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| Thursday, August 28, 2008 19:51:52 |
Foreign strategic market penetration affect Chinese industries development
Since China’s entrance to the WTO, the influx of foreign enterprises and their market penetration strategies have had great effect on Chinese market and industry development, China Economic Times reported.
Retail
2005 is famed as the "Year of Retail" as it was the first year that China fully opened its retail sector to foreign investment. As a result of the changes in government policy, the influx of multinational companies is prominent. From 1992 to the end of 2004, the Ministry of Commerce had licensed 3997 outlets belonging to 314 foreign companies to establish in China. In the first nine months of 2005, the Ministry of Commerce licensed 1130 outlets from 554 foreign companies, which is a third of the total number of foreign establishments licensed in the past 13 years.
Most foreign brands establish themselves in China by expanding shopping outlets to cover major cities or regions in the country. Walmart, for example, plans to open another 150 outlets in the next five years, in addition to the 50 existing outlets. Carrefour plans to invest another 100 million Euros by 2008 and will become the fastest growing franchise in China.
Another expansion strategy is acquisition. In November 2005, England-based Asmore acquired a more than 50 percent stake of a chain of agricultural products in Shenzhen, while in December 2005, Carrefour acquired a bargain store franchise in Shanghai.
Beverage
In the beverage sector, Coca Cola has a share of more than 50 percent of the market share. Together with Pepsi, they turn Chinese local brands into minority competitor. Foreign domination of the sector is prominent. Foreign investors also dominate beer production and distribution in China. Apart from Yanjing Beer, which insists on staying local, other brands are partially or totally controlled by foreign investors.
In recent years, China Resources Breweries Ltd. has acquired more than 40 Mainland beer corporations. It is now among the top three in the market. As the global giant in beer industry, SAB has a 49-percent share of China Resources Breweries.
German Anheuser-Busch (AB) controls Tsingdao, Budweiser, and Harbin, among others, in China. It has a 27 percent share in Tsingdao and a 90 percent share in Harbin. In sales term, Harbin now has more than 8 percent of the market, while Tsingdao has 15 percent.
Other local brands are acquired gradually such as Yunnan Dali, Lhasa beer and Huanghe by Carlsberg.
Pharmaceutical
From drug manufacturers, research and development to sales, purchasing and acquisition, multinational companies have now expanded investment and even entered the sector of Chinese medicine.
At present, the 20 top global pharmaceutical companies have established factories with other Chinese companies, including German Boehringerc. H. Sohningelheim’s factory at Shanghai Zhangjiang Industrial Park, Glaxo SmithKline at Tianjian and Astra Zeneca at Wuxi.
The most recently innovated marketing strategy is to establish joint hospitals with Chinese medical centers. In March 2004, America-based Chindex jointly established Shanghai United Family Hospital, a profitable hospital, with Shanghai Changning medical hospital. Many followed suit and, in Shanghai, more than 200 public hospitals are in joint ventures with foreign investors from America, Germany, Korea, Japan and Singapore to establish hospitals, clinics and medical centres.
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