Expanding Market for Chinese Mobiles - Research Paper Example

Expanding Market for Chinese Mobiles Due to stiff competition in the sector of technology, China as one of the largest mobile manufacturer has come up with the idea of seeking overseas market for its mobile phones as a way of expanding the market. As a result, China has tried to improve her relationship internationally by actively participating in exchange of goods and services so that foreign nations can purchase her mobile phone more compared to the mobile phone types of their rivals. Introduction China mobile limited is vigorously active to seek market opportunities for the fourth-generation telecommunication technology in foreign countries today because for the past years china has remained behind in establishing abroad markets. Through actively looking for the overseas market, China is aiming to have 30 to 60 million of 4G mobile type users worldwide by this year. As a result, through growth or expansion, this will assist China to emerge as a market decider in the future as shown by the analysts. The company’s management has aimed to hire international personnel or explores for new markets overseas, an international plan can help increase and spread a business. Therefore, China is actively concern with entry strategies in both non-equity, (Cavusgil 89) which includes export and contracts agreements with foreign nations and equity mode. This includes joint venture and wholly owned subsidiaries activities in order to venture in international markets. On the other hand the pictures outlined marketing strategies which are put in place to expand Chinese mobiles in the market. Additionally the resume principle acts as a pillar to hold the business in the market. a) Exporting and Importing This is the first and most common strategy in order to become an international company. There should be adequate import of goods from the foreign nations. Importing is the process of buying goods or services in another country. This will help to improve interrelationship between China and foreign nations. As a return, foreign nations will engage in exchange terms where China will have the opportunity to export its mobile phones to these foreign nations. Export is the process of selling goods or services produced in one country to other countries. Export can be either direct or indirect. Indirect export means that products are carried abroad by other agents and the parent firm does not have special activity connected with foreign market since sales abroad is treated as the domestic one. On the other hand, direct exporting means that, the firm is directly involved in marketing its products in foreign markets. Because of active import and export processes, China will have the opportunity to advertise its phones in foreign markets and establish markets in these foreign nations that it involves itself in import and export process (Cavusgil 122) b) Licensing Licensing is another means to enter into a foreign market with a limited degree of contingencies. Granting license means to give permission. International licensing of foreign firms to sell China phones give the foreign nations patent rights, trademark rights, copyrights or the knowledge on products and processes. As a result, the licensed firm in the foreign nation will produce the China’s phones, market China’s phones in their assigned territory and pay China a license fee and royalty that is related to the sales volume of the China phones. Fortunately, the authorities of foreign nations readily welcome this kind of agreement because it helps to bring new technology in the country. c) Franchising Franchising system is defined as a system in which semi-independent business owners pay fees and royalties to the parent company (franchiser) in return for the right to become identified with its trademark, to sell its products or services. Moreover, the franchisee is free to often use its business format and system. Franchising can be similar to licensing except that in franchising, the franchising firm tend to be more directly indulged in the building ad control of the market programs. Additionally, franchising agreements last for a long time and the franchisor offers a wider package of rights and resources that usually include equipment, managerial systems, operation manual, initial training, site approval and the exclusive support essential for the franchisee to conduct its business in the same way it is done by the parent company. Franchising is associated with advantages such as low cost, it is less politically at risk, allows immediate expansion into different regions of the world and if there is well selected partners bring financial investment and managerial capabilities to the operation (Cavusgil 136) d) Forming Joint Ventures Although joint ventures has a lot of similarities with the licensing process, the difference is that in joint venture, China will have an equity position and a management voice in the markets of foreign nation. The partnership between the host and foreign country is formed and usually results to the formation of a third firm. This kind of involvement, will give China a better control over all operations and the access to local market knowledge. It will also assist China to access to the market network of the foreign nation hence exposed to another added opportunity to engage in market with these other nations in market agreement with the current franchisee. This agreement has an advantage over other agreement because it permits the avoidance of control problems of the other kinds of foreign market entry strategies (Cavusgil153) e) Forming Strategies Alliances A strategic alliance means is a term used to describe a variety of cooperative agreement between different firms. They include shared research, formal joint venture and minority equity participation. This kind of agreement will have a great advantage to China opportunity to have fruitful access of foreign market because the modern form of strategic alliance is increasingly becoming popular and has very distinguishing features. For example, they are between firms in high-industrialized nations, these will help China to become more industrialized and on the other hand, industrialized nations are characterized with good status of economy hence China will make good sales for the phone. The focus is often to create new product and technologies rather than distributing existing ones, therefore, China will have the advantage of introducing its new 4G telecommunication both domestically and in the foreign markets internationally. Moreover, they are created to serve for a short duration of time; this will help China to maximize its new phone sales as people are evolutional such that they often rush for new products introduced in the market. China will also enjoy the opportunity because the main objective of strategic alliance is exchanging the technology innovations. This will help China to launch its new technological phones and has the choice to decide to sell the technology to foreign nations to popularize its phones internationally. This will also keep China on toes to the competition nature of the technology since strategies alliance is more supported by its short life cycles (Cavusgil 170) f) Involvement in Direct Investments A direct investment involves international firms forming a production unit in a foreign market. When China involve itself with direct investments with foreign nations in its good and services, it has the opportunity to venture into foreign market by forming agreements with the foreign nations it has been involved with in direct investment. Direct investment involves two ways, first is that direct investment firms can make a direct acquisition in the host market. Acquisition currently has become a popular way of entering foreign markets mainly due to its quick access, involves low risks and its outcomes can be estimated more easily and precisely compared to Greenfield investment way. Secondly, direct investment firms can develop its own facilities from the ground up and this form is referred to as Greenfield investment. On the other hand, direct investments of China to other foreign nations will help China to create market to its phones. This will can a good method to expand its market to abroad through forming agencies that would market its phones of behalf of the China mobile company (Cavusgil 190) Reasons why China needs Collaboration with Foreign Nations for Its Success As a summary, China needs collaboration with other foreign nations not just to provide support for the markets of its phones but also to enable develop itself in terms of relationship with foreign nations and its technology. Additionally, China does not only need collaboration with foreign nations to compete in terms of market for the technology but also for the formation of partnership to help exchange ideas to develop new businesses or reduce investment cost. Collaboration is needed to eliminate risks of technology of having too much capacity for the local market to avoid in fluxing its local market with its phones and increase profit for its phone sales. It also needs collaboration to learn. Learning will entail improving skills through working with partners in the foreign nations and gaining access to other countries through joint relationship. It will provide access to the foreign nation’s practices such that it will enable China to acquire the knowledge about the kind of phone varieties people in the foreign market need most and the most demanded phone types. Lastly, collaboration will help to change the name of competitive game to manage industries in a rivalry manner and provide a friendly competitive environment that enhances the ability to develop a transnational organizational capability that is the key factor that can help the technology firm adapt to the changes in the dynamic environment of technology (Cavusgil 203) Work Cited Zou G., Cavusgil S.T. The GMS: a Broad Conceptualization of Global Marketing Strategy and its Effect on Firm Performance, Journal of Marketing, (2002). Read More