Challenges of International Apparel Brands in Penetrating China - Essay Example

? Challenges of International Apparel Brands in Penetrating China Purpose: The purpose of this paper is to show the relation between the consumption of international brand and the Chinese consumer. The paper’s purpose further lies in analysing the prospects for the foreign apparel brand in the Chinese market. Methodology: The methodology used in the paper is qualitative as the research is based on the observation. The research based on qualitative methodology has been given importance to have a clear picture of the China’s market scenario. The qualitative methodology has been used to define objectives of the research paper. Findings: China is the fastest growing economy and the new hotspot for the companies worldwide. The preferences of the consumers have changed since the liberalisation of the economy and foreign brands have become symbolic status. Yet, it can be seen that the older roots of Chinese culture still impacts the buying behaviour. The lack of knowledge of Chinese culture amongst foreign brands has also been noticed. Research Limitations: Qualitative methodology has provided ample scope of research but it still has some limitations. It cannot be widely used for sampling large population. But, there is always room for future research based on different research methodologies. The research has also emphasised on practical and social implications affecting the society and the business entities. Originality: The research has focused on the importance of Chinese culture in determining the market scenario for the apparel brand. Piracy problem being a major concern for the foreign brands has also been highlighted. Key Words: Chinese Culture, Consumer Behaviour, Apparel Brand, Piracy, Research, Qualitative methodology, Practical and social implications, Symbolic value. Table of Content Purpose 6 Methodology 6 Qualitative Research 7 Objectives of Paper through Qualitative Research 7 Findings 8 Foreign brands and the Chinese consumers 9 Consumer satisfaction and Chinese cultural values 12 Foreign brand consumption & the modern Chinese culture 13 Chinese market a different insight 13 Discussions 14 Conclusion 15 Reference 17 Bibliography 20 Purpose The purpose of this paper is to analyse the Chinese consumer behaviour related to the consumption of international brands. This paper further emphasises on the study of Chinese culture and its impact on the consumers’ preferences. China as a growing economy is seen as the prospect for the foreign brands to explore the country. China is said to be the land of opportunity and to analyse its true nature the paper has focused on the implication of Chinese culture and what international brands requires to be a part of the Chinese business market. Why china is an important market? How can china help international brands to extend their market share? These questions have also been the point of discussion in the paper. It can also be seen that China though offers opportunity, but for any foreign brand to expand into China would require a research on the Chinese consumers behaviour. Consumer research based on the behavioural pattern can make the international brands understand the market in a better way to implement the right strategy. A thorough research based on the analysis of data collection and other methods can play a significant role in understanding the true nature of consumer behaviour in context to the Chinese culture (Hoyer & Macinnis, 2009, p. 40). Methodology Research methodology can be defined as the process of analysing, collecting and devising the required information. Methodology is an important procedure for any company wanting to market its product in a new territory (Burns & Bush, 2007, p. 6-7). Market research methodology involves the explanation of the problem and the process to find the desired solution. The cause of problem and the research methodology plan are directly proportional to each other. The research methodology has also helped in determining the objective of paper which is to analyse the Chinese market and the consumer behaviour. A foreign apparel brand’s primary role in terms of marketing research is based on its target market. The paper has very well identified the target market and suggested how any apparel brand planning to launch a product should initially decide on the target market, and then move forward with its plan of expansion. The other objective of the research methodology was to define the connection between the brand and its customers through information aimed at problem solving and recognising the opportunities, to have better knowledge about the processes involved in market and the procedure to make the market more effective by implementing certain actions (Schmidt & Hollensen, 2007, p. 19). Qualitative Research There are many research methods which can be implemented to study the behaviour and the culture of the new territory where an organisation plan to expand. Amongst these methods the most prominent one is the qualitative method of research. Qualitative research method is the process of gathering, examining and understanding the data which however cannot be enumerated in terms of numbers. Qualitative research is equally at par despite lacking to provide quantified evidence. This method was chosen for the research objective as it is the most sought after research method for the organisations that plans to study the behavioural