“Forget the idea that the rise of Chinese competitors simply means cheap, low-quality imitations flooding world markets” (Williamson & Zeng, 2008, p. 44). Though many people think, that China can only deal with cheap mass production to flood the market with low-quality goods. Chinese products have nothing in common with low-quality imitations. It is all about implementing of efficient cost innovations that give the economy a boost. A growing number of competitors is the best evidence.
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Those innovations made it possible for Chinese enterprises take their niche in the market and offer more for less in comparison with main rivals in various fields. The tactics of cost innovation appeared to be rather effective with its three main faces. The first one provides buyers with modern technologies at the lowest price. The market is full of Chinese IT products that are able to compete with recognizable American and European brands due to low cost. “The Chinese economy, since 1978, has experienced a spectacular performance on account of its successful economic reform and open-door policy” (Devare, Singh & Marwah, 2008).
Another reason for a growing number of Chinese competitors is the fact they present an unmatched product line with a variety of choices. Enterprises do not limit their series with only a few items. As a rule, product line contains over a dozen of different available options to please every customer. The situation has changed over the last ten years. Developed and customer-oriented Chinese business were introduced to the international market.
The key to success includes offering high-quality goods at a very low price if compared with the main rivals. Such strategy could be considered as recklessness a decade ago, and so it was. However, the world of developing technologies is shaping modern economy in a new way. Though some may think it is impossible to take the challenge from China, the only way to disrupt its competition is to implement new strategies following the one and only rule: changing it to better and cheaper.
Case study question: What makes emerging markets attractive for international business? Discuss emerging markets as target markets, as platforms for manufacturing, and as sourcing destinations.
It is clear that Indian market is still among the most unexploited trading and industrial platforms as well as Chinese and other emerging markets. At the same time, international corporations and enterprises keep searching for new areas that will provide them with an opportunity to grow and develop. On the one hand, huge companies have already taken their place in the niche. On the other hand, they can benefit from additional production capacities and available labour forces.
In spite of common opinion and stereotypes, emerging markets are more than able to provide international companies with the economy-friendly environment and all necessary facilities for further development. Moreover, some countries like India can boast efficient manufacturing infrastructure in addition to a selection of raw materials and more.
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Loyal obligations and financial laws appear to be another reason why emerging markets are so popular with international companies, though “India’s tariffs are relatively high, especially in agriculture, where the rate is 41.9 per cent”(Cavusgil, Rammal & Freeman, 2012). They provide corporations with a business-friendly legislative structure. That is why local businesses can offer their customers cheap and at the same time quality goods.
It would be a huge mistake for international businesses to miss the opportunity and not enter a ready market featuring well-qualified specialists in various fields. This fact explains why companies like Tata turn out to be serious competitors to the US and European enterprises.
Cavusgil, T., Rammal, H. & Freeman, S. (2012). International Business: The New Realities. Melbourne, Australia: Pearson Australia.
Devare, S., Singh, S. & Marwah, R. (2012). Emerging China: Prospects of Partnership in Asia. New Delhi, India: Routledge.
Williamson, P. & Zeng, M. (2008). How to Meet China’s Cost Innovation Challenge. Web.