With a population of 1.3 billion and GDP growth at or above 10%, China is poised to become the most dominant consumer base in the world. It is no surprise, then, that for several years, a whole host of companies have made attempts to sell their wares in China. Companies that enter China, however, face significant late-mover disadvantages. Consider, for example, mobile phones—any telecommunications firm that wants to enter the Chinese market faces huge hurdles. China Mobile, the largest service provider in the nation, announced that they added 5.26 million new subscribers in the month of August 2009, bringing their total to 502.9 million. These figures dwarf those of the Verizon, the largest service provider in the U.S., which added 1.1 million subscribers in the second quarter of 2009, bringing their total to 87.7 million. China Mobile also has a huge technological advantage, as its network covers all 31 of China’s provinces and reaches 97% of China’s population. Since China Mobile is a state-owned company, it benefits from protectionist policies. Given these advantages, do late entrants to China’s telecommunications market have a chance for success? How can firms utilize late-mover advantages to compete effectively with China Mobile?
With a population of 1.3 billion and GDP growth at or above 10%, China is poised to become the most dominant consumer base in the world. It is no surprise, then, that for several years, a whole host of companies have made attempts to sell their wares in China. Companies that enter China, however, face significant late-mover disadvantages. Consider, for example, mobile phones—any telecommunications firm that wants to enter the Chinese market faces huge hurdles. China Mobile, the largest service provider in the nation, announced that they added 5.26 million new subscribers in the month of August 2009, bringing their total to 502.9 million. These figures dwarf those of the Verizon, the largest service provider in the U.S., which added 1.1 million subscribers in the second quarter of 2009, bringing their total to 87.7 million. China Mobile also has a huge technological advantage, as its network covers all 31 of China’s provinces and reaches 97% of China’s population. Since China Mobile is a state-owned company, it benefits from protectionist policies. Given these advantages, do late entrants to China’s telecommunications market have a chance for success? How can firms utilize late-mover advantages to compete effectively with China Mobile?
Chapter35: International Trade Restrictions
Section: Chapter Questions
Problem 1E
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With a population of 1.3 billion and GDP growth at or above 10%, China is poised to become the most dominant consumer base in the world. It is no surprise, then, that for several years, a whole host of companies have made attempts to sell their wares in China. Companies that enter China, however, face significant late-mover disadvantages. Consider, for example, mobile phones—any telecommunications firm that wants to enter the Chinese market faces huge hurdles. China Mobile, the largest service provider in the nation, announced that they added 5.26 million new subscribers in the month of August 2009, bringing their total to 502.9 million. These figures dwarf those of the Verizon, the largest service provider in the U.S., which added 1.1 million subscribers in the second quarter of 2009, bringing their total to 87.7 million. China Mobile also has a huge technological advantage, as its network covers all 31 of China’s provinces and reaches 97% of China’s population. Since China Mobile is a state-owned company, it benefits from protectionist policies. Given these advantages, do late entrants to China’s telecommunications market have a chance for success? How can firms utilize late-mover advantages to compete effectively with China Mobile?
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