The document analyzes the Chinese market as an opportunity for the Australian skincare brand Larissa Bright. It notes that China has a large population with growing disposable incomes and a preference for natural, imported beauty products. While the Chinese beauty market is very competitive, Larissa Bright is well positioned to succeed due to China's economic growth, demand for skincare products, and view of Australian brands as "green". The document concludes China provides an attractive market for Larissa Bright's expansion.
2. Larissa Bright Australia
Alive Health. [Image]. (2016). Retrieved from http://www.alivehealthorange.com.au/larissa-bright
3. Chinese Market
• Active online shoppers
• Prefer natural products
• Prefer imported beauty products
• Recognise Australia as having a “green” environment
PNG ALL. [Image]. (2016). Retrieved from http://www.pngall.com/china-flag-png
5. Macro-Economic Performance
• GDP = 10866.44 Billion US Dollars (2015)
• 17.53 % of world economy
• Growth rate of 6.7%
• CPI = 101.30 Index Points (As of August 2016)
• Government Debt = 43.90 % (2015)
6. Labour Force
• Working age = 16–60
• Working age population = 915.83 million (2015)
• 67% of whole population
• Unemployment rate = 4.05%
• Expected to stay at this rate til at least 2021
7. Population
• Population = 1.382 Billion (2016)
• 18.72% of the world’s population
Worldometers. [Image]. (n.d.). Retrieved from http://www.worldometers.info/world-population/china-population/
8. Income
• Disposable Income = 31195 CNY (2015)
• From 28844 CNY in 2014
• Consumer Spending = 264757.60 CNY HML
• Income Distribution = Top quintile has
almost half of total income whilst
poorest quintile accounts for under 5%
• “One of the most unequal countries in
the world” (Talley, 2015).
Talley, I. [Image]. (2015). Retrieved from http://blogs.wsj.com/economics/2015/03/26/china-is-one-of-most-unequal-countries-in-
the-world-imf-paper-says/
9. Imports & Exports
• Not known for exporting beauty products - prefer to
import as they believe imported beauty products are of a
higher quality.
Hong Kong Trade Development Council. [Image]. (2016). Retrieved from http://china-trade-research.hktdc.com/business-
news/article/China-Consumer-Market/China-s-Cosmetics-Market/ccm/en/1/1X000000/1X002L09.htm
10. Beauty Industry
• Growth in beauty and personal care sales
• Skincare = RMB 142 billion – 8 % growth (2014)
• Make-up = RMB 21 billion – 9% growth (2014)
• Baby & men’s care products also recording growth.
• Competition is fierce due to supply of products from many
different countries
• Beauty market in Hong Kong dominated by France, Japan,
Switzerland and USA.
12. Trading
• Member of the World Trade Organization (WTO)
• Free Trade Agreements with:
• ASEAN – South-East Asian Nations
• Pakistan
• Chile
• New Zealand
• Singapore
• Peru
• Costa Rica
• Iceland
• Switzerland
• Korea
• Australia
14. Strengths
• Largest trading nation &
exporter of goods
• Good trade relationships
• High GDP & Growth rate
• Unlikely to experience a
financial crisis
• No unexpected events
occur – natural disasters
etc
Weaknesses
• Income inequality
• Dependent on exports
16. Ramifications
• Competitive
• Cultural and Language
Differences
• Barrier to Market Entry
Attractiveness
• Large population with
high disposable income
• Demand for products
• Profitable
18. References
• Anqi, F. (2015). China's labor force shrinking. Retrieved fromhttp://www.china.org.cn/china/2015-
01/22/content_34625754.htm
• Australian Trade and Investment Commission. (2016). Consumer products to China (personal care,
fashion). Retrieved from http://www.austrade.gov.au/Australian/Export/Export-
markets/Countries/China/Industries/Consumer-products
• Australian Trade and Investment Commission. (2016). Cosmetics to Hong Kong. Retrieved from
• http://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Hong-
Kong/Industries/Cosmetics
• China FTA Network. (2016). China’s Free Trade Agreements. Retrieved from
http://fta.mofcom.gov.cn/english/fta_qianshu.shtml
• Gentlemen Marketing Agency. (2016). Cosmetics products: 10 hot trends in China. Retrieved from
http://marketingtochina.com/cosmetics-products-10-hot-trends-in-china/
• Hong Kong Trade Development Council. (2016). China’s Cosmetic Market. Retrieved from
http://china-trade-research.hktdc.com/business-news/article/China-Consumer-Market/China-s-
Cosmetics-Market/ccm/en/1/1X000000/1X002L09.htm
• Investopedia.(2015). What country is the world's largest exporter of goods? Retreived from
http://www.investopedia.com/ask/answers/011915/what-country-worlds-largest-exporter-goods.asp
19. References cont.
• Kotabe, M., Marshall, A., Ang, S., Griffiths, K., Voola, R., Roberts, R., & Helsen, K. (2014).
International Marketing 4th Asia-Pacific Edition. John Wiley & Sons Australia, Ltd: Milton, Qld.
• Larissa Bright Australia. (2015) Hero Ingredients & Glossary. Retrieved from
http://www.larissabright.com.au/hero-ingredients-and-glossary
• Statista. (2016). China: Unemployment rate from 2010 to 2021. Retreived from
https://www.statista.com/statistics/270320/unemployment-rate-in-china/
• Talley, I. (2015, Mar 26). China Is One of the Most Unequal Countries in the World, IMF Paper
Says. Retreived from http://blogs.wsj.com/economics/2015/03/26/china-is-one-of-most-unequal-
countries-in-the-world-imf-paper-says/
• Trading Economics. (2016). China Consumer Price Index (CPI). Retrieved from
http://www.tradingeconomics.com/china/consumer-price-index-cpi
• Trading Economics. (2016). China Disposable Income per Capita. Retrieved from
http://www.tradingeconomics.com/china/disposable-personal-income
• Trading Economics. (2016). China GDP. Retrieved from
http://www.tradingeconomics.com/china/gdp
• Worldometers. (n.d.). China Population. Retrieved from http://www.worldometers.info/world-
population/china-population/
20. THANK YOU
For any questions please email
sharna.brendecke@my.jcu.edu.au
Editor's Notes
Good evening ladies and gentlemen, my name is Sharna Brendecke and today I am here to analysis the economic environment of the Chinese foreign market and the implications and advantages it has for Larissa Bright Australia.
