Market Screening for Final Exporting

Market Screening for Final

Exporting Chocolate to China

The company I own produces chocolate and chocolate derivatives. We currently operate in America, but we wish to extend our business to a global level. With the view of going global, we are thinking of exporting to the Chinese market. Throughout the report, we are going to depict each aspect related to our future success or failure by performing a market screening.

Description of product to be exported

The company is called "Sweet Dreams" and it offers a wide variety of chocolate products. Beginning with the well-known chocolate bar, we can mention chocolate truffles, chocolate sticks, chocolate beans and other premium specialties. Even the chocolate bars range from the most common type (milk chocolate) to all assortments. For example, we can refer to some of the ingredients added, like: almonds, nuts, caramel, fruits, mint, champagne, honey, rice etc.

In accordance to the target market, we can create different types of products by adding new ingredients. Thus, taking into consideration some specifics of the Chinese people, we can include rice or other preferred components.

Characteristics of target market

GNP/capita, GNP/capita growth rate, Size of market

While the economies of China and India are considerably smaller than that of the U.S., China is likely to overtake and India to equal the U.S. economy in size by mid-century. And as the world's economic center of gravity shifts to Asia, U.S. preeminence will inevitably diminish. Measured in comparable units of purchasing power, the U.S. economy, at $10.7 trillion, is currently almost twice the size of China's ($6.3 trillion) and three times the size of India's ($3.6 trillion). The much higher U.S. per capita income, almost eight times that of China and roughly 11 times that of India, is partially offset by the much larger populations of the two Asian countries. But with per capita incomes in China and India likely to grow more rapidly than in the U.S., thus narrowing the large gaps in living standards, both Asian economies will eventually surpass the U.S.[...] China's aggregate GNP has grown by about 10% a year since the late 1970s." (Welcome To The Asian Century. By 2050, China and maybe India will overtake the U.S. economy in size.). By making some computations, we can suppose that "China would reach about half the U.S. per capita income level by the year 2050, while its projected population of some 1.4 billion will be about 3.4 times the U.S. population of about 400 million. At that point China's GNP would be about 75% larger than that of the U.S." (Welcome To The Asian Century. By 2050, China and maybe India will overtake the U.S. economy in size.).

With chocolate consumption increasing at a rate of 25 per cent a year in the Asia-Pacific region, and 30 per cent in China, chocolate makers fear that coco- bean growers will not be able to keep up with demand"

For Lovers of Chocolate, future could be very dark.). The size of the market is continually increasing as the Chinese people tend to shift their preferences from the traditional sweets to the Occidental products. They seek to be in trend and, therefore, they opt for whatever gives them the feeling of Occident.

Market screening

Basic need potential. As the product cannot be tagged as a means of fulfilling basic need, we can assess its purchase as being more the result of a wish.

Exchange rate trends. People's Republic of China has the currency

Renminbi. Before 2005, an U.S. dollar used to be pegged at 8.28 RMB. However, on July 21st, 2005, it was changed to 8.11 per U.S. dollar and, subsequently, they removed the peg to the U.S. dollar. The state announced that the RMB would be pegged to a basket of foreign currencies and would not be strictly tied to the U.S. dollar. Therefore, it would trade within 0.3% against this basket of currencies.

Import restrictions. China has no import restrictions on chocolate, except for the fact that producers should mark the country of origin of the products they offer.

Price controls. Chocolate has no price control.

Government and public attitude toward buying American products. In a trend of adapting to the occidental trend, the Chinese have become more and more captivated by the taste of chocolate. For this purpose, a report (Chocolate Strives for Standard.) was made by Sinomonitor International (a Sino-Japanese independent market supervising firm), disclosed during 2003-2004, on a sample of 70,000 Chinese people aged between 15 and 64, in 30 major cities. It revealed the fact that customers were willing to buy chocolate in order to be in fashion.

The government, which is a communist one, has imposed chocolate importers to mark the country of origin in order to provide the customers with the accurate information about the products they offer.

Size, number, and financial strength of competitors. If we take into consideration the report mentioned above, the main competitors are: Dove (38.61%), Cadbury, Le Conte, Nestle, Hershey's, Golden Monkey, Ferrero Rocher, M&M's, Tresor Dore and Shenfeng. These ten producers account for 90% of the chocolate market, while the first three cover about two thirds of the market share. However, among these ten best companies we can only depict two internal brands. These are Golden Monkey (2.94%) and Shenfeng (1.58%). Due to the new regulations regarding the percentages and quality of the ingredients used, many national producers may not be able to continue their activity unless they invest in new recipes and technologies. This stands as an opportunity for foreign companies which have already adopted these standards and can commercialize their products in China.

Socio cultural forces. Chinese are well-known for their unusual preferences.

However, these habits seem peculiar for other nations which have not experienced the same climate and social conditions. The Chinese culture is totally different from the American one. Still, in the case of the chocolate, we can mention that it is not a product which contradicts with the beliefs of the citizens. It does not contain forbidden ingredients and, in addition to that, it does not interfere with their religious creed.

The difference of language is not an entry barrier for our company. The package is simply an accessory which can be easily translated from and into any language. Thus, the content (chocolate) bears no difference in accordance with the nations where it is sold.

Export marketing strategies

Promotion methods. The methods used in order to promote the product should be very well adapted to the target market. As we intend to sell in China, we should consider the specifics of this nation. Therefore, we should take into consideration their culture, their desires, and their goals. Chocolate is not a product which satisfies a basic need. On contrary, its consumption is based on the customers' will, on the customers' expectations. A common idea is that chocolate enforces a special effect on its consumers. It brings along a feeling of comfort, a sensation of content. Therefore, our promotional campaign should stress on the idea that chocolate brings delight.