AMB336: International Marketing



17145067754577001355725540005773420AMB336: International MarketingResearch Report – Assessment 2Christopher Grayson – N9443835Word Count:17987900035000AMB336: International MarketingResearch Report – Assessment 2Christopher Grayson – N9443835Word Count:1798right23002457452016760098002016Table of Contents TOC \o "1-3" \h \z \u Executive Overview PAGEREF _Toc452393506 \h 21.Opportunities from Expansion into China PAGEREF _Toc452393507 \h 32.Challenges of the Chinese Market PAGEREF _Toc452393508 \h 32.1Client Analysis PAGEREF _Toc452393509 \h 32.2China’s Perception of the West PAGEREF _Toc452393510 \h 32.3Client Service Requirements PAGEREF _Toc452393511 \h 32.4Risks Stemming from Government Agencies PAGEREF _Toc452393512 \h 33.Internet Trends PAGEREF _Toc452393513 \h 44.Recommendations PAGEREF _Toc452393514 \h 44.1Develop a Mobile Based Game PAGEREF _Toc452393515 \h 44.2Video content PAGEREF _Toc452393516 \h 44.3Open a Representative Office PAGEREF _Toc452393517 \h 5Executive OverviewThe purpose of this report is to develop clear marketing strategies to successfully launch Australian Architects Limited into the Chinese market. An analysis will explore the preferences of clients taking into account cultural differences and the perception China has of foreign firms. Issues surrounding possible legal complications from the Chinese government and legislation will be dissected to highlight the key risks AAL faces. Internet trends will be examined as a means to offer effective marketing tactics to utilize in the challenging, Chinese digital environment. Three key recommendations will be presented all of which will integrate into a marketing campaign aimed to develop brand awareness and establish AAL as a high end, luxury service. A mobile based application will spearhead a digital marketing strategy executed through popular Chinese Social media and instant messaging avenues. A representative office will also be set up in a tier one city to act as a base in China to conduct marketing activities. This will also serve as a demonstration to show potential clients that AAL is serious and committed to integrating into the Chinese construction industry. Opportunities from Expansion into ChinaWith slower growth in the European and American markets China is becoming an increasingly more desirable location for Australian Architects Limited to expand into CITATION J?R \l 3081 (Vandenbussche, Vogel, & Detragiache, 2015). This is due to booming economic growth pushing infrastructure and investment in the high end commercial construction CITATION DuZ15 \l 3081 (Du & Zhang, 2015). This has opened the door for foreign companies to expand in this market with the low to middle income residential areas still predominantly dominated by local firms. The company is in the ideal position because China is the second largest economy in the world and Australia is one of only a handful of developed nations to have a free trade agreementCITATION Aus \l 3081 (Department of Foreign Affairs and Trade, 2016). In terms of growth rate service trade has been increasing at an average of 10% over the past decade which is the fastest rate of any of Australia’s trading partners CITATION Aus16 \l 3081 (Australian Trade and Investment Commission, 2016). Another key advantage to expanding into China is that Chinese firms own 68% of the hotel projects in the Asia Pacific-area CITATION Oli14 \l 3081 (Olivier, 2014). Hotel projects are ideally suited to the type of design work Australian Architects Limited specialises in so partnerships forged could potentially open the entire region. Challenges of the Chinese MarketClient Analysis In the Chinese corporate environment social relations are of great significance in order to obtain required information and influence key Chinese decision makers CITATION Bj?95 \l 3081 (Bj?rkman & Kock, 1995). Customer and client satisfaction is also of upper most importance and structured business practices in regards to meeting times, quality objectives and cost are of great value in the Chinese business culture. In other global markets surveys and research and development techniques are commonly used first when looking to penetrate a new market CITATION Tun01 \l 3081 (Tung & Worm, 2001). In the case of China growth is so rapid that structured studies may result in loss business because the method is too slow. Many successful firms report deals being stuck in Karaoke bars or at dinner without time to consult contract lawyers or auditors. Fast, higher risk decisions are vital to gaining a competitive advantage over larger, firms who have strict, business procedures CITATION Lin05 \l 3081 (Ling, Ibbs, & Cuervo, 2005). These firms often mirror processes used in business dealings in the Western market. China’s Perception of the WestThe Chinese perception of foreigners is in part forged by a history of invasion and perceived “unequal treaties” dating back to the early 18th century CITATION Ami08 \l 3081 (Amitia & Javorcikb, 2008). There is a genuine fear that foreign entities will once again dominate important sectors to the Chinese Economy. An underlying sense of entitlement is compounded by paranoia that the West is always trying to paint China negatively CITATION Obb15 \l 3081 (Obbema, 2015). For this reason joint ventures are not always safe in protecting foreign firms, as they are still viewed with suspicion and are often targeted by local officials CITATION Sun13 \l 3081 (Sun & Guo, 2013). The purpose is frequently just to demonstrate power and flex strength as a display for the Chinese community.Risks Stemming from Government Agencies Another vital stakeholder to consider in an expansion move by Australian Architects Limited is the Chinese Government. Cultural differences result in some members of government bodies having a less than positive attitude towards foreign entities CITATION Mur13 \l 3081 (Murray & Dainty, 2013). This can result in increased approval procedures or these individuals seeking personal gain from deals. This kind of corruption is often out of the control of foreign firms and is a large risk to project development CITATION Man09 \l 3081 (Manion, 2009). In terms of corruption the Chinese Government tends to have a reactive policy to anti-corruption rather than a proactive one CITATION Zha15 \l 3081 (Zhang & Lavena, 2015). This results in many business dealings going unchecked unless an accident or environmental issue raises concern and is investigated. China is also prone to political risks which may hamper progress due to increased taxes and levies or land right disputes. Internet TrendsDigital Marketing in China is vastly different to the approach taken in Western Countries due to the absence of social media powerhouses Facebook and Twitter. Search engines and instant messaging offer the most potential with the search platform Baidu’s revenue forecast to rise 39% annually to reach $14 billion by 2018, according research conducted by iResearch CITATION iRe15 \l 3081 (iResearch, 2015). Baidu has a 20% market share of video content across key platforms of the Chinese market CITATION Tre16 \l 3081 (Trefis Team, 2016). With advertising infrastructure improving and less Government imposed restrictions online video, microblogging and social networking are key avenues to focus a marketing campaign. The other popular form of digital commination is instant messaging and is dominated by the company WeChat. A staggering 93% of the population in Tier 1 cities using WeChat with 69% of the companies 2014 revenue coming from ad sales on the mobile platform CITATION Cra14 \l 3081 (Smith, 2014). According to statistics from CITATION Sta16 \l 3081 (Statista, 2016) there are 1.28 billion registered mobile users in China. With an estimated 700 million still not accessing the internet there is huge potential growth opportunity in this market.Recommendations Develop a Mobile Based GameUsed primarily as a penetration strategy the company should invest in getting a basic game developed that appeals to the Chinese population’s individual desire to live a life of status and luxury. This game will act as the flagship of the marketing campaign and is designed to take advantage of booming growth in the mobile platform and China’s love of gamingCITATION Sil \l 3081 (Lindtner, Mainwaring, Dourish, & Wang, 2009). Content wise the game would allow users to design and expand their own hotel and ultimately a hotel empire based on AAL inspired designs. Players could share their creations and visit their friends own virtual residence all the while collecting in game currency based on the feedback of the games programmed customer base. While this activity would require hiring a firm for online game design China has a huge, skilled industry with very competitive pricing. With a budget at a minimal as 20 thousand AAL could have a professionally made, basic application with ongoing server fees covered in the price CITATION OhG07 \l 3081 (Oh & Ryu, 2007). Unlike in the Western world where gaming is seen as a recreational activity online games have a large impact on Chinese politics. For example the Communist Youth League (CCYL) employ streamers and young gamers to generate national spirit. The main motivation behind this penetration tactic is to demonstrate AAL as a firm supporter of Chinese culture CITATION Nir10 \l 3081 (Kshetri, 2010). This is to establish the brand as a reputable business known to the broader community rather than just key construction executives. Video contentBased on the research conducted the advertising budget is best spent over a combination of WeChat instant messaging and Baidu’s video platform. This is due to video sharing sites being more popular than television especially to the younger audiences. AAL should produce professionally made, videos catchy enough to inspire organic, free promotion via shares over blogs and social media. Videos would also be appropriate for paid advertising spots as a means of generating reach and brand awareness.Content of videos would be aimed at the high end construction market and present lavish, unique design accomplishments made by AAL abroad. This technique is to launch AAL as a premium service and sell to potential investors and wider community based on the “wow factor”. Shares would generate from friends sharing and posting content which would in turn filter through to key decision makers with a vested interest in the architectural content. Open a Representative OfficeResearch into Chinese consumer behaviour and the corporate environment show that the advantages of having an office in China outweigh a firm located only in Australia. Opening a joint venture with an existing firm offers an easier means of penetrating the market and gaining social relationships with those in the construction industry. The downside of this suggestion is it has the potential to reduce the amount of control AAL has over company objectives and goals. Failure rates for joint ventures based in China are notoriously high. Also with an unstable political environment means disputes raised are unlikely to be dealt with fairly by government bodies and officialsCITATION Lin05 \l 3081 (Ling, Ibbs, & Cuervo, 2005). This would likely result in a shift in power favouring the Chinese firm, with them holding less risk than that of AAL. Therefore it is recommended that AAL open a representative office in China, manned by administrative staff previously located in Australia. The reason behind this decision is that Chinese business culture has been known to suffer a range of managerial issues when employed by foreign entities CITATION She90 \l 3081 (Shenkar, 1990). These commonly include overstaffing, workers loafing and misuse of utilities. Chinese workers don’t have the same loyalty to an internationally based company and aren’t held accountable to the same degree as they are working for domestically owned one.A representative office would not necessarily have to take on architectural work but would instead act as a base of operations in China to manage company relations with clients. AAL could fly in specialists from Australia if required.The combined Marketing Strategy These three recommendations would work collectively to penetrate the market and ensure that content is advertised over effective platforms. This will maximise reach and promote the brand. Having an office in China is ideal as it will aid building relationships with advertising firms and domestic marketing consultants. The approach to marketing in China must be flexible to account for likely changes in a booming Chinese digital sector. Although WeChat and Baidu are the ideal candidates for this campaign high competition in this market means contracts with them should be short term. This is to ensure AAL can adapt tactics where necessary in the future CITATION Kum15 \l 3081 (Shalender & Singh, 2015).References BIBLIOGRAPHY Amitia, M., & Javorcikb, B. S. (2008). Trade costs and location of foreign firms in China. Journal of Development Economics, 85(2]), 129-149.Australian Trade and Investment Commission. (2016). Austrade. Retrieved from : , I., & Kock, S. (1995). Social relationships and business networks: The case of Western companies in China. International Business Review, 4(4), 519–535.Department of Foreign Affairs and Trade. (2016). China Australia Free Trade Agreement. Retrieved from ChAFTA: , Z., & Zhang, L. (2015). Home-purchase restriction, property tax and housing price in China: A counterfactual analysis. Journal of Econometrics, 188(2), 558–568.iResearch. (2015). China Online Video Market. Retrieved from , N. (2010). The Evolution of the Chinese Online Gaming Industry. Journal of Technology Management in China.Lindtner, S., Mainwaring, S., Dourish, P., & Wang, Y. (2009). Situating Productive Play: Online Gaming Practices and Guanxi in China. Lecture Notes in Computer Science, 5726(1), 328-341.Ling, Y. Y., Ibbs, W., & Cuervo, J. (2005). Entry and business strategies used by international architectural, engineering and construction firms in China. Construction Management and Economics, 510-520.Manion, M. (2009). Corruption by Design: Building Clean Government in Mainland China and Hong Kong. Harvard University Press.Murray, M., & Dainty, A. (2013). Corporate Social Responsibility in the Construction Industry. Routledge.Obbema, F. (2015). China and the West: Hope and Fear in the Age of Asia. I.B.Tauris.Oh, G., & Ryu, T. (2007). Situated Play, Proceedings of DiGRA 2007 Conference. Digital Games Research Associ.Olivier, J. (2014). Marketing China. Retrieved from Marketing to China: , K., & Singh, N. (2015). Marketing Flexibility: Significance and Implications for Automobile Industry. Global Journal of Flexible Systems Management, 16(3), 251-262.Shenkar, O. (1990). International joint ventures' problems in China: Risks and remedies. Long Range Planning, 23(3), 82-90.Smith, C. (2014). DMR WeChat Statistics Report (2014). DMR.Statista. (2016). Number of mobile cell phone subscribers in China from March 2015 to March 2016 (in millions). Retrieved from , W., & Guo, Y. (2013). Unequal China: The political economy and cultural politics of inequality. Routledge.Trefis Team. (2016). Market Share And Broader Chinese Economy Risks Will Impact Baidu. Retrieved from Forbes: , R. L., & Worm, V. (2001). Network capitalism: the role of human resources in penetrating the China market. The International Journal of Human Resource Management, 12(4), 517-534.Vandenbussche, J., Vogel, U., & Detragiache, E. (2015). Macroprudential Policies and Housing Prices: A New Database and Empirical Evidence for Central, Eastern, and Southeastern Europe. Journal of Money, Credit and Banking, 47(1), 343-350.Zhang, Y., & Lavena, C. (2015). Government Anti-Corruption Strategies: A Cross-Cultural Perspective. CRC Press. ................
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