Yes, China needs a, "Consumer Reports". They could rate how the different players compare. I'm trying to find a Government agency that might be doing this. While I'm looking, here's the Chinese Market Place.......................................................................................
There is no doubt about this: the presence of Pacific Rim countries' economic power is in everybody's sight. ÿThen how about the role of China in the years to come? Will China be the next greatest business frontier? Is it a land of opportunities and profits?
In 1994, an English research paper pointed out that, before 2003, China will be the world's largest market for electronic appliances and other electronic products; the consumption total will grow from $261 billion in 1993, to $734 billion by 2003. Among them, more than $4 billion will be on children's clothing alone, $2 billion on furniture, $8 billion on beers.
China's gross product (GNP) has been growing for more than 10 years at double digit pace. It is the world's 11th largest trading nation. World Bank, in 1993, claims that China is already the world's second largest economy, smaller than the U.S. but larger than Japan, while the International Monetary Fund estimates China's GOP at $1.66 trillion, making it the world's third-largest economy.
Market Place
Mainland China is divided into 30 provinces, autonomous regions and municipalities. From a marketing standpoint, the country also has at least seven major regional markets; The South, the East, The Beijing-Tianjin region, Central China, the Northeast, the Northwest, and the Southwest. The first five regions each contains more than 100 million people. Each region has very different marketing characteristics, including different climates, dialects, infrastructure capabilities, and food consumption patterns.
Since 1979, retail sales in China have grown at a compound annual rate of 15%. The French fashion house Pierre Cardin, the first major apparel company to enter the Chinese market (it opened its first showroom in 1981), has been joined by the Japanese retailer Isetan Co., and Saison Group's Seibu Department store, as well as by the U.S. companies Nike Inc. and Playboy Enterprises Inc., which sells clothing and accessories. The American designer Donna Karan opened her first DKNY sportswear boutique in Shenzhen.
Today the majority of Chinese people are making a lot more money than they used to. And Chinese government still lets people pay only token amounts for housing, taxes and medical care - freeing a big chunk of take-home pay to buy burgers, televisions and cosmetics. As some market observers say, China's average income may be lower than that of Thailand, but the average Chinese may have as much money to spend.
And then there are people who are entrepreneurs, or else who made lots of money quickly and they don't know how to spend it, so they go to karaoke bars and act like big shots, drinking XO Cognac and Pabst Blue Ribbon or Carlsberg beer, buy their wife or girlfriend Estee Lauder eye shadow, and fill their homes with Panasonic large screen television sets and Toshiba laser disk karaoke machines. McDonald's hamburgers and Kentucky Friend Chicken, because of their high prices thus the prestigious symbol are of course places they will patron. This kind of consumption may appear odd to foreigners, but hey, China just opened its doors, it is still time learning.
Much of this stunning growth comes off a tiny sales base - those entrepreneurs. China may be home to close to 1.2 billion people, but only 60 million to 100 million of them are believed to be sufficiently well-off to afford foreign consumer goods. And that is why it took Coca-Cola Co. 10 years to turn its first profit in China.
And today the 60 million people is no small number for people who have the right product. Procter & Gamble Co. is selling truckloads of Head & Shoulders shampoo in Guangdong, and Unilever Group's Lux is the top-selling soap in Shanghai. Heinz baby formula is literally everywhere in China now.
Five years ago, Chinese consumers never would have thought they be buying what they are buying today. Chinese senior citizens, aÿgroup of well over 2 millionÿin number, never would have thought they be drinking Coca-Cola.
Market Support
Support systems for the marketplace are doing their best, but hardly meeting the demand. China's infrastructure is badly strained. the transportation network, with railroad as its backbone, is particularly overburdened. Moving goods around China could be quite a venture. This situation has improved in the last couple of years, withÿthe opening of Beijing - Tianjin, Nanjin -ÿShanghai Superhighways, and many of the local new highways.ÿ
Telecommunication systems have been improved a great deal, but still there is much to be desired. International direct dialing is reliable, domestic lines are less jammed, more and more individuals have installed phones in their homes. However, the standard installation fee per line runs in the range of $300, and even so,ÿwithout personal connections, it could take a month or twoÿ to just have a phone line connected. There are about 2 phone among 100 people on the average.
For importers, and sellers, hundreds of national and international trade shows take place in China every year, most are sponsored or cosponsored by government ministries, trade associations, provincial and other local governments, or by the China Council For Promotion of International Trade (CCPIT). Trade shows are a very efficient way to establish contacts. The Guangzhou Spring & AutumnÿTrade Conferences are the largest of its kind. For importers, attending such an fare is a must.
As a result of the economic growth, advertising market is booming. Advertising channels for mass market include publications, radio, television and billboard displays. The number of advertising companies in China is growing rapidly, many of them joint ventures. Prices for most advertising is regulated by the state. Mass advertising is especially effective in China because Chinese consumers look out for prestigious products. To regulate this area, the first advertising law was established as recent as 1994.
Prospect
The most important character in China's economic reform is the gradual opening of certain designated areas. These areas were promoted through special treatment.
The South Coast region had an early economic jump start. Massive use of foreign capital, success of market-oriented economic reforms, and geographic proximity to Hong Kong have enabled Guangdong to become perhaps the fastest growing economy in the world. Next to Guangdong is Fujian Province, which is just north of Guangdong - thanks to the huge capital inflow from Taiwan, which is only separated from the mainland by a narrow strait. Hainan, though still less developed, has great potential with its abundant resources, and most flexible economic policies. Yangpu Area was leased to a Hong Kong based Japanese company to become the center of the economic development on that island.
The East Coast region (Shanghai, Jiangsu, and Zhejiang) has been traditionally the milking cow of the central government. Even without highly preferential economic policies from the central government, the region progressed rapidly. And today when all things (economic policies) are about equal, this region probably has the most potential in the future of China's economy.
The Northeast region (Liaoning, Jilin, and Heilongjiang) is a heavy industrial center with substantial petroleum, metallurgical, coal, chemical and building materials industries.
The Beijing - Tianjin region has become a growing economic and commercial center attracting large amounts of foreign investment. The ETDZ in Tianjin has been very successful. Motorola, AST and many other U.S. concerns are already well established in the city.
The Northwest and the Southwest regions are still behind the development pace elsewhere in the country. More and more people are getting into the areas, but geographically they are hard to access, and the population residing in the areas are limited. However, investors who go into these zone often find the sincerest hospitality. They have huge potential, it is just investors are more keen on areas that they can manage more easily.
The economic growth can be attributed to the reforms in the economic sector started in 1978. From the experience in the last 18 years one can safely predict that China is going to progress steadily throughout the rest of this century.
Therefore, for foreign multinational companies and entrepreneur a like, the opportunities shall beÿtoo enticing to pass up. With a possible mailing list of 1.2 billion people and the world's fastest growing major economy, China offers vast promise. All key governments and company executives from developed worldÿhave made pilgrimages to Beijing to chase business. For Bill Gates, CEO of Microsoft, China frequently appears on his travel schedule, even though China today represents only a small number on his balance sheet, ÿand all this, in spite his claim of rampant piracy of his products in China. |
