1. Fragmented and differentiated market With the increasing attraction of MNCs to the size and

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1. Fragmented and differentiated market With the increasing attraction of MNCs to the size and growth of the Chinese consumer market, some are inclined to overlook the diversity among the indigenous consumers. The popular misconception of China as a huge market with homogeneous consumers often results in difficulties in evaluating demand and formulating effective marketing strategies. In reality, China is a large geographic area consisting of multiple fragmented markets; segmented by regional economic development and local culture. The Chinese also have diverse cultural patterns demonstrated by deviations in dialects, ideals, lifestyles, traditions, and customs. Consequently, these regional disparities affect people's perception of…show more content…
Accordingly, the prices of LV products sold in Shanghai are about 35% higher than those sold in Paris. REF! RELEVANT? 3. Rise in Domestic firms – Chinese Companies “Made in C. By. C. For C.” A key challenge faced by potential entrants into the Chinese market is the increasing emergence of competitive local enterprises. In 2011, China’s 12th Five Year Plan came into force, shifting the focus of social and economic measures to the strengthening of China’s new home-grown enterprises. In 2010, 60% of China’s GDP came from domestic private enterprises – this is in striking contrast to the 38% they contributed in 2005. REF!!! Indigenous innovation policies are inhibiting foreign firms from fully exploiting China’s growth whilst simultaneously providing an advantage to local competitors. The Chinese government are encouraging home-grown companies to sell to the domestic market through states subsidisation of domestic firms, and a corresponding cut in export subsidies. The market transformation from a ‘Buy China’ to a “Made in China, Designed by Chinese, for Chinese” is reflected in the record-breaking number of patents filed by Chinese innovators. The end of ‘cheap China’ has partly triggered the rise of ‘consuming China’. China’s government is trying to boost incomes and, ultimately, consumption. The increase in incomes has led to higher living standards
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