Geographic Regions
China is the third largest country in the world after Russia and Canada, and it is located along the Pacific Ocean coastline in the Southeast Asia. The country covers 9.6 million square kilometers similar to the United States (Harbach et al. 2010). China is boarded by fourteen nations, which includes Laos, India, Korea, Bhutan, Vietnam, Pakistan, Napa, Burma, Tajikistan, Russia, Afghanistan, Kyrgyzstan, Mongolia, and Kazakhstan. On the interior side of the country, China has 22 governing provinces and the most relevant cities include Shanghai, Beijing, Guangzhou, Hong Kong, and Xian. Shanghai is the largest city and is called the Mouth of Yangtze.
Regarding topography and climate, China can be divided into four distinct regions including Northwest, North, South, and the Qinghai-Tibetan region. The far South has a tropical climate, the Far North has Arctic climate, North-West region is a desert, and East or Qinghai-Tibetan areas is defined by fertile lands (Harbach et al. 2010). The country is two-third mountainous with Himalayas, Tian Shan, and Hunlun mountains and plateaus in the West. The Yangtze and Yellow/ Huang He Rivers are the most common rivers in China. Based on the geographic differences, the population in each region has different customs and lifestyles.
Demographic
China is the country with the highest population in the world reaching approximately 1.36 billion people and is the second largest economy with a gross domestic product (GDP) of about $10 trillion in 2015 (Preston, 2015). However, Chinese population density is ranked 78th in the world. The five largest provinces such as Xinjiang, Inner Mongolia, Xizang, Gansu, and Qinghai constitutes for 55 percent of land and 5.7 percent of the Chinese population (Harbach et al. 2010). Concerning ethnicity, the country has 56 ethnic groups. The main ethnic groups include Han, Zhuang, Manchu, Uyghur, Hui, Miao, Yi, and Tujia accounting for 91.9 percent, 1.3 percent, 0.9 percent, 0.8 percent, 0.8 percent, 0.7 percent, 0.65 percent, and 0.6 percent of the population respectively (Harbach et al. 2010).
In 1979, the One-China Policy was established to curb the high growth of population in China. The policy was meant to help the country reduce the population by 300-400 people. However, the policy has resulted in unexpected consequences such as gender imbalance. For instance, during the 2000 census, 119 males were born out of 100 female born. Consequently, the legislation banned the abortions of the female fetuses in 2004 (Harbach et al. 2010). The minority groups grow seven times faster the rate of the majority, Han, because they are exclusive of the One-Child Policy. In addition, other exclusions include children with disabilities, rural couples, and parent without siblings. The China's working age population grew by 2 percent a year by 2012, and it is anticipated to reduce by approximately 100 million people by 2025. However, the old population continues to expand as it is growing at 4 percent a year (Preston, 2015).
Psychographics
The lifestyle pattern of the Chinese population is highly defined by their massive participate on the e-commerce market. For instance, according to Wang (2012), people now participate in online shopping in China accounted for 210 million people, which is a higher number than 179 million in the United States. However, the consumers' attitudes and lifestyle is reflected by the emerging trends in spending patterns. The four anticipated patterns in the next decade include growing discretionary spending, aspirations-driven trading up, emerging senior market, and the evolving geographic differences (Yuval et al. 2012).
Consumer Buying Behaviors
The trends of consumer buying in China can be categorized into five groups: value seekers, sophisticated higher earners, loyal brand enjoyers, pragmatic masses, and self-indulging youths. The Chinese consumers are value seekers because they tend to negotiate for the good value of their money since they research for products, analyze and compare the prices.
Today, the Chinese consumers are acquiring the spending patterns and behaviors similar to the West countries. In addition, Chinese consumers are acquiring knowledge about products and hence remaining loyal to their favorite brands. The consumers are categorized as pragmatic consumers because the consumer attitudes are different between the coastal and inland consumers despite that their income are equal. In the inland region, the consumption attitudes are more traditional compared to the consumers in the coastal areas. The young population in China are distinctive such that they are more individualistic on wants, more indulgent on purchases, and more loyal when it comes to their favorite brands (Wang, 2012).
Distribution
Over the past few years, the distribution landscape in China has significantly changed. Products in China go through multi-tiers of distribution parties before consumers get them. The parties involved in the product supply chain include distributors, agents, sub-distributors, and wholesalers among others. The distributors constitute the largest share of the wholesale trade in the country and are open to the foreign investors since 2004 (Fung Group, 2012). The major channels for foreign and domestic distributors include Traditional Trade Channels and Modern Trade Channels. Recently, some of the large-scale wholesale markets in China have upgraded to acquire modernized facilities, sound management, and enhanced brand positioning. Other common distribution channels include direct sale by manufacturers, warehouse-style supermarkets, and online distribution channels. However, the distribution landscape in China is experiencing challenges such as industry malpractices, disintermediation, fierce competition, and barriers to obtaining distributorship rights to distributors (Fung Group, 2012).