Larissa Bright Australia specialises in all natural Australian skincare and beauty products that are vegan, organic, eco-friendly and not tested on animals. Larissa Bright consumers are typically Australian, however, Larissa Bright has successfully exported products to New Zealand and Korea and now hope to export to Asia, specifically China.
The Chinese market, in particular, would be the ideal market for Larissa Bright Australia as Chinese consumers are active online shoppers who love natural products. Chinese consumers also prefer to import beauty products, as they believe they are of a higher quality. The Chinese also recognise Australia as being a green environment and are, therefore, more likely to buy natural products from Australian brands.
China has long been regarded as a strong economic country. In fact, 17.53% of the world’s economy is made by China, which is not surprising considering the country’s Gross Domestic Product (or GDP) was measured at 10866.44 Billion US Dollars in 2015. And China’s GDP continues to grow at a percentage of 6.7 yearly. As of August 2016, the consumer price index was at 101.3 Index Points. And China’s government debt was recorded at 43.90% in 2015.
In regards to China’s labour force, the working age population, which includes those between 16 and 60, was at 915.83 million in 2015. That meant that 67% of the Chinese population was considered to be working. In comparison, the unemployment rate was measured to be at 4.05% and is expected to stay at this rate until at least 2021.
In 2016, the Chinese population is said to be at 1.382 Billion, with China making up 18.72% of the world’s population. And the population is still growing yearly by approximately 0.46%. That is a lot of potential customers for Larissa Bright Australia.
In regards to income, China has a high disposable income of 31195 Chinese Yuan Renminbi (CNY) in 2015, which rose significantly from 28844 CNY in 2014. Consumer Spending is also high at 264,757.60 CNY HML. Consumers with high disposable income are more likely to spend money and purchase items, such as beauty products, which are not considered a necessity. The income distribution of China, however, is very unequal, with the top quintile having almost half of the total income whilst the poorest quintile accounts for fewer than 5%. This would suggest that only consumers in the top quintiles would be able to afford to buy non-necessary items like Larissa Bright’s beauty products.
The Chinese is not known for exporting in the beauty industry as they themselves believe that beauty products from other countries are of a much higher quality. In fact, China spends millions of US dollars every year importing beauty products. For example, in 2015, China spent 2,722 million US Dollars importing skin care and preparation products, products of which Larissa Bright Australia specialises in.
The Chinese Beauty Industry is growing every year with more and more Chinese consumers buying into the need to look and feel good. In fact, skincare products have had a yearly growth of approximately 8% and a 9% growth in make-up. Baby and men’s care products have also seen a growth, products of which Larissa Bright also supplies.
In regards to external economic relations, China is one of the largest trading nations in the world. China became a member of the World Trade Organization (WTO) in December of 2001, which led the way to free trade agreements with a number of different countries including Australia. China has since been established as Australia’s largest two-way trading partner and a vital part to the Australian economy.
The Chinese economy has its strength’s and weaknesses, however it’s strengths far out way its weaknesses. In terms of strengths, China is one of the largest trading nations and a large exporter of goods. Furthermore, China is known to have good trading relationships with many countries, which only ensures its continued trading and exporting success. China has a strong economy as evident by its high GDP and growth rate of 6.7%. A high GDP ensures that consumers have a high disposable income that they can then put back into the economy. As China has such a strong economy, it is very unlikely that the country would experience any kind of financial crisis. Lastly, unexpected events, such a natural disasters, rarely occur, which means that China does not have to put large amounts of money towards yearly natural disaster evacuations or clean ups in its budget. The only major weaknesses to the Chinese economy are that income is not distributed equally and that they rely to heavily on exportation. If China had a more equalised distribution of income, then a larger number of consumers would be able to purchase more expensive or non-necessity items such as beauty products.
Overall, the Chinese Market has a number of ramifications and attractions. The major ramifications that exist for Larissa Bright Australia include competitiveness and cultural and language differences. Competition is a ramification of the Chinese market, as many other international countries, such as France, Japan, Switzerland and USA, have already dominated the beauty industry. In order to enter this competitive market, Larissa Bright Australia must ensure that they have a competitive advantage such as low prices. Larissa Bright, however, does already have the advantage of being a natural product, which is something that Chinese consumers want. The other complication is the cultural and language difference, which could be a barrier to entering the Chinese Market. This could be overcome, however, by employing someone who is Chinese and/or work with local distributors or agents. These ramifications will need to be considered in order to create a suitable market entry strategy. In contrast to the ramifications, the Chinese Market has many attractions. The first attraction is that China has a large population, with high disposable income. Therefore, the is a potential for many consumers, of which will have the disposable income to buy products. In china, there is also a large demand for all natural beauty products and Chinese consumers will prefer to have these products imported, particularly from Australia. As there is a large demand for natural products and plenty of consumers with money to purchase, there is no doubt that Larissa Bright would profit from having products sold in the Chinese Market.
Thus, it is evident that China provides an attractive market in which Larissa Bright Australia would sell products. However, they will need to consider a suitable market strategy, and advertise their competitive advantages, to ensure success in the Chinese market.