China's Emerging Company Product Exported to Denmark - Case Study Example

China's Emerging Company Product Exported to Denmark Name Institution Course Date China's Emerging Company Product Exported to Denmark Executive Summary The bilateral relationship existing between China and Denmark has undergone positive developments which have boosted two-way trade and investments. One of the emerging company product produced in China is electronics and telecommunication gears. Denmark is a potential market for such products due to the positive features concerning its economic issues, political issues, environment and technological advancement. The economy of Denmark is open with a low level of corruption. It is considered world’s leader with regard to technological advancement. The most favourable entry mode into Denmark is international licencing as it reduces political risks when it comes to exports and it can easily reach new markets with limited restrictions. Generally, Denmark a favourable market when it comes to electronic and telecommunication gears. Contents China's Emerging Company Product Exported to Denmark 2 Executive Summary 2 Contents 3 Introduction 4 Market analysis 4 Political-legal issues 4 Economic-financial issues 5 Culture Issues 7 Technology Issues 7 Environment Issues 8 China’s Entry Mode into Denmark’s Market 8 Target Market Segment 9 4Ps Marketing Mix 9 Product 9 Place 10 Price 11 Promotion 11 Conclusion 12 References 13 Introduction China and Denmark have had a history of trade exchanges over the years. In the 1990s, Denmark established diplomatic ties with China (Dsgaard and Kirkebæk, 2001). Over the years, this relationship has matured and has led to China importing and exporting products and services from Denmark. In 2014, the trade between China and Denmark exceeded $10 billion. This has made China Denmark’s largest and successful trading partner in the Asian community. Due to this, Denmark is a suitable market for China’s products. To be specifically, an emerging company product exported to Denmark by China is electronic equipment (Dsgaard and Kirkebæk, 2001). The demand for electronic equipment and telecommunication gears in Denmark is huge thus making the country a potential market for electronic products. This essay will analyse Denmark as a potential market for electronic products from China. It will also detail out the favourable entry mode by China to Denmark and will establish the target market segments for electronic products from electronic companies such as ZTE found in China. The company will evaluate the marketing mix used by ZTE. Market analysis Political-legal issues Generally, the level of corruption in Denmark is low as surveyed by the Transparency International Corruption Perceptions Index (Fund, 2007). Also, the country has strongly reinforced the protections for property rights. Denmark has an independent judicial system that governs the economy in a fair manner and the intellectual property rights are consistent with the world’s standards (Fund, 2007). In addition, Denmark is an associate of the European Union. Together with UK, the country opted-out of the Maastricht Treaty therefore they haven’t implemented the euro. The election conducted in June, 2015 resulted to the creation of a minority government. This group aims at carrying out a continued debate on the issues regarding immigration. Additionally, Denmark is considered and classified to be number 4 out of 189 by the World Bank. This is in terms of the 2015 Ease of Doing Business Index and is the highest in the region of Western Europe (Fund, 2007). Economic-financial issues Denmark’s economy is ranked as the 11th freest economy as per the 2015 Index with well-balanced economic growth as shown in the diagram below. Figure 1. graph showing the economic growth of Denmark (Dsgaard and Kirkebæk, 2001) It has an overall economic freedom of about 76.3. It also has points of about 0.2 as compared to the previous year having improved amongst the 6 out of 10 economic freedoms. This is inclusive of their monetary freedom as well as their property rights (Fund, 2007). While the Denmark’s economic freedom has been successful in the past. Since the last 10 years, Denmark’s economic freedom has deteriorated by about 2.3 scores. This decline has resulted from issues such as corruption, financial freedom as well as poor government spending. Currently, there’s a bit of pressure on the government finances which has come as a result of negative rates in terms of growth. Otherwise, the economic freedom of Denmark remains to grow since the country is among the most stable within Europe (Dsgaard and Kirkebæk, 2001). Its economy indicates well established laws as well as property rights. In addition, Denmark has a mature economy that can accommodate both global trade and investment. Figure 2. showing the progressive economic freedom in Denmark (Terry and Anthony, 2015) Culture Issues Denmark is considered as a country which is very free and is rated to be one of the best countries in Europe when it comes to integration (Dsgaard and Kirkebæk, 2001). It constantly upholds its position in terms of political privileges as well as general freedoms. It has a government that aims at monitoring and closely assessing its current progress and constantly makes effort to prevent cases of extremism as