Advertising & Promotions
In China, the new age of media is gradually dominating the traditional advertising channels such as radio, television, and newspapers. The advertising market in the country increased by 9.8 percent in 2009 and its expenditure was likely to grow by 12.8 percent by 2010. In 2009, television constituted of 63 percent of the country's total advertising expenditure (Zhang, 2011). However, currently, the Chinese market is adapting the digital marketing through social media and online advertising because they are more effective compared to the traditional form of marketing.
Pricing Strategy
Companies entering the Chinese market have various choices in the pricing strategies to be applied in the market. The pricing strategies involve skimming, prestige, global, market, and penetration market. The skimming strategy involves introducing a higher price for product and them lowering the price over time. The prestige strategy implies to the luxury products or products with brand reputation because customers buy them despite the high price. The market strategy is when the price is set by the established market while the penetration strategy involves charging lower prices than the competitors in the new market do. Firms entering the Chinese market must strategically choose the pricing strategy.
Market Size
According to the Hunter and Wong (2015), Chinese stock markets are ranked number two in the world's market capitalization after the New York Stock Exchange. The two markets are also ranked number ten regarding the number of listed companies. However, China constitutes of the harshest emerging markets with a big boom, huge volatility, and bust cycles enhanced by fast trading investors and heavy government involvement. In terms of trading volume, the market in China is four times larger than the New York Stock Exchange, with 3 percent of the market turnover daily.
Government Regulations
In Chinese market is the socialist legal system of China that constitutes of both custom and statutory law controls and regulates the China Market. The responsibilities for standards are reflected on the Standardization Administration of the People's Republic of China. Since China is a member of the World Trade Organization, the traders' rights are protected. In addition, the UK Intellectual Property Office's (UKIPO) provides the guide to the Intellectual Property in China. The value added tax (VAT) in China is at the rate of 17 percent and a minimum rate of 13 percent for the levied goods (UK Trade & Investment, 2015).
References
Atsmon, Y., Magni, M., Li, L., & Liao, W. (2012). Meet the 2020 Chinese Consumer. Retrieved from McKinsey Consumer & Shopper Insights website: http://www.mckinsey.com/~/media/mckinsey/global%20themes/asia%20pacific/meet%20the%20chinese%20consumer%20of%202020/mckinseyinsightschina%20meetthe2020chineseconsumer.ashx
Fung Group. (2012). Distribution in China. Retrieved from Li & Fung Research Centre website: http://www.funggroup.com/eng/knowledge/research/china_dis_issue101.pdf
Harbach, J., Lapeyre, K., O’Berry, P., & Staley, A. (2010). China: Geography and Demographics. Retrieved from http://www.laits.utexas.edu/orkelm/kelmpub/geographychic.pdf
Hunter, G. S., & Wong, J. (2015, July 10). Everything You Need to Know About China’s Stock Markets - WSJ. Retrieved from http://www.wsj.com/articles/everything-you-need-to-know-about-chinas-stock-markets-1436534913
Preston, R. (2015, November 3). OracleVoice: Why Demographic Trends Spell Trouble For China And Russia -- And Prosperity For US. Retrieved April 11, 2016, from http://www.forbes.com/sites/oracle/2015/11/03/why-demographic-trends-spell-trouble-for-china-and-russia-and-prosperity-for-us/#7fdb17c02593
UK Trade & Investment. (2015, December 21). Doing business in China: China trade and export guide - GOV.UK. Retrieved April 11, 2016, from https://www.gov.uk/government/publications/exporting-to-china/exporting-to-china#legal-considerations
Waller, D. (2012, October 1). Pricing strategies for success|Opinion|chinadaily.com.cn. Retrieved April 11, 2016, from http://www.chinadaily.com.cn/bizchina/2012-10/01/content_15794589.htm
Wang, H. H. (2012, December 17). Five New Trends of Chinese Consumers | Forbes Welcome. Retrieved April 11, 2016, from http://www.forbes.com/sites/helenwang/2012/12/17/five-new-trends-of-chinese-consumers/#216ed77434cc
Zhang, L. (2011, January 1). Advertising in a New Age of Media | China Business Review. Retrieved from http://www.chinabusinessreview.com/advertising-in-a-new-age-of-media/
