Term Paper: Market Screening for Final

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Market Screening for Final

Exporting Chocolate to China

The company I own produces chocolate and chocolate derivatives. We currently operate in America, but we wish to extend our business to a global level. With the view of going global, we are thinking of exporting to the Chinese market. Throughout the report, we are going to depict each aspect related to our future success or failure by performing a market screening.

Description of product to be exported

The company is called "Sweet Dreams" and it offers a wide variety of chocolate products. Beginning with the well-known chocolate bar, we can mention chocolate truffles, chocolate sticks, chocolate beans and other premium specialties. Even the chocolate bars range from the most common type (milk chocolate) to all assortments. For example, we can refer to some of the ingredients added, like: almonds, nuts, caramel, fruits, mint, champagne, honey, rice etc.

In accordance to the target market, we can create different types of products by adding new ingredients. Thus, taking into consideration some specifics of the Chinese people, we can include rice or other preferred components.

Characteristics of target market

GNP/capita, GNP/capita growth rate, Size of market

While the economies of China and India are considerably smaller than that of the U.S., China is likely to overtake and India to equal the U.S. economy in size by mid-century. And as the world's economic center of gravity shifts to Asia, U.S. preeminence will inevitably diminish. Measured in comparable units of purchasing power, the U.S. economy, at $10.7 trillion, is currently almost twice the size of China's ($6.3 trillion) and three times the size of India's ($3.6 trillion). The much higher U.S. per capita income, almost eight times that of China and roughly 11 times that of India, is partially offset by the much larger populations of the two Asian countries. But with per capita incomes in China and India likely to grow more rapidly than in the U.S., thus narrowing the large gaps in living standards, both Asian economies will eventually surpass the U.S.[...] China's aggregate GNP has grown by about 10% a year since the late 1970s." (Welcome To The Asian Century. By 2050, China and maybe India will overtake the U.S. economy in size.). By making some computations, we can suppose that "China would reach about half the U.S. per capita income level by the year 2050, while its projected population of some 1.4 billion will be about 3.4 times the U.S. population of about 400 million. At that point China's GNP would be about 75% larger than that of the U.S." (Welcome To The Asian Century. By 2050, China and maybe India will overtake the U.S. economy in size.).

With chocolate consumption increasing at a rate of 25 per cent a year in the Asia-Pacific region, and 30 per cent in China, chocolate makers fear that coco- bean growers will not be able to keep up with demand"

For Lovers of Chocolate, future could be very dark.). The size of the market is continually increasing as the Chinese people tend to shift their preferences from the traditional sweets to the Occidental products. They seek to be in trend and, therefore, they opt for whatever gives them the feeling of Occident.

Market screening

Basic need potential. As the product cannot be tagged as a means of fulfilling basic need, we can assess its purchase as being more the result of a wish.

Exchange rate trends. People's Republic of China has the currency

Renminbi. Before 2005, an U.S. dollar used to be pegged at 8.28 RMB. However, on July 21st, 2005, it was changed to 8.11 per U.S. dollar and, subsequently, they removed the peg to the U.S. dollar. The state announced that the RMB would be pegged to a basket of foreign currencies and would not be strictly tied to the U.S. dollar. Therefore, it would trade within 0.3% against this basket of currencies.

Import restrictions. China has no import restrictions on chocolate, except for the fact that producers should mark the country of origin of the products they offer.

Price controls. Chocolate has no price control.

Government and public attitude toward buying American products. In a trend of adapting to the occidental trend, the Chinese have become more and more captivated by the taste of chocolate. For this purpose, a report (Chocolate Strives for Standard.) was made by Sinomonitor International (a Sino-Japanese independent market supervising firm), disclosed during 2003-2004, on a sample of 70,000 Chinese people aged between 15… [END OF PREVIEW]

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