well as radicalization among the young people. Its government also attempts to pass down knowledge to new foreigners so as to enhance and improve the capability within individuals to enthusiastically participate in matters regarding the society of the country. In addition, Denmark has a cultural policy that came up with art forms for example ‘Danish Cultural Canon’ (Fund, 2007). This is aimed to serve as a guide in indicating the milestone of the long and compound history of the country and its people. It also serves as a stand for discussion. The government of Denmark also has integrated a programme called ‘Denmark That Stands Together’ that preaches respect within various people within the country and discourages discrimination of any nature (Dsgaard and Kirkebæk, 2001). This rich culture makes Denmark a suitable country for cultural exchange. Technology Issues Currently, Denmark is considered the world’s leader when it comes to progression of technology. The country has constantly profited from the government e-leadership which is very efficient (Dsgaard and Kirkebæk, 2001). It has also benefited from availability of various e-government services as well as the liberalization of the telecommunication division. The country is society with top notch industry and research in topics such pharmaceutical science and greentech to mention a few. It also has the highest spending directed towards higher learning having world-class facilities in subjects that are of global importance. Denmark is also known of its clean technology. It has been ranked as one of the top countries that focus on development as well as the use of renewable energy. It targets to have 50% of its electricity from wind power by the year 2020.It is renowned to be a world-class leader in clean innovations (Albert, 2010). In addition, Denmark is an ideal country for carrying out test regarding new information technology. Software companies in the country relish success and it is considered a significant hub for European nations (Fund, 2007). Environment Issues The national demography of Denmark is comprised of 89.6% of its population of Danish roots which is over 5.6 million. This was according to statistics in 2012. Most of the remaining 10.4% of the population was made up of immigrants who were from migrant parents or without any Danish citizenship (Dsgaard and Kirkebæk, 2001). One-third of the immigrants originated from bordering Scandinavian nations whereas the rest two-thirds came from nations for example Turkey, Somalia and South Asia to mention a few. China’s Entry Mode into Denmark’s Market China’s electronic company such as ZTE can use different types of entry modes into Denmark such as indirect export and international licensing (Shambaugh, 2013). Indirect export type of entry that involves exporting via locally based export mediators. It has its downside since the exporter will not have any control over its product in the overseas nation. On the other hand, licensing is an entry mode which involves license agreement that permits overseas companies’ manufacture owners’ product for a fixed period in a specific target market. Therefore, China can use licensing as their main means of market entry because it is more advantageous compared to indirect export (Shambaugh, 2013). For example, using international licensing, China can be able to reach new markets which are inaccessible by export from existent institutions. Also, China can retain already established markets which have been shut down by restrictions imposed on trade. In addition, political risks are significantly reduced since the license is most at times 100% locally owed. Therefore, international licensing can be the best and the most efficient way for China to gain entry to the Denmark market since its advantages supersedes that of indirect export (Shambaugh, 2013). Target Market Segment Trying to satisfy the wider market of Denmark is rarely effective. Segmenting the customers into groups of similar individuals will enable the electronic companies in China choose the one that is the most profitable (Aghdaie and Alimardani, 2015). Electronic products from China targets middle class individuals who make up a large percentage of people in Denmark. Additionally, another target market segment for China’s electronic products include the population of people with ages between 18 and 35years who are more attracted to technological and electronic equipment. Electronics from China’s company can target small and medium sized electronic companies that are aimed at buying electronic equipment from a multinational company at subsidised prices and supply it locally to different customers (Aghdaie and Alimardani, 2015). 