Challenges of Western Brands when Marketing to Chinese Literature review

Challenges of Western Brands when Marketing to Chinese - Literature review Example This potential can be signified by the continual growth of retail sales of consumer goods, for instance retail sales figures increased by 3% in 2007 (PRC 2011). China may be described as a large and homogenous developing market. The ‘huge population, the rapid industrialization and unprecedented economic growth’ provides manufacturers a great opportunity (Ewing et al., 2002). Multi-million Fast Moving Consumer Goods (FMCG) like Coca Cola, Uniliver and Mc-Donald’s have experienced a lot of success in this market. The consumer brand consciousness in china goes through four eras and steps into a post-industrialization era. The consumer’s attitude has seen a change from a supply-side orientation to a demand-side orientation (Schlevogt, 2000). Nolan (2002) once pointed out that china is moving rapidly to integrate with the world economy. The Preference For Domestic Brands There are still some issues which may act as an impendent for international companies. One such impediment, cited by many scholars, is local brand loyalty in china. Ayala and Lai (1996) claimed that foreign brands may find it hard to enter this market, due to the development of brand loyalty. â€Å"Foreign brands underestimate the power of domestic brands and the degree of brand loyalty to them† (Ewing et al, 2002). ... Other factors that internal brands have to contend with while competing with local brands are ethnocentrism and protectionism. According to Bates (1998) the idea that â€Å"west is best† is no longer the dominating factor for consumer’s first choice. Although, western culture still does influence consumption behaviors, it tends to benefit local brands more than their foreign competitors. For example, there has been a general trend among businessmen to wear formal business attire, rather than casual wear. But local brands like Youngor and Firs have been the main beneficiaries of this trend instead of foreign manufacturers. â€Å"European fashion was most aware by Chinese consumers, but consumers simply consider it as a source of choice rather than actually purchasing European fashion products† (Bates,1998). According to Nolan (2002) when China joined the World Trade Organization, their local corporations needed to find a way to compete on a worldwide field. Chinaà ¢â‚¬â„¢s industrial policy also faced many issues in the process of emerging into the global business arena. These limitations in turn, constrained the development of local brands. For instance, ‘policy inconsistency exists in the same industry, China’s weak economy based, and failures in China’s bureaucracy’ (Nolan, 2002). The Growth of China’s Fashion Industry The Vogue China Fashion Index (2006) (the National Bureau of Statistics) found that Chinese consumers associate fashion with modernization, innovation and personalization. According to the statistics, 18.7 % of Chinese consumers consider modernization as the highest factor while selecting fashion, and then followed by 17% who consider