context of consumers as part of its expansion into a new territory. Qualitative method has also been helpful in research involving unstructured process as it depends on observations of problem insight. This method has also been useful in the case of analysing small group of unstructured samples to understand and analyse the problem (Parasuraman, Grewal & Krishnan, 2009, p. 178). A qualitative method was preferred over quantitative method as it is more apt while selecting small samples in comparison to large samples for analysis. Qualitative research method requires no structured process of research and is easy to obtain results based on observations (McDaniel & Gates, 1998, p. 98). Objectives of Paper through Qualitative Research The prime objectives of the paper which has been performed through qualitative research can be discussed as follows: To identify the pertinent aspects related to the Chinese customer’s choice of product. Identifying the local brands which are preferred as alternatives by the consumers. To identify the consumers’ emotional nature as this can greatly influence the business environment. Identifying other characteristics which can further elaborate on the preferences of consumers (Malhotra, 2008, p. 147). Qualitative research method has played a significant role in determining the buying behaviour of consumers. The paper has opted for qualitative research as the primary research tool based on two factors, communication and observation. An organisation can collect primary data by communicating with the consumers and get to know their preferences in terms of products. Communication process can be processed through telephones or mails. Observation is another method involved in the primary data collection. For organisations expanding business in different cultural background are recommended to use observational method in understanding the behaviour of consumers (Isikli, n.d., p. 88). The paper has used secondary data from different articles and books on Chinese culture. These secondary data were integrated and analysed to get a holistic view of the Chinese consumer behaviour and how it can help the international brands in their quest of expansion in China. Descriptive research has also been used in analysing the target market. Descriptive research is applied to get a clear picture of the marketing situation and its aspects (Wrenn, Stevens & Loudon, 2006, p. 44). Apart from the qualitative research, data’s based on questionnaires and interviews have also been analysed to collect more evidence regarding the Chinese culture. The literature review also emphasises on the modern Chinese culture and the demand for foreign brands. The subject scope of the paper which is to acknowledge the importance of Chinese culture in the context of China’s business market for the foreign brands has also been covered in the paper. The trends and patterns over the years in context to foreign brand consumption have also been discussed in the paper. Findings The findings based on the research methodology about the international brands planning to enter the Chinese market can be illustrated below: Foreign brands and the Chinese consumers Chinese economy is one of the fastest growing economies in the world. Since, the advent of economic liberalisation in the early 1980’s the country has seen unprecedented growth. This feature of the country has made it the hotspot for the foreign brands willing to expand their business and extend their market share. Chinese culture in comparison to other cultures is different and this makes the road to success multifaceted for the global brands. Chinese consumers have strong liking for foreign brands as they hardly distinguish them as different brands but rather treat each brand as an international brand and use it to maintain their status symbol (Gu & Frank, 2006, p. 62). The Chinese consumers’ behaviour has always been a subject of discussion. The case is the same in context to the international clothing brands expanding in China. China has long been an economy focusing on the domestic market. But, since liberalisation it has opened its gates for the foreign investors and foreign brands. Chinese culture unlike the western cultural is society centred in its approach. The Chinese people are more likely to bond together as a group than prefer being self-centred. But, this has not prevented Chinese consumers from buying international clothing brands. International clothing brands are looked upon as status symbol by the consumers to distinguish them from the others. This behaviour of the Chinese consumer stands parallel to their western counterparts (Cerdi, n.d, p. 2-7). The Chinese market has shown considerable growth in the consumptions of foreign apparel brands which has eventually raised the value of apparel imported by China (Graph 1). Graph 1- Value of Textile & Apparel products imported by China Source: EU SME Centre 2011 The rise in clothing consumption in Chinese urban market has further created more opportunity for the foreign brands (Graph 2). Graph 2- Urban Household Clothing Consumption Source: EU SME 2011 The textile and apparel imports in China saw a fall during the Global Financial Crisis. As the market improved the value of apparel imported by China also experienced a significant growth (Graph 3). Graph 3- Value of Textile & Apparel Products Imported by China Source: EU SME 2011 Consumer satisfaction and Chinese cultural values The buying behaviour of