4Ps Marketing Mix Product This element of the 4Ps marketing mix highlights what a company offers to the consumers. There are many electronic companies in the world which are competing against each other in order to reach new heights. Therefore, electronic companies in China should come up with ways to boost their competitive advantage in order for their exports to increase. For example, ZTE electronic company in China has employed specialised and experienced engineers and new technology in manufacturing their products (ZTE, 2013). ZTE multinational company offer a variety of products ranging from mobile phones, software, tablet computers and hardware and telecommunication gears. The company has partnered with other companies with the aim of developing new, better and high quality products. The brand consists of many patents registered to it. Place The place element of the marketing mix highlights the venue and location to which products are provided. ZTE Corporation is a multinational electronic and telecommunication equipment company that is located in Shenzhen, China (Alon, 2003). It has spread its products and services all over the world through the employment of sales people and other techniques. ZTE Multinational Corporation operates in three main business units namely carrier networks, terminals and telecommunications. The company is also engaged in the creation of designs and production of different products, devices and telecommunication gear. Due to this, the company has set up plants and warehouses where they store their products. Besides the distribution of its products, ZTE in China just like other electronic companies in the country offer additional services including installation and servicing. Their retail shops have spare parts of their products and gears that are useful to the customers (Alon, 2003). ZTE has succeeded over the years due to offering of quality products together with its distribution strategy. ZTE should choose an effective distribution strategy that will triumph in Denmark market. Price Electronic companies in China have the ability to survive in Denmark. For example, ZTE has established its pricing policies very simple and forthright in order to boost its competitive advantage. Since customers and buyers have the ability to choose to which company they buy their electronic appliances, ZTE has not compromised its quality in order to reduce its prices. Some of its products are higher in prices compared to the competitors (ZTE, 2013). Nevertheless, most of its products have effective competitive pricing strategy whereby their products are priced not far from their competitors. When prices are set nearly the same, customers can purchase according to the quality of the products. Therefore, ZTE has maintained its profitability and has generated higher profits and sales over the years as a result of this. In many circumstances, in order for ZTE to increase its sales, the company employs a flexible pricing policy such as giving out discounts to some extent to the customers (ZTE, 2013). Promotion Due to the good relationship between the two countries, China’s Companies can establish its brand and acquire a huge market share in Denmark. With regard to ZTE Corporation, the company has adopted a strategy to redefine its image on the basis of promotion. The company is targeting to win consumers abroad including Denmark by boosting its promotional and marketing budget. It has also joined with some technology companies in boosting the quality of their products (ZTE, 2013). The company’s promotional activities entail various advertisements in the television channels all over the world, in the internet, magazines to name a few. In addition, among other electronic companies in China, ZTE has taken part as sponsors of sports events. It offers discounts for its products and has given out a number of coupons with an aim of increasing sales. Conclusion In conclusion, Denmark market is a potential and an ideal market for China’s electronic products because of the following. Their political risk in the country is low due to the stable and independent judicial system that governs the country in a fair manner. Also, the economy of the country is at a low risk since its economic freedom indicates great potential as well as continuous improvement. Moreover, the culture within the country is very rich with policies aimed at eradicating any forms of radicalism as well as extremism. Denmark has a sophisticated technological advancement and innovation. It has been ranked as the world’s leading nation in terms of innovation. The environment in Denmark has most of its population being Danish and a few of them being immigrants. In addition, China can use international licensing as an entry strategy into Denmark’s market since it will be advantageous both to China and Denmark. All these elements create a conducive environment for China to gain entry into Denmark’s electronic market. References Aghdaie, M & Alimardani, M 2015, Target market selection based on market segment evaluation: a multiple attribute decision making approach, International Journal Of Operational Research, vol. 24, no. 3, p. 262-265. http://dx.doi.org/10.1504/ijor.2015.072231 Albert, M 2010, The OECD innovation strategy getting a head start on tomorrow, Paris, OECD. Alon, I 2003, Chinese economic transition and international marketing strategy, Westport, Conn. Praeger. dsgaard, K & Kirkebæk, M 2001, China and Denmark relations since 1674, Copenhagen, Nordic Institute of Asian Studies, NIAS. Fund, I 2007, Denmark, Washington, International Monetary Fund. Shambaugh, D 2013, China goes global: the partial power, Oxford, New York, Oxford University Press. Terry M. and Anthony B, 2015, Index of Economic Forum, Retrieved from http://www.heritage.org/index. ZTE 2013, Growth Accelerates in the Worldwide Mobile Phone and Smartphone Markets in the second Quarter, Retrieved from http://www.idc.com/getdoc.jsp?containerId=prUS24239313 Read More