International Business Environment Marketing Essay

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Vietnam has always imported more from China than it exports there. Products imported from China
spread all over the country so many that hardly ever people think about what can be exported back to
China. However, there're a few Vietnamese manufacturers now eyeing China and its 1.3 billion
consumers. They believe they can and should find a place there, especially since the key traditional
exporting markets like US and European are now still affected by the global economic crisis. I would
like take this case as an example of a Vietnamese company - a footwear producer - which is believed
to gain success when trying to penetrate Chinese market thank to its clever market entry strategies.
Besides, I also tried to reveal some challenges that this company may have to face in the coming
future in order to strengthen its position.

1. Company and products

Binh Tien Imex Corp., Pte., Ltd, with the brand name Biti's, is the leading footwear manufacturer in
Vietnam. The company was established in Dist 6, Ho Chi Minh City from 1982. At beginning, the
company just had 02 small production teams named Binh Tien and Van Thanh with only 20 workers
and specialized in simple rubber sandals. After 28 years, the company became a strong group of 02
members: Biti's and Dona Biti's. Numbers of staffs increase rapidly and up to the amount of 9000
people in 2009.
Every year, the company produces more than 20 million pairs of shoes and sandals of several styles
and sizes including fabric shoes, sport shoes, children footwear, sandals, etc. Biti's products are not
only best sold in domestic market but also be loved in international market thanks to its products' good
quality and diverse kinds and designs.
"Biti's takes a loving care of Vietnamese feet" or "Biti's - tender care of your feet" is a familiar slogan
with domestic consumers. Biti's brand is now getting more and more famous. This helps Biti's products
have firm foothold in the domestic market. Biti's now owns 02 trade centers, 02 business center, 02
branches, 23 showrooms and more than 2300 shops and agents nationwide. The company has been
exporting to more than 40 countries all over the world and has successfully satisfied many famous and
strict customers. (Please refer to exhibits for more information about the company and products).

2. Finding "niche market" from Chinese footwear market

Since the key traditional exporting markets like US and European are now still affected by the global
economic crisis, Biti's tries to find the new ones. In the Southwestern of China, with more than 420
millions of people and more than 30% of population in urban areas, consumption demands on footwear
are more and more increasing. Besides, people's living standard is improving day by day; shopping
opportunities of society are then accelerated. Moreover, inbound tourism is developing. Those above
mentioned results are chances for the development of the domestic footwear market. However, due to
Chinese footwear manufacturers are very strong, the weaker ones (Vietnamese companies) could not
attack directly. They should find the "Achilles heel" to attack in order to gain some advantages over the
un-expectation of rivals. Biti's considered:
Although China is the number one exporter of footwear products across the world but since they focus
too much on exporting, the potential of local market were ignored.
Advantage over manufacturing technology: Since the manufacturing technology of footwear product in
China changed too quickly for exporting demand; for example: from the material of rubber sandals in
the '60s, they have moved to 70 EVA materials in the '80s and the subsequent material PU, TPR...; this

has made Chinese manufacturers ignored the need consumer demand in the country especially in
southwest China's provinces where people have lower living standards, but need the high quality
products. With the increasing living standard and changing in consumer behavior, the low quality
products which are very cheap though no longer dominant as before. Biti's has advantage over quality
of the products using EVA material which can fully suit these needs.
Advantage over the similarity of requirements for products: Since the Southwestern of China is close to
Vietnam, the climate and geography (and even culture) are quite the same. Requirements for footwear
products like quality (people love durable and high quality product since they go on foot a lot), material
(people prefer nature materials), and design (fashionable models) are quite similar, too. Therefore Biti's
products which focus on quality and suitablity to the climate and geography may gain some advantage
in this market, which helps to avoid too many efforts and costs on adaptation.
Advantage over geographical location: In China, it was difficult for the trading between the well
developed eastern provinces and the undeveloped western provinces, especially the Southwestern
provinces of China to take place due to unfavorable conditions for transportation, especially due to the
far distance. Meanwhile, Vietnam's goods, although made from Vietnam or even in Ho Chi Minh City
still gain more favorable in transportation to the southwestern province of China.
Advantage over language: Sometimes we can speak Vietnamese in many places, including parts of
Quangxi and Yunnan provinces in China, since business merchant travel across borders frequently,
they learn both languages, so it is quite easy for Vietnamese business to find
partners/retailers/agencies/distributors in this region.
Biti's took these advantages to penetrate to China, firstly in Southwestern provinces.

