Challenges for foreign companies entering the Chinese market

Abstract

The aim of the following thesis is to discuss the challenges that many foreign brands meet when dealing with the Chinese market. Moreover, the final purpose of this work is also to emphasize the importance of being sensitive to cultural differences, studying the target market before taking any action, and learning how to transform those challenges into profitable opportunities. Our analysis provides in the first chapter an overview of the first two issues that a foreign company has to tackle when entering a foreign market, namely cultural and linguistic barriers. The second chapter examines the Chinese e-commerce market. Chapter three examines the Guochao trend and the “Made in China 2025” as potential threats that could undermine the reputation and competitiveness of foreign companies. The last chapter presents two examples of foreign companies that have successfully established themselves in the Chinese market, namely Starbucks and Gucci. To conclude, starting from the aforementioned case studies, this thesis will offer a critical overview of the debate between standardization and local adaptation, analyzing the main ideas suggested in the literature. The following thesis demonstrates how the Chinese market is very different from the Western market and how they could act as opportunities if a company truly engages itself in a deep understanding of the market's needs. Particularly, ongoing market research is needed as well as a certain degree of adaptation.