Market Intelligence for China
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1/2011 GIA Geographies White Paper Paper White GIA Geographies Market Intelligence for China GIA Geographies White Paper 1/2011 Market Intelligence in China requires EXECUTIVE SUMMARY constant monitoring and quality If I tell you I know a country where every dream was possible, a place you would go to get rich with the implicit recognition that anyone with assessment. The information avail- enough tenacity, hard work and good ideas would become successful, able from traditional channels is what country would you think about? often too general or inaccurate to be Fifty years ago, most people would have answered this question by of any real use, but by diversifying proposing the United States. However, several financial crises later, a new place of economical dreams and financial empires has risen to information sources, worthwhile, qual- the top to challenge its Western rival with the confidence of its high ity material can be found and utilized growth and never ending market possibilities; China. effectively. China has become a besieged fortress surrounded by investors, and Market Intelligence (MI) practitioners who apply constant vigilance and monitoring are the ones with the keys to get in. The middle king- dom is a country of fast changes where the ones lacking in information are left behind in a blink of an eye, and where the ways to stay on top of this critical knowledge are scarce and sophisticated. This Global Intelligence Alliance White Paper offers some possible solutions to overcome the inherent MI challenges in China, through the combined expertise of our team in Shanghai. To do so, this paper discusses the major economic indicators in the country’s key regions, as well as provides some of the most recent and relevant local insights and opportunities. We conclude with a few MI best practices within the Chinese market context and several cases to illustrate them. GIA Geographies White Paper 1/2011 Market Intelligence for China 1 1/2011 GIA Geographies White Paper Paper White GIA Geographies TaBLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................................................. 1 TaBLE OF CONTENTS ...................................................................................................................................2 1. INTRODUCTION ......................................................................................................................................3 2. OVERVIEW OF EASTERN CHINA ...............................................................................................................4 3. OVERVIEW OF NORTHEAST CHINA ........................................................................................................ 16 4. OVERVIEW OF CENTRAL CHINA .............................................................................................................18 5. OVERVIEW OF WESTERN CHINA ............................................................................................................ 21 6. CHALLENGES IN CONDUCTING MARKET INTELLIGENCE FOR CHINA ........................................................26 7. RECOMMENDED SOLUTIONS ...............................................................................................................29 8. BUSINESS CASES ................................................................................................................................33 CasE 1: MARKET siZING AND COmpEtitOR INTELLigENCE FOR thE ChiNESE BGM METER maRKET CasE 2: MARKET AND PRiciNG STRatEGY ANALYsis FOR thE INFANT miLK FORmuLA maRKET IN ChiNA AND ThaiLAND CasE 3: CustOMER INTELLigENCE OF MEtaL-WORKING LubRicaNT acROss 8 COUNTRIES IN APAC 9. CONCLUSIONS .....................................................................................................................................36 10. ABOUT GIA CHINA ................................................................................................................................36 11. REFERENCES ........................................................................................................................................37 The term “Market Intelligence” which is used in this paper refers to understanding the present and future business environment by using the intelligence process to provide decision-making support. Terms such as competitor analysis, technology analysis or customer insight will be used under the overarching term “Market Intelligence”. “Market Intelligence” should be seen as synonymous with concepts such as Competi- tive Intelligence and Business Intelligence. GIA Geographies White Paper 1/2011 Market Intelligence for China 2 Exhibit 1. 1/2011 Heilongjiang Jilin Xinjiang Liaoning Beijing Inner Mongolia Tianjin Gansu Hebei Shanxi Ningxia Shandong Qinghai Jiangsu Shaanxi Henan Anhui Shanghai Hubei Tibet Chongqing Zhejiang Sichuan Jiangxi Hunan Fujian Paper White GIA Geographies Guizhou Yunnan Guangxi Guangdong Northeast China Region Eastern China Region Hainan Central China Region Western China Region 1. INTRODUCTION With the biggest population on earth (about 20% of the world’s population), the third largest territory, the second most important economy, the highest number of skyscrapers, the second spot in the world’s billionaire ranking (10% of the total) and many other world records, China can easily cause vertigo and inspire a marvelous feeling of anticipation to anyone daring enough to venture into its market of superlatives. The country is also host to some of the world’s most critical stock exchanges with Hong Kong and Shanghai, and increases its commercial strength as a hub and manufacturing plant every year with 6 of the 10 largest container ports of the world. That being said, this economical wonderland has its mysteries and complexities that one should not underestimate when coming to the middle kingdom. First of all, due to its sheer size, China is a maze of languages and cultures where 56 ethnic groups interact in a myriad of dialects uni- fied through a standardized writing system. The geography also covers everything from the snow covered peaks of Tibet to the tropical beaches of Hainan, making China a whole continent rather than a country where you can grow, mine or produce anything at any given time. In other words, don’t ask “if” you can do something in China, but rather “how” and “where” you should do it. A decision even harder to make as the 32 provinces and 5 autonomous regions have extremely high levels of independence to estab- lish their own regulations and policies. The available resources, differences in development, culture and mentality all contribute to blur the picture and make it difficult for foreigners and locals alike to understand and predict what is seen as necessary or welcomed by local authorities. At the same time, the global trends of the economic reforms since 1978 have been defined by the heart of the Chinese political system in Beijing and must be analyzed thoroughly when GIA Geographies White Paper 1/2011 Market Intelligence for China 3 1/2011 researching the region. As this white paper is being written, China is preparing for the transition to a new generation of leaders who might radically change the rules of the game for the next decades. This major political change will require a very close monitoring from specialists and market analyst to ensure that no one is caught unaware in the wind of change that is sure to blow in the People’s Republic over the next few years. However, these hurdles never discouraged far-sighted foreign businesses who kept on investing steadily in China year after year and ensured that the GDP growth rate stayed well ahead any other economically relevant country, and ensured them the leadership in their segments. With this white paper, GIA offers you a first set of insights on how to address this colossus of modern times with a rigorous and systematic region by region approach based on the “Regional Economic Development” and “11th Five Year Plan”. It provides an overview of Eastern China, Paper White GIA Geographies Northeast China, Central China and Western China, highlighting some of the challenges of conducting Market Intelligence in China, and provides practical solutions based on real life case studies and experiences. 2. OVERVIEW OF EASTERN CHINA Exhibit 2. Heilongjiang Jilin Xinjiang Liaoning Beijing Inner Mongolia Tianjin Gansu Hebei Shanxi Ningxia Shandong Qinghai Jiangsu Shaanxi Henan Anhui Shanghai Hubei Tibet Chongqing Zhejiang Sichuan Jiangxi Hunan Fujian Guizhou Yunnan Guangdong Guangxi Northeast Coastal Region Eastern Coastal Region Hainan Southern Coastal Region Introduction Eastern China is the most developed and prosperous region in China due to the geographical advantages of having many ports along the coastlines and the opening-up policy. It consists of 10 provinces and autonomous municipalities: Southern Coastal Region (Fujian, Guangdong and Hainan), Eastern Coastal Region (Shanghai, Jiangsu and Zhejiang) and Northern Coastal Region (Beijing, Tianjin, Hebei and Shandong). These three regions are the most developed in China. GIA Geographies White Paper 1/2011 Market Intelligence for China 4 1/2011 But each region varies greatly due to its geographical coverage from north to south. This paper will explore the dynamics for different regions. Southern Coastal Region The Southern Coastal Region is one of China’s most well-known areas. With the Pearl River Delta Economic Zone, and close access to Hong Kong, this area is