Marketing Analysis for Hive’s Entry in China

In 2013, China is the second largest retail market globally and Asia’s largest by contributing $3.4 trillion towards consumer economy. It’s retail market has become one of the most lucrative and rapidly growing market in the world (Ku, 2016). After US, China had contributed the largest market size in terms of value for 241 categories (Biciunite, 2015). According to PWC (2015), China is expected to surpass the US and become the world’s largest retail market overall by 2018. According to Biciunaite (2015), ever rising employee wages combined with higher government expenditure on healthcare and pensions will increase the living standards in China (Chinese savings rates are currently among the highest in the world, partially due to lower levels of social security). This will increase per capita consumer expenditure in China by around 7% per year over the period of 2014 to 2020, thereby bringing total spending to US$5.7 trillion by 2020. It is expected that the total Chinese consumption is to be worth $2.3 billion by 2020. Thus, it is quite clear that tapping into that growth would be core strategic plans for many fast moving consumer goods (FMCG) companies. With China devaluing its currency, Chinese retailing size has slowed down with the decline in Chinese economy, Patti (2015) pointed out that lots of FMCG companies are still trying to rely on mainland market to take up the slack for other markets in the world. This huge potential in Chinese market also incorporates huge challenges, especially for global brands. Firstly, Chinese consumers are becoming increasingly demanding and sophisticated than ever before and they are no longer willing to pay premium for any international brand and secondly due to strict regulations which acts as a barrier of entry for international firms, local firms are taking this opportunity to satisfy market needs (Pat and Zhou, 2015). Due to these challenges, international brands are facing a hard time as local businesses are growing rapidly by imitating western best practices. Pat and Zhou from Nielsen (2015) claimed, the Chinese market has become complicated for western players and domestic firms can respond more quickly than international brands to cater Chinese customers’ tastes. Following figure 1 illustrate the market growth change of local and multinational companies