Case Study Doing Business In China Marketing Essay

Case Study Doing Business In China Marketing Essay Although the times have changed, the citizens of the United States cannot help but recollect on the history of an unstable political system, corruption, environmental degradation, the lack of intellectual property protection and last, but not least, a variety of different cultures in the far East; so with that said, why would any American business organization want to pursue business in China? What was once a small-town audio store called Sounds of Music had an epiphany back in 1966 that has currently yielded pay dirt. Nearly twenty years later, Sounds of Music transformed into an electronic conglomerate known as Best Buy Inc, Co. This S & P Fortune 500 company is currently known as the largest consumer electronics retailer in the United States. Best Buy chose to pursue this â€Å"uphill battle† due to the fact that it was near impossible for them to ignore their ever growing free market economy and the urbanization that is taking place within it. Best Buy is sophisticated en ough to distinguish between what makes them profitable within the United States and what will make them unsuccessful in other parts of the world, in particular to this study, China. In order to truly understand China and the complexities of expanding there, one must know how to do business in China. It may sound implausible to the average domestic business man/woman to think there is much of a difference in doing business in China, than what it is here in the United States, but it is indeed a credible fact. Developing a SWOT analysis could aid in the many challenges of trying to conduct business in China, but this evaluative method doesn’t change intangible circumstances such as time and return on investment. Best Buy had both of these conditions present during their feasibility study. Realizing the opportunistic possibilities and competitive advantage of the situation, Best Buy didn’t hesitate to conduct thorough due diligence before doing business in China. This pape r will discuss some of the important aspects of their research as it covers the basic understanding of doing business in China and how Best Buy emerged from being just a face in the crowd to achieving commendable status in Shanghai, China. This report will elaborate on Best Buy’s experience as they try to tap into a foreign market for the first time ever knowing that the potential risk could be irreversibly negative. Best Buy Inc, plans to prove that it is indeed possible to enter into the Chinese Market for consumer electronics. Best Buy announced on April 1, 2006 that they would be opening their first branded store in China. Best Buy did not just enter the market but they were wise about it as well. They wanted to hedge the risks involved in any possible way. On May 12, 2006, the company made a purchase of a majority stake in Jiangsu Five Star, which is the fourth biggest Chinese appliance and electronics retailer. By purchasing this majority stake, Best Buy saved a tremend ous amount of time that is necessarily needed to create a comparable sized organization through grown. They now had their presence in China in 136 stores, as well as the close to 1,000 stores that they have successfully opened in both the United States and Canada. The purchase of this stake also helped Best Buy get a feel of what Chinese customer’s needs and wants were.