the consumers in China can be said to be directly related to the consumers’ upbringing in the Chinese culture. Chinese culture is influenced by Confucianism, which is society centred. It is important to analyse the cultural difference, the behavioural patterns of the consumers to get the nod of acceptance. The satisfaction of the large consumer base is another important aspect in terms of market for the international brands (Yau & You, 1994, p. 63-67). Consumption for the Chinese consumers is more than the fundamental needs. They buy products to develop a new identity based on the brands. The other aspect of Chinese consumers is that not very large population is inclined towards buying international clothing brands as the maximum number of population of China resides in rural areas (Thompson, 2010, p. 73). Foreign brand consumption & the modern Chinese culture The modern Chinese culture is very much inclined towards the western culture which has a significant impact on the buying behaviour of the consumers. But, the old ideologies cannot be separated from the new ones, thereby playing a crucial role in the foreign brand consumption. With more youth population the Chinese culture is surely moving towards being reckoned as the new hub of fashion industry. The youth population is willing to pay for the foreign brands which tend to raise their status symbol in the society. Modern Chinese consumers buying behaviour is not merely based on the international brands but the quality of these brands carry with the tag. For an international brand to be successful in the Chinese market has to considerably keep differentiating itself from the local brands. A proper planning regarding the expansion is the need of the hour for the international clothing brands. Further it can be noted that there are three main categories which can be targeted by the international clothing brand to succeed in the Chinese market. The three categories are the urban youth who are willing to spend and maintain status based on high standard of living, second the college goers and thirdly the working class people. China is well on the course to emerge as the number one consumer of foreign brands and may see a rise in consumption of more than 100% in the coming years which can directly be related to the booming economy of the country which has made its people richer and more responsive towards the foreign brands (Lu, 2011). Chinese market a different insight International brands exploring the Chinese territory have great opportunities. The Chinese economy gives these brands ample opportunity to grab a large market share. But, along with the prospect comes the trouble as well. The trouble for these international brands lies in the case of Intellectual Property Rights (IPR). The problem of counterfeit has emerged as a major concern for the foreign brands along with the competition in the Chinese market. The local brands are no exception to this problem. Apart from the piracy problem Chinese market also lacks proper retail structure to boost the sales of the international brands. Thirdly, it can be said that any foreign brand hoping to get fast returns on invest have a wrong notion. To expand into a territory like China where old ideologies still holds a place in the mindset of consumers, the international brands should think in terms of long term returns. It is also important for the international brands to position themselves differently in the Chinese market to emerge as successful brand. Advertising also plays an important role in defining the brand preference. Advertising the medium through which an international brand can convey its message to the people of China. Lastly, it can be said that with the opportunity the international brands also have to manage the risks lying ahead in terms of marketing their product and positioning it differently from the other foreign and local brands (Luo, 2007, p. 180). Discussions Chinese culture bears it roots from the philosophies of Confucianism which highlights the culture as society centred. Consumers are more influenced from the external environment such as friends, family members in taking a decision. It is very important for an international brand to study the cultural differences before launching its products in China. China may be the top growing economy in the world but it has its own pros and cons when it comes to purchasing power of consumers. The international brands entering China and regarding it as the next big thing have to deal with different situation in its business outing. Many international brands have acclimatised themselves to the Chinese environment to have greater market penetration as compared to other foreign brands in the apparel industry. Chinese people’s inclination towards foreign brands is a known fact since many foreign brands in several industries have been successful with their expansion in China. Also Chinese consumers’ choice for international brands has increased considerably. This fact can be used as a tool by any new international apparel brand to analyse and study the changes these brands or companies has made in their strategies to be a well established brand (Cheng, 2009, p. 33). Apart from knowing the Chinese culture it is also important for any international brand to understand what makes consumers of one culture follow the preferences of other culture in terms of products preferences. This can be truly termed as consumer buying behaviour. The impact of