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Challenge: New Markets

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As the VP of International Sales, you are responsible not only for sales but also for sales strategy. Prepare a preliminary report to the CEO identifying which three countries you think would most likely be interested in Our Company's mobility product and state why you think these would be good target countries. Describe the opportunities and risks in each of the target countries. Then discuss the cultural (including religion, ethical business behavior, social responsibility, language, etc.), political, economic, legal and technology issues you, as Vice-President of International Sales will face when selling into these countries. In addition, explain any other differences between selling the mobility product in the United States and selling it in your three targeted countries.
This is the first writing assignment for this course, 5-7 pages. My instructors' remarks for locating resources was "try Google."

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For U.S. manufacturers, there are more and more reasons to consider China a strong market. The dynamic and growing Chinese population, combined with the market access secured by China's WTO membership, is creating many opportunities for U.S. exporters. China is not just a market for the largest multinationals. In fact, 83 percent of all U.S. firms exporting to China in 1999 (the last period for which data are available) were small and medium-sized enterprises, and 46 percent were very small companies-each with fewer than 20 employees. As U.S. companies increasingly focus on China, the Commerce Department is strengthening its export services.
While the global economy grew less than 2 percent last year, the Chinese economy grew 8 percent, according to Chinese data. Since China's opening in 1979, gross domestic product growth has averaged 9 percent a year. Additionally, China has charted the fastest economic growth of any major economy since 1990.

While much of this growth is attributed to Chinese government spending and foreign direct investment, consumer demand in China is beginning to play a larger role in driving the economy. More cellular phones are in use in China than in any other country in the world. China is the second-largest personal computer market in Asia after Japan, and sales of PCs have risen at an annual average of 67 percent since 1993. Consumer purchases of automobiles have begun to take off. Motor vehicle demand in China is expected to grow from around 2 million units today to 10 million units within a decade.

Concurrent with the rise in consumer demand, China's WTO accession has created new opportunities for U.S. exporters. One example is the automotive sector. Substantial tariff reductions last year prompted a price war and a 34-percent jump in auto sales. In turn, U.S. auto parts exports increased more than 60 percent in the first three quarters of 2002, in comparison with the previous year.

As a new WTO member, China has begun to lower tariffs, create a more transparent investment environment, overhaul and publish its laws and regulations, strengthen intellectual property laws, and restructure standards and testing procedures. But many of these reforms are being phased in over several years, and many tasks remain undone. Market barriers remain, and China still faces challenges in such areas as enforcing intellectual property rights, further improving transparency and the rule of law, and ensuring that product standards are in line with international norms and are applied equally to domestic and imported goods.

The U.S. Department of Commerce closely monitors China's WTO implementation. Even before China's accession to the WTO, the department's International Trade Administration (ITA) offered exporters pursuing the Chinese market an array of trade tools and services. However, since the WTO accession of China in December 2001, the ITA has established several new resources for businesses interested in China.

Since December 2001, representatives from the ITA China Team in Washington, D.C., have traveled across the United States to meet with small companies, chambers of commerce, industry associations, and other groups at 19 events. The objective of these outreach activities has been to promote understanding of what China's WTO membership means for U.S. businesses, as well as to share information on the many services that the Commerce Department offers exporters. In New York City, Omaha, Minneapolis, and Los Angeles, among others, ITA China specialists have participated in conferences, workshops, and briefings prior to trade missions for exporters interested in China.

In China, the ITA has expanded its staff and increased its focus on the WTO by inaugurating a Trade Facilitation Office (TFO) at the U.S. embassy in Beijing. TFO team members work closely with American businesses, Commerce Department trade and WTO specialists in Washington, and embassy staffers to ensure that U.S. companies enjoy the benefits of China's WTO accession.

The Trade Facilitation Office's mission is manifold. The TFO conducts outreach activities, working closely with the American business community in China to identify real and potential market access problems and issues as China implements its WTO obligations. The Facilitation Office also provides information to U.S. companies on what China's WTO accession means for their operations in China or exports to China. TFO staff also advocate on behalf of U.S. exporters to ensure that broad WTO compliance issues and specific WTO-related problems U.S. industries encounter in China are raised with Chinese authorities.

