Developing markets are experiencing rapid industrialization growing industrial and consumer markets, and new opportunities for foreign investment. Consider the following illustration. In China, it is just a few shopping days before the advent of the Year of the Dog and the aisles at the local Wal-Mart super center are jammed with bargain hunters pushing carts loaded high with food, kitchen appliances and clothing. It could be the pre-holiday shopping rush in any Wal-Mart in Middle America, but the shoppers here are China’s nouveau riche. Superstores have proven popular with Chinese consumers, who devote a large part of their spending to food and daily necessities. Wal-Mart has been able to tap into the Chinese sense of social of social status by offering membership cards that confer not only eligibility for special discounts but social status as well.
Along side Campbell’s soup and Bounty paper towels are racks of dried fish and preserved plums. One shelf is stacked high with multiple brands of congee, a popular southern Chinese breakfast dish, and another name yue peanuts and packets of bamboo shoots. In the liquor section in the back of the store is three snake rice wines complete with the dead serpents bodies coiled tighter in the potent liquid. About 95% of Wal-Mart sells in China is sourced locally. Gone are the efforts to sell big extension ladders or a year’s supply of soy sauce to customers living in tiny apartments.
At present Wal-Mart operates 1,600 units in nine foreign countries including more than 50 in China. Revenues and profits are growing nicely for its international operations, and overseas expansion is set to continue particularly in China since its entry into the world Trade Organization. As one executive commented It boggles the mind to think if everybody washed their hair every day, how much shampoo you would sell [in China].
The China market can be difficult to and may not be profitable for many years. Most foreign retailers are in a learning mode about the ways and tastes of Asia, which are very different from those on main street USA. Price smart designed its Beijing store with two huge loading docks to accommodate full sized diesel trucks in anticipation of the big deliveries needed to keep shelves well packed. What the company found was Chinese distributors arriving with goods in car trunks, on three wheel Pedi cabs, or strapped to the backs of bicycles.
Procter & Gamble offered powdered Tide detergent in large quantities but China’s oppressive summer humidity turned to into unwieldy clumps. Stocking large quantities of paper towels and disposable diapers didn’t work well either – most customers didn’t know what a paper towel was, and disposable diapers were too expensive a luxury for most package sizes also posed a problem – small Chinese apartments could not handle the large American sized packages.
On top of all that, foreign retailers have had to learn to deal with the uncertainty of China’s complex and rapidly changing business climate, were personal connections mater more than business plans, and rules and regulations often are a matter of interpretation. It doesn’t matter what the law says notes one retailer, what matters is what the guy behind the desk interprets the law to say.
Global awareness also involves knowledge of world market potentials and global economic, social, and political trends. Over the next few decades enormous changes will take place in market potentials in almost every region of the world, all of which a globally aware person must continuously monitor. Finally, a globally aware person will keep abreast of the global economic, social, and political trends because a country’s prospects can change as these trends shift direction or accelerate. The former republics of the Soviet Union, along with Russia, Eastern Europe, China, India, Africa and Latin America, are undergoing economic, social, and political changes that have already altered the course of trade and defined new economic powers. The knowledgeable marketer will identify opportunity long before it becomes evident to others. It is the authors’ goal in this text to guide the reader toward acquiring a global awareness.
How do you sell $75 jeans or $150 wireless phones in a country where the per capita gross domestic product is only a couple of thousand dollars a year? Marketing researchers have found that extended families are showering their money on the kids, a common form of conspicuous in the developing world. Even in China, the spending power of youth is something to discount. Studies have shown that the average 7 to 12 year old in a large city has $182 a year in spending money – admittedly less than the $377 in France or $493 in the United States but still a significant amount considering the huge population.