The Factors and Issues Facing Foreign Companies

The factors and issues facing foreign companies when entering Chinese markets

Abstract

In this essay, I will explore the determinant factors which tend to lead the foreign companies to threatening positions and even failure, when entering the Chinese markets, analyse the reasons behind the failure and give some feasible suggestions. I will mainly categorize the factors into two sets: macro environmental factors and micro environmental factors. My aim is to demonstrate and remind the companies of the importance of those factors. To clarify my points more clearly, two examples can be illustrated. In the end, I will give some alternative suggestions which might be helpful in making the final decisions.

With the world gradually shrinking into a small global village, the implications of globalization has triggered a chain of challenges and threats, including the global marketing. Globalization, which Friedan T.L defines as the inexorable integration of markets, lively engaged integrations and communications, enables products to transform all over the world beyond nation boundaries (2000). Like a host of other developing countries, China is increasingly strong and influential and Chinese markets are getting increasingly tempting. Especially its breaking down of trade barriers has generated a lot of benefits, which keep on grabbing foreign companies’ attention and luring their entries. According to the Globalization of Chinese Companies (Yeung et al, 2011), China has not only rank the second in gross domestic product terms since 2010, but also has been the largest exporting nation since 2009. However, accompanying all the booms brought about by the chances of globalisation in Chinese markets, have had some issues and problems to prosper in, is also very prominent among them.

In this essay, I would like to explore the main factors through the issues facing foreign companies when entering Chinese market and clarify some main factors behind the scenes and make some reasoned suggestions to respond to those issues. It is undeniable that evaluating the marketing environment is an important step and is necessary because it is of great significance to identify the potential issues before entering the Chinese markets. This might be greatly helpful in scanning the challenges beforehand, making good choices and formulate reasonable marketing strategies. Putting my observation and exploration on the SWOT analysis, there are at least two sets of factors would largely affect foreign companies in their determinations to step into the global markets. One set of factors can be categorized as the macro environmental factors, which mainly include economic, socio-cultural, political-legal factors. The other set is the micro environmental factors, comprising the company’s internal weaknesses and strengths, their external challenges and threats in