3. Market entry strategy

3.1. Entry mode:
Considering the above-mentioned advantage, the company chose exporting through different
distribution channel (cross border trading, representative office, agency, distributors) and used
extension strategy to entry Chinese market.

3.2. Key market entry strategy - how to meet the foreign market
requirements?
Among three global strategies to penetrate foreign markets: extension, adaptation and invention
strategy, firstly Biti's choose the first one. However, the company also applied special market entry
strategy for this special market:

Gradually conquered the consumer

Biti's did not penetrate China through splashy advertising campaigns. At first, it infiltrated the market by
showing its products at trade fairs in the border areas which are opened frequently.
While Chinese producers mainly focus on low price and fashion; Biti's offers quality with reasonable (or
even high price) first. This differentiating strategy helps to company to define a new position in the
Chinese market. Biti's let the consumer try, love, trust and come back to buy other products rather than
using splashy advertising campaign to attract them.
Biti's also demonstrated their deep knowledge of business culture in Chinese Southwestern provinces:
Chinese business men (business Chinese merchants) always take the initiative (active) role. When
they see an opportunity, they will be very active and come to Vietnam to place orders directly with
manufacturers. The company also took its potential partners from China to come and visit the

production line and demonstrate the quality of the products to attract them. The comfortable footwear
also 'followed the steps' of Chinese businessmen who came to Vietnam and then returned to China,
and has gradually become a popular footwear brand name in China.

"Spreading oil strategy"

Start with cross-border trade: Favorable conditions through tradition of trade from years, the
preferential policies for business operations across border, the preferential import tax or quota for
neighboring countries... have been used effectively by Biti's to promoting trade to Chinese
Southwestern provinces.
In order to take full advantage of border trade, Biti's built Lao Cai International Border Gate Trade
Center, which is right after the Interdisciplinary Controlling Center (Custom, Border-guard Office, Tax
Organization), at Lao Cai International Border Gate; around 200m far from China Border gate, with
investment if 40m USD. Biti's had good reason for choosing to build a commercial center at the Lao
Cai border gate since Lao Cai borders Yunnan, a Chinese province with a population of 42 million with
Kunming as its headquarters. Biti's realized that the taste and consumer practices of people in Yunnan
are similar to those of the Vietnamese. Yunnan could be the gateway for Vietnamese goods into
western China. Therefore, this was a very promising market for Biti's.
Biti's tried to support for partners in exchange for the effective distribution channel. After gained some
important movement, Biti's expanded its distribution channels, spread all over Chinese Southwestern
provinces and expanded to other regions, including four representative offices in Nam Ninh, Con Minh,
Ha Khau, and Quang Chau. Until now, the company has totally 25 General Distributors and over 300
distributors.

Trademark protection
Positioning as a high quality product; Biti's paid attention to protect its image. To avoiding fake products
issue (which is a serious issue in China market) Biti's immediately register its trademark to China
government to protect the brand name.

Understood and respected local business culture/practice

Chinese market with billions of consumers and millions of large and small brands is too difficult for
businesses to penetrate. Therefore, the business should not be too ambitious that it will easily
dominate a large market share. Instead, it should understand its own strengths and enlist in the "niche"
market, customer support, and especially business network to be set up.
Each distributor was carefully chosen for each market sector by Biti's . Working with partners, Biti's
respected the decision of the partner provided that it would not drop the main requirements and the
goal seeking new markets for the company. Due to all Chinese traders are experienced, they would
definitely know where and how to invest or trade to achieve success as expected.
However, Chinese business men always asked for special incentives than others. Therefore, when
dealing with them, to nurture close relationships with their local counterparts, Biti's tried to demonstrate
the fair, consistent view/opinion toward a common benefit, which helps to make Chinese business
people respect and trust in a long-term stability in the partnership.

