In the recent assessment of the global market, any market analyst would put China at the front
line as the world's biggest exporter. Nevertheless, China is likewise a demanding market for
goods and services. There are grand openings for companies like ours who want to develop that
market. The possible rewards for our company exporting soft drinks to China are discussed
below. According to Jiurai (2015), the middle social class of China has gone up considerably in

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current years, already more prominent than the middle class in the U.S. This social class has
moved from approximately 156 million persons in 2015 to about 199 million currently. This
represents about 19% of the country's population. By 2030, this social class will be more than a
billion persons. This proposes the search for openings, originating from the consumption that
encourages individuals who are going to rise socially. This is, therefore, a prospect market for
our soft drinks and further supports our motive to export our products to China, promising more
significant profit margins.
China has continued to grow dramatically over the previous years, presently maintaining with
desirable degrees by the criteria of nearly any economy globally. The GDP per capita was USD
6,150 in 2017; it is projected to reach USD 8,780 in 2020 which indicates a rise of about 49% in
less than five years (Menkinoski, Toshevski and Nikolovski 2016, p. 175). This shows that the
consumption increase will continue denoting the presence of an exceedingly big market, and
developing, creating the appearance of prospects for new bidders such as our company to supply
the demanded goods and services.
China has very distinct market sections or segments. There is a market of middle social class
individuals yearning for increased value-added goods. Similarly, there is a considerable income
division, which caters for their needs through quality goods. For instance, in the food industry,
customers are ready to pay highly for varied quality products. This is an advantage for our
company since it guarantees a broad market for soft drinks hence significant profits.
Alongside the growth of the middle social class and the economy, current demands are coming
up in the market. Much of such requirements include goods and services that enhance the life
quality of China's residents. Examples include recreational facilities, and food and beverages.

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This creates a chance for our company to venture into China and provide the people with a
delightful taste of our soft drinks.
Conclusion
The Economist (2018) denotes that, although there are many hindrances in the way of being
successful in exporting products to China, the reward of productively going through this strict
process is similarly massive. Gladly, as the economy of China continues to develop and become
more exposed to overseas businesses, the rewards considerably surpass the limitations of
exporting products to China. China is the best market for our soft drinks since its markets are
developing more quickly than nearly anywhere globally.

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