Essay Title: 

Chinese Marketplace

March 28, 2016 | Author: | Posted in asian studies, history

The market figure of 1 .3 billion potential consumers in China draws many companies to invest . As an emerging market , however , there are many risks and many areas of the country that are hard to reach Starbucks is already active in China , with 100 retail locations According to the Euromonitor International , China doubled its on-trade coffee consumption between 1998-2003 . This is a mostly urban phenomenon with most rural areas largely untapped . On-trade sales of coffee mainly go through three types of establishments : coffee shops /cafys (independent and chained , Internet cafys and fast food [banner_entry_middle]

restaurants In to expand its markets in China , Starbucks needs to consider the economic characteristics of the Chinese marketplace , the barriers to expansion , and what psychological factors could aid in success

The World Fact Book estimates the GDP Growth Rate at 10 .2 . The industrial production growth rate is estimated at 29 .5 . Currently , the population of China is working in the following sectors : agriculture (49 , industry (22 , and services (29 . There are also 123 million internet users . These statistics show favorable conditions for growth in China . With the overall growth of the market increasing and an active industry and services sector , China has populations sophisticated enough to enjoy the drinking of coffee . Also , the 123 million internet users create a market that Starbucks can tap via internet marketing . A closer look at who the potential markets are in China by BCG estimates that there are 25 million to 35 million middle class households in China , compared with 8 million affluent homes (p . 1 . The economic statistics clearly show market expansion possibilities for Starbuck ‘s in China

However , there are some barriers to expansion . The Chinese marketplace is not well understood yet . First of all , there are 30-40 large cities in China , followed by 500 other large markets . Currently , Starbucks is only in the largest cities , such as Shanghai . However , these other large cities offer large markets as well . The difficulty in accessing these markets is two fold . First , it is difficult to access many places within China , and setting up a national distribution system is very difficult (BCG China Report

. 7 . Second , the task of marketing the product is difficult . Chinese consumers are known to be very frugal and in these areas the importance individuals place on image may not be as strong as in cosmopolitan centers

The main aspect of Chinese culture that aids the expansion of Starbucks is the Chinese concern with image . This is first reflected in the Geert Hofstede report which states that China ranks lowest of all Asian countries in its scale of individuality . Many people in China desire to keep up with their peers – to use the same brands and have the same image to represent their social status . It is imperative for brands to align themselves with the goals . According to the BCG China Report (p 4 ) For brands to make a dent over here , it ‘s no longer a game about creating esteem , it ‘s a… [banner_entry_footer]

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