An Irish firm in the Chinese Market

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An Irish firm in the Chinese Market

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Abstract

Enterprise Ireland, positioned in the cosmetics field, is willing to enter an international market. With 15% of annual growth in the global market, China becomes more and more attractive for businesses all around the world. In Europe, the attractiveness is intensified by the amount of trade exchange between both parts of the planet that has soared since 1987. To internationalize products or brand is not an easy game, whatever the country it concerns. Indeed, several criteria have to be taken into account such as the country's economy, politics and laws, culture and social aspect and so on. In China, difficulties are multiplied due to the political risks and business methods that lean a lot on the social network. Then, to succeed in its globalization trial and profit from the Asian euphoria, the cosmetics firm seeks to get a complete framework.
It will firstly include a complete research on the market characteristic of the global Chinese market and the cosmetic market, secondly the explanations of two market entry strategies with an option for the most suitable one, and finally key organizations in terms of distribution and logistics.

Introduction.
Political and socio cultural environment.
1. Politics as a tool to encourage or discourage activities depending on its interests.
2. The political risk in the host country.
3. The three categories of actions.
Entry modes.
1. Selecting the right mode.
2. The internal factors.
3. The international experience.
4. The external factors.
5. The desired mode characteristics.
Distribution and logistics.
1. The cosmetics Irish business entering the Chinese market.
2. The Chinese market as the first international experience for the Irish SME.
3. The Irish SME as a newcomer in the Chinese market.
4. Managment of sales and distribution.
5. International marketing channels.
Conclusion.
References.

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[...] In this case, the Irish firm entrusts sales and services with agents or distributors. Unlike to the indirect exporting, the direct one performs the export task rather than delegating. To choose between indirect or direct exporting, marketers have to select selling through a manufacturer's representative or through the firm's own sales force. The advantages of this entry mode are not only the raise of sales but also the raise of control, better market information and the development of expertise. Costs are higher with the direct approach than the indirect approach because in the indirect method the costs are shared. [...]

[...] Indeed, if a Chinese worker will work to earn per month, an Irish man earn at least for fourteen times more! In China of the whole population counts in the workforce and within it income disparities from the coastal people to the inland one are significant. This way, a worker from Tianjin (coastal) will earn more than one from Shaanxi (inland). Also, in some countries, nation's labor unions may be a problem because of their strengths and their political influence. [...]

[...] As well, Chinese people use few gestures and don't make a great show of feelings. Arm-grabbing and backslapping are considered like a lack of respect. In China, language is, however, a key point in the negotiation process. Indeed, even if most people speak English, using an interpreter for big deals is really appreciated. Although the Chinese environment seems to be full of pitfalls, the potential market remains the greatest appeal. Especially in the cosmetics field which knows a growth, Chinese consumers, with an increasing of income, are attractive (Sum Y.L.1995, St-Maurice I. [...]

[...] For the competition aspect, the Chinese market is really attractive for the local and foreign cosmetics companies, so the representation through an agent could be a tool of competitiveness to be present in lots of point of sales. The description of it advantages allows to conclude that the best intermediary for the internationalization seems to be the agent. As saw previously, in both cases, the dealing with the distributors is unavoidable but the agent is a plus that the firm could use to create a distributors network and to dispense its products through several third parties. [...]

[...] The Irish SME is a newcomer in the Chinese market, so the utilization of an agent could be useful, firstly, to create a network, which is essential with the Guanxi phenomena. Furthermore the agent matches with the financial resources of the SME as the remuneration of the agent; the commission only depends on the percentage of sales he brings. Secondly, it will allow the company to acquire experience by keeping the control. Indeed, the agent is only an intermediary between company and distributors, who has to prospect for distributors and negotiate. [...]

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