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Running Head: REPORT

REPORT AND ANALYSIS

NAME

INSTITUTE AFFILIATION
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Contents
INTRODUCTION .......................................................................................................................... 3
CHALLENGES FACED BY HAIER ............................................................................................ 4
IMPACT OF POLITIAL AND ECONOMIC FACTORS ............................................................. 6
RECOMMENDATIONS ................................................................................................................ 7
CONCLUSION ............................................................................................................................... 7
REFERENCES ............................................................................................................................... 9
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INTRODUCTION

Goldman Sachs’ chief economist Jim O’Neill coined the term BRICS in 2011. The

BRICS grouping the five emerging economies- Brazil, Russia, India, China and South

Africa- is of great importance to developing countries and emerging economies. Jim

identified the “Next 11” (N-11) growth markets in 2005. N-11 includes the countries that

over the coming decades are most likely to rise quickly economically. The emerging markets

are challenging developed countries by producing innovative products for less cost than

western more developed countries. However there are number of challenges that marketers

from developing countries face and these countries must overcome those challenges in order

to keep up with their more developed counterparts.

The path to globalization does not run smooth. There are many Chinese brands that are

widely known but are still at their infant phase in tapping markets of developed countries.

Haier is the company that we will be discussing in this report. Haier group of China initially

used to manufacture refrigerator later expanded rapidly into other sectors. In few years Haier

became appliances giant. It has a global network of marketing and sales offices. It provides a

wide range of consumer electronics and home appliances. It has competitive edge due to

continuous innovation, people at Haier are continuously working on innovating products.

Haier products are sold in markets of Europe, Asia, Middle East and The United States. With

the expectation of entering the higher end market abroad, Haier made a bid on Maytag

Corporation which is US based, but unfortunately Whirlpool made a winning bid. This was a

major obstacle for Haier, they lost the golden chance to enter the high end market of The

United States.

Organizations need global strategies to be able to understand consumers. In order to

understand current potential customers, marketing research is the only way. Companies must
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know how international market research differs than that conducted in domestic markets.

Marketers who engage in global market research studies must consider several factors. There

are number of challenges that researcher face while conducting research across national

borders. In order to contribute to firm’s competitive advantage in the marketplace, those

Marketers will be better suited to design and implement projects who are well aware of the

unique context of international market research (Young and Javalgi, 2007).

CHALLENGES FACED BY HAIER

There are few challenges faced by Haier despite being the appliances giant. Unlike

developed economies it lacks transparency about its governance structure. The ownership

status of the Haier Group is not clearly defined. This was one of many reasons why

Whirlpool bought Maytag Corporation. Most brands prefer the developing countries while

entering the international market. The main reason why Chinese brands are finding it difficult

to have loyal customers because of the reputation of products made in China, and mainly

because Chinese firms ignore the importance of the purpose-based marketing. According to

Batra (1997) marketing environment different in developed countries and in transitional

economies. The movement towards freer markets has led to great interest in unique issues

and the marketing challenges to these economies. Multinational corporations show interest in

these emerging markets, as the see growth and leadership potential. China selling more

refrigerators every year than The United States proves this point. Organization or individuals

who wish to promote market and commercial success of domestic enterprises in emerging

economies, operating in their own or in export markets are another reason for this interest.

Five key characteristics are radically different in emerging and developed markets. Those

five characteristics are unbranded competition, chronic shortage of resources, sociopolitical

governance, market heterogeneity, and inadequate infrastructure. These characteristics make

us rethink the important assumptions related to marketing, such as market segmentation,


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market orientation, and differential advantage. Similarly issues of marketing practices and

public policy need to be rethink (Jagdish, 2011).

A wide range of products of Haier are sold in The US, but China is still unable to make their

brands well known and widely acceptable. It takes more than Olympic sponsorships, English

websites and services to achieve the transformation from local to global brands. Literature

dealing with skills of marketing managers is limited, whereas much attention is devoted to

the development of marketing strategy. There are many marketing theories that acknowledges

the need for marketing skills, but fails to identify these skills. It has become very important in

today’s world to value human capital more than anything and to value emotional intelligence

as well. It is important for companies to retain individuals who possess competencies and key

skills. Employers are looking for individuals who can apply sound marketing principles in the

field, lowering staff turnover. Combination of managerial and technological capabilities are

needed to survive in today’s market. There are three important factors that needs to be keep

in mind in order to survive in any environment, most important being the individuals having

technical, human and conceptual skills, secondly the focus of organization must be on

building marketing competencies of individuals, and thirdly the focus of organization on

strategic outcomes and corporate competence (Melaia, Abratt and Bick, 2008). There are few

companies that have successfully transformed, like Samsung has totally transformed itself

from A South Korean brand to a global one. It’s because of its design different from all

others, and amazing features. There is more of a home based marketing, Chinese firms are

afraid to take risk to go and advertise their products beyond borders.


