Part 2-1 Marketing Environment in China

Marketing department Micro-environment Macro-environment Marketing environment The factors and forces outside marketing that affect marketing management’s ability to develop and maintain successful transactions with its target customers.

 The microenvironment Company’s marketing Company’s internal environment Suppliers Marketing intermediaries Customers Competitors Publics

 The macroenvironment Company Microenvironment Demographic forces Economic forces Natural forces Technological forces Political forces Cultural forces

Demographic forces Demographics Gender ratio (M:F)106.74: :100 Gender ratio at birth116.86: :100 Population Growth Rate0.9%0.49% Urban Population36.22%49.68% Mobile Population221 million144 million Population1.27 billion1.37 billion Family Size Demographics Mobile Population144 million221 million

Population Geographic Distribution of Mainland China

Age 119million World bank: 200 million in 2015 and 400 million in 2044 One child policy; demographic dividend

Population Age Mix

Education College degree(per 100,000 people):

Economic forces In 2013, China’s GDP (9,038 billion dollars)ranked the 2nd; GDP per capita ($6,629) ranked the 90th by IMF GDP ranking of Chinese cities: 1 Shanghai 上海市 2160 billion RMB 2 Beijing 北京市 Guangzhou 广州市 Shenzhen 深圳市 Tianjin 天津市 Suzhou 苏州市 Chongqing 重庆市 Chengdu 成都市 Wuhan 武汉市 Hangzhou 杭州市 834

The disposable income per capita for urban households was 24,565 RMB in Income For rural households, the disposable income per capita was 7,917 RMB in Rank / Region / Per Capita Disposable Income 2012, Yuan 1. Shanghai: 40, Beijing: 36, Zhejiang: 34, Guangdong: 30, Jiangsu: 29, Tianjin: 29, Fujian: 28, Shandong: 25, Liaoning: 23, Inner Mongolia: 23,150

Share of Urban Households by Income Class According to the NBS of China, Gini Coefficient was 0.32 in 1980, reaching 0.45 in 2001, surpassed the warning lines. In 2010, the coefficient raised to

Savings  National deposits: RMB 160 trillion in 2006  Saving rate: over 40% in the past two decades  Why? Investments, Debts and Credits  Capital markets are still small.  Bond market segments remain unbalanced.  There is a lack of institutional investor in stock markets.  Small businesses borrow money from private capital due to the difficulty of bank loans.

Unemployment Rate The Chinese Academy of Social Sciences surveyed 7,000 people in mid-2008 and declared that the unemployment rate was 9.4%. **The number of state sector workers fell from a peak of 113 million in 1995 to 71 million in Source: IMF-2011 World Economic outlook

Real Estate Reasons behind Chinese booming real estate market? 1)Fundamental: demand, new household forming, and demand to live better 2)Lack of alternative investments 3)Liquidity, hot money flow in 4)Herd mentality 5)Local government 4 million 64.5 million An economist at the Chinese Academy of Social Sciences reported that 64.5 million electricity meters in urban areas around the country registered zero consumption over a six-month period. Official data provided by the National Bureau of Statistics suggests an overhang of about 4 million units. V.S.

Health Care Insurance Urban Employee Basic Medical Insurance System (UBEMIS) The government has expanded coverage of the UBEMIS to include non-state-owned sector and self-employed workers. Rural Co-operative Medical Care System (RCMCS) The annual cost of medical coverage is 50 yuan per person, among which 10 yuan is paid by the participant.

Source: Naughton(2007) Central Government Share of Budgetary Revenue and Expenditure Fiscal Reform and Fiscal Policy

Fiscal Reform and Fiscal Policy-Inflation

Chinese Philosophy  Confucianism  ‘li’ ( 礼 ): the importance of order and rites.  ‘ren‘ ( 仁 ) :the importance of benevolence.  Social order; obedience to authority ; collectivism  Taoism  nonaction (wu wei): the strength of softness, spontaneity, and relativism Socio-cultural forces

The impact of Western Philosophy. Maoism ( ) Socialism with Chinese characteristics (1979-) Chinese Philosophy

Religion and Culture  Pre-1949: Utilitarianism and Indifference  Ordinary people, believers and non-believers, held utilitarian views of religion  Intellectuals followed lofty Confucianism.  Post-1949: Surviving Governmental Suppression  Marxism as the only valid ideology  Post-1979: Revival and Competition  The 80’s: Chinese attitude toward religion became more friendly  The 90’s: worship of money

Guanxi  What is Guanxi?  Relationship  More importantly, obligation of one party to another, built over time by the reciprocation of social exchanges and favors.  Example: Microsoft in China