While, in the United Kingdom the grocery market is saturated and growth is only achievable by gaining market share of a competitor, the People’s Republic of China (PRC) has significant growth opportunities due to a large population and an increasing middle class with a growing disposable income. However, time pressure is high, as many companies seeking to exploit the high growth rates, accordingly investments will become more expensive. Although, China has strong growth potential, it is still a relatively poor and state-controlled country with a multitude of regulations and risks.
Hence, this report will assess risks and opportunities associated with a market entry in order to facilitate Sainsbury’s decision whether or not to expand its retail business to the Chinese market, as well as provide recommendations concerning an appropriate market entry strategy.
Table of content
1. Introduction
2. Analysis of the political economy in China (Root Model)
2.1. General instability risk
2.2. Ownership Risk
2.3. Operations Risk
2.3.1. Labour law
2.3.2. Import restrictions
2.3.3. Taxation
2.4. Transfer Risk
2.4.1. Foreign exchange
2.4.2. Currency risk and stock market volatility
3. Cultural differences
4. Opportunities
4.1. Modern convenience store
4.2. The Internet
4.3. Distribution infrastructure
5. Market entry strategy and recommendations
6. Appendix
Appendix A - Pest Analysis
Appendix B - Market entry strategy
Appendix C - Country and regional comparison
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