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IMPACT OF POLITIAL AND ECONOMIC FACTORS

In China businesses are facing many political challenges. In China regulation are not

as transparent or absolute as they are in western economies. There is a form of social network

in China called guanxiwang in local language; it is the relationship between the entities of the

network and the individuals. In China links with communist party help international

businesses avoid red tape and bureaucracy. Businesses find it hard to survive due to lack of

transparency. China is one of the fastest growing economies in the world. Due to changes in

policies companies investing in China have to consider the stability of political and economic

environment and have to prepare themselves from various risks. China has tried to maintain

Yuan against US dollar. The demand for labor has also increased due to high economic

growth. The minimum wage level has been increased by the government in past five years.

The operating cost has been increased with such decision and it is a risk factor that companies

have to keep in mind (Jayaraman, 2009). The research proves that on average emerging

markets experience less political risk. The political risk impact on both markets however is

statistically significant. During the last ten years political risk has increased in emerging

markets. During the decade developed markets have become politically riskier whereas

emerging markets have become politically safer (Diamonte, Liew and Stenvens, 1996).

The environment of international marketing is changing rapidly due to globalization,

technological advancement. Marketing of products and services of the countries presents a

very challenging task to MNCs due to difference in many aspects including cultural, political

and economy. Emerging economies are playing a major role in the performance of the global

economy. Initially trade between developed and developing countries was of very much

importance, but now trade between developing countries have become more important.

Developing countries are now focusing on developing their own market first and then are
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making efforts to pursue regional economic integration. By doing this developing countries

are diversifying their products away from their export markets in North America and Europe.

Economic growth of any country depends on its factors of production, an environment that is

stable both economically and politically, and major return on investment by businesses and

individuals. There are some major barriers in developing markets which restricts the growth

of consumer demand and make it difficult for them to access international markets. Those

barriers include a coordination failure that affects the operation of markets, bad condition for

investment in private sector, and less financial services (Ganapavarapu and Chary, 2015).

RECOMMENDATIONS

In order to become an acceptable brand in developed countries there are few options

to go with. First is to convert the competition into a kind of cooperation. Haier can also work

with Whirlpool with Mutual Corporation. One example is corporation of Haier with Japan

Sanyo. Both companies make use of mutual distribution channel to sell their products. Japan

Sanyo sell their appliances and batteries in China, and on the other hand Haier sell washing

machines and wine coolers in Japan. The other way is to convert conflicts into connections.

Many international competitors are interested in making use of Haier’s logistics system, in

returning helping Haier to strengthen its logistics.

CONCLUSION

China is world’s fastest emerging economy with rapid industrial development. After The

United States and Germany, China is the world’s third largest trading nation. It will always

be an important business partner of The US. The United States consumers and businesses

need to understand the difference in the cultural, political and economic environment of
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China and The US. Most importantly the political and economic differences and their impact

on business practices and business conduct need to be understood.


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REFERENCES

Batra, R. (1997). Marketing Issues and Challenges in Transitional Economies. Journal of

International Marketing, 5(4), 95-114.

Diamonte, R., Liew, J., & Stenvens, R. (1996). Political Risk in Emerging and Developed

Markets. Financial Analysis Journal, 71-76.

Ganapavarapu, L., Chary, S. (2015). International Marketing Environment Challenges and

Opportunities. International Journal of Science and Research, 4(8), 1836-1838.

Jagdish, N. (2011). Impact of Emerging Markets on Marketing: Rethinking Existing

Perspectives and Practices. Journal of Marketing, 72(4), 166-182.

Jayaraman, K. (2009). Doing business in China: A risk analysis. Journal of Emerging

knowledge on Emerging Markets, 1(1), 55-62.

Melaia, S., Abratt, R., & Bick, G. (2008). Competencies of Marketing Managers in South

Africa. Journal of Marketing Theory and Practice, 16(3), 233-246.

Young, R., Javalgi, R. (2007). International Marketing Research: A global project

management perspective. Business Horizons, 50, 113-122.

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