Establish close relationship with government officials

Since the China government plays an important role in influencing market movement and administering
foreign investments, a strong government relationship remains an important factor to do business
successfully in China. Acknowledge this, Biti's tried to build a good relationship with Chinese officials,
then received many supports from them, especially in the trademark protection and trade promotion.

Both Vietnamese and Chinese governments encourage the cross-border trade; therefore, the
company earned some advantages.

4. Evaluation
4.1. Reason for success
Through above-mentioned efforts, Biti's has gained some initial success: the export growth rate to
China of Biti's is at 35-40 percent per annum; products exported to Southwestern provinces of China
accounts for about 80% of total products exported.
I believe that Biti's will gain more and more success through its penetration to China, due to the
followings reasons (which are all clearly demonstrated on Biti's market entry strategies and actions):
Differentiate itself to fulfill the needs of chosen niche market
Met requirements of foreign market: high quality, natural material, fashion design
Was clever to take a full use of advantages through technology, government supports (cross border
taxes, quota, incentive), transportation, similarity in geography, culture, behavior, language
Was flexible and effective in building distributions channels
Having deep knowledge of local business practices and applying them smartly

4.3. Threatens/challenges
As we can see, the company has been succeeded in using extension strategy to entry the Chinese
market, while the adaptation and innovation level is rather low (since Chinese and Vietnamese have
quite similar characteristics and requirements). Beside, the differentiate strategy seems to work well
since the Chinese manufacturers could not foresee this kind of action from a Vietnamese company.
However, as soon as Chinese manufacturers realize that they are losing their local market shares, they
will find the new way to get them back (for example try to imitate the products or strategy). At this
time, the extension strategy will not be enough. Together with extension strategy (trying to find new
markets, reaching more regions or different kind of customers), the company should consider
innovation strategy and adaptation strategy, try to enrich the products and make them unique, improve
more and more the brand value of the products, as well as reduce cost through expanding
production to strengthen and improve its position.

EXHIBIT I
COMPANY PROFILE
Name:

Binh Tien Consumer Goods Production Company

Address:
22 Ly Chieu Hoang, District 6, Ho Chi Minh city, Vietnam
Nation:
Vietnam
Year of establishment:

1982
Employees:
More than 9.000
Type:
Manufacturing, trading
Register capital:
50 billion VND
Sale 2009:
More than 720 billion VND (36 mil USD)
Annual sale from export:
40-60%
Main products:
Sandals, sport shoes, canvas shoes, slippers, work wear
Main markets:
Vietnam, US, Europe, China, Mexico
Certificate:
ISO 9001, Vietnamese high quality standard, National brand
Source: http://www.bitis.com.vn
Binh Tien Imex Corp., Pte., Ltd, the brand name - Biti's, is the leading footwear manufacturer in
Vietnam. The company was established in Dist 6, Ho Chi Minh City from 1982. At beginning, the
company just had 02 small production teams named Binh Tien and Van Thanh with only 20 workers
and specialized in simple rubber sandals. After 28 years, the company becamce a strong group of 02
members: Biti's and Dona Biti's. Numbers of staffs increase rapidly and up to the amount of 9000
people in 2009. Biti's owns 03 trade centers, 01 business center, 02 branches and more than 4000
shops and agents nationwide. The company has been exporting to more than 40 countries all over the
world and has successfully satisfied many famous and strict customers.
In China, Biti's has set up 04 representative offices in Quang Chau, Con Minh, Nam Ninh and Ha Khau.
Brand name "Biti's" has been registered and protected in China in 1999. Until now, the company has
totally 25 General Distributors and over 300 distributors.

Local Market
02 Branches
02 Trade Centers
02 Business Centers
23 Showrooms
over 2.300 shops and agents nationwide to launch the products to the customers

Border Trade
China Market
Nam Ninh Representative Office
Con Minh Representative Office
Ha Khau Representative Office
Quang Chau Connecting Office
25 General Distributors and over 300 distributors.

Laos Market
Dongpalantha Representative Office
Anou Area Distributor

Cambodia Market
The official distributor: Cambo Trading Company. This is the company who distributes Biti's products all
areas in Cambodia.

Global Market
Biti's products have been exported to more than 40 countries all over the world, the key markets are
US, Europe, China, