De Beers in China
Autor: Yohan • July 15, 2011 • Research Paper • 1,696 Words (7 Pages) • 1,928 Views
International Business Management
De Beers in China
Date 5th June 2011
Yohan Ziard
Contents
Page 3 From a strategic prospective, why did De Beers go to China?
Page 5 Is Louis Vuitton Moet Hennessy an appropriate retail venture partner for DeBeers in China? What could be improved in DeBeers/LVMH supply chain and distribution strategy?
Page 7 What are the differences Chinese diamond purchasers and diamond purchasers in the US How did the firm adapt there offering?
Page 8 Appendix
Page 12 Reference List
Page 13 End Notes
1) From a strategic prospective, why did De Beers go to China? Was it a profitable move? Use the CAGE framework to justify your answer
De Beer went to China because it saw the dynamics of the world economy changing. It noticed that its business practise was under scrutiny. De Beer’s monopolistic practise are been seen as antitrust activity by the regulators in the western world. Even though it still controlled significant proportion of the supply chain its control and overall market share is under threat, it is now shifting from a company that controlled supplies to a company that is creating demand. However the growth of its traditional markets was not as good as the emerging economies. Even though according to the case the US purchased 51% of the worlds diamonds, the demand in China is growing, “it is expected to grow by 12 to 13% in 2007” (Times of India, 2007) . Also in 2007 “China’s number of millionaire households grew by 39%” (business week, 2007) . According to an article on the WSJ it is indeed the right strategic move which had a positive effect on profits as “a rise in profits and sales in 2010 on the back of….. strong demand from India and China” (Maylie, 2011) help the company’s performance in this gloomy global economic environment.
Why did De Beers choose China? After all its cultural, administrative, Geographical and economical distance between its traditional markets and China are vast. For example as for culture it does not have a common language, its social norms are not the same as the west, as for stones “diamonds
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