Additionally, the office organizes seminars in China on WTO-related issues for Chinese officials, as well as programs to familiarize Chinese businesses with international commercial practices and standards. The Trade Facilitation team also provides feedback to U.S.-based Commerce Department staff to share with American companies.

China is a large, diverse and complex market that is going through rapid change and reform to move to a more open economy and trading environment. While there are many opportunities in China, there are also many factors to consider before entering the market.
As a general rule, companies who wish to expand to China should gain experience from other markets in the region first and be prepared for the long-term commitment to enter the Chinese market.
The following are some tips for exporting to China for the first time.
Research the Market
It is important that you get key market information to evaluate whether it is worthwhile for your company to do business in China. Some things to consider are:
· whether your product/service is suitable to the China market;
· which region to focus on in China;
· who are your competitors;
· what are local buyers'/consumers' tastes;
· impact of any reforms and regulations.
Places where you can get information on China include: Department of Foreign Affairs and Trade, Austrade, China Council for Promotion of International Trade (CCPIT) and Ministry of Commerce, China.
The new Ministry of Commerce was established in March 2003 based on the merging of the State Economic and Trade Commission (SETC) and the Ministry of Foreign Trade Economic Co-operation (MOFTEC).
The new Ministry combines MOFTEC with departments in charge of domestic and foreign trade in the SETC and the State Development Planning Commission (SDPC), which is also to be renamed as State Development and Reform Commission (SDRC). The new system is part of the Chinese Government's reform plan to upgrade the administration of trade, banking, State-owned companies and other key sectors..
If you have identified opportunities relevant to your company, you may want to visit China and make your own assessment of the country and its people. Read about China and its history before you leave - history is of immense importance to the Chinese and some knowledge of it will help explain how the Chinese perceive themselves and you.
If you have a potential business partner in China, your initial visit can be an opportunity to size up their company and assess their level of technological know-how. Chinese hosts are often happy to show visitors around production facilities. You should ask about the size and scope of the operation, its business plans, whether it has access to foreign exchange, and how much experience it has in dealing with foreign companies.
Don't see your visit to China as a one-off approach, which will automatically lead to instant orders. Instead, regard it as stage one in a long-term strategy of Guanxi cultivation.
Commitment and Resources
Think twice before you commit to China and be prepared to double the amount of time you invest. China is a complex market, which requires considerable money and time.
Negotiating a deal with a Chinese business partner or getting a licence could be complicated and time consuming. For a foreign or joint venture company, the minimum registered capital could range from USD$62,000 to USD$37 million.
You may need funds for airfares, accommodation, legal services, advertising, sales promotion, interpreting and translating, setting up joint ventures or establishing representative offices in China.
Before you commit, make sure your company has the capacity to meet the costs and can invest the time. Look at your products or services and determine if they are suitable for the current China market. China is looking for products tailored to its market. Companies which examine the obstacles to technology in China and adapt their products to overcome them, will impress Chinese officials and help establish strong relationships.
Locating a suitable Chinese partner is one of the most important steps towards your successful business in China. A good partner will not only make your first step into China a pleasant experience, but also help you build up the right connections for your company's future development in China.
Check the reliability and credibility of the data on your customers from independent sources. Avoid talking only to those people to whom your Chinese partner or buyer directs you. Bear in mind that a contract with an insolvent customer is worthless.
Each of the main investment centres in China will have a local Foreign Trade and Economic Co-operation Commission. This is an agency of China's Central Foreign Investment Regulatory Ministry known as the Ministry of Commerce (MOFCOM). It can provide information and advice on available, approved projects and details on potential local partners.
The Japanese economy was long mired in recession, but finally appears to be on the road to recovery.
Japanese stock prices, after hitting rock bottom in April of last year, are on the rebound as well. And
companies are becoming more focused and profitable, following years of private sector restructuring, in
which firms sought to eliminate what became known as the three excesses, namely: excessive facilities,
employment and corporate debt. The surge in capital spending-in line with the recent boom in digital
technology-related industries-is also helping to fuel the current recovery trend. Having said this, I think it
is crucial that Japanese companies continue to take aggressive measures and complete the ...