one culture over another can be based on several aspects, such as electronic media which has removed the barriers between two countries. Secondly, consumers also get inspired to follow certain fashion trends by watching movies or theatre. Reasons are umpteen, some are essential while some keep changing over a certain period of time (Schiffman & Kanuk, n. d, p. 477) The Chinese consumers buying behaviour is also related to its purchasing power which is directly related to income. Chinese consumers can be segmented into four major groups- the urban youth, the rich, the poor and finally the working class or the middle class. The international apparel brand needs to analyse these facts and accordingly implement its strategy. The strategy should be in accordance to the target group which can provide the maximum profitability along with market share and loyalty factor (Assael, 2005, p. 270). Lastly, the foreign brand should also focus on the fact that consumers in China are status oriented and would like to be seen differently from others or to be more precise would like to maintain a status quo in the society. Studying and analysing this fact the foreign brand should maintain a quality gap along with the fashion trend with its local counterparts to emerge as a winner in the cut throat competition market of China. Conclusion The literature review of the paper suggests scope for the international apparel brand in the Chinese market. The research defines the consumer behaviour and their buying preferences. Much has been said about the Chinese culture, its influences, inclination towards foreign brands and the ways a foreign brand can become a part of the Chinese economy. But, all this research may also prove to be insufficient as every research has its limitations in providing the exact data. This paper was primarily based on the qualitative research and it had its limitations. Qualitative research is based on observation which provides limited information as it cannot be quantified. Qualitative research processes in an unstructured manner which may also lead to biasness. Also the sample collection is based on small groups which provide limited access to information regarding the consumer behaviour (Writing.colostate, 2012). Every research methodology has its limitations but there is always space for improvement. This implies in the case of qualitative research as well. Future research can be based on other research methodology which can further analyse the importance of Chinese culture in a more structured and descriptive manner. Quantitative along with descriptive methodology can be used in the future research to understand the nature and behaviour of group of people related to Chinese culture. It can further be implemented to predict and describe features of buying behaviour of consumers (Churchill & Lacobucci, 2009, p. 84). Apart from this quantitative and descriptive research can further help to determine the desired market for the apparel brand and ways to improvise on the future strategies of marketing. Quantitative research is an important tool which along with descriptive and qualitative research can help to enhance a company’s understanding of the interrelated variable of market (Stevens, 2006, p. 34). The paper had its research limitations but also had certain practical and social implications. The practical and social implications highlighted issues related to the importance of consumer behaviour in knowing the market of a country. Practical implications emphasised on the practice involved related to the entry mode of apparel brand in the Chinese market. It has been known from the research paper that for any foreign brand it is necessary to know the culture of the desired country, the implications of the culture on the buying behaviour and the changing trend and preferences in context to the international apparel brands. This research has also made an impact on the society as it has been able to evaluate and analyse the behavioural pattern which is greatly influenced by the society and the people comprising it. The research has pointed out the differences in societies of western world and China in terms of brand preference and influence. The research will also impact the attitudes of the public as more people will acknowledge the importance of knowing a culture and the behaviour of the consumers in a country. This will enable them to take decisions and choose a brand not only in terms of symbol but also utilisation purpose. The practical implication of this research will have greater impact on the economic front as more and more business entity will prefer collecting and analysing data regarding the importance of culture. This will further help them to not only expand into China but also establish themselves as a successful business entity. The research paper has also widely contributed towards the importance of Chinese culture in context to the business opportunity in the country. It has talked about the roots of Chinese culture and its impact on modern cultural as well. The research paper has provided the evidence regarding the preferences of Chinese consumers. The paper has also talked about the reason as to why an international apparel brand should maintain a quality gap and differentiate itself from the local brands. Piracy related problems have also been unearthed in the research paper along with the necessity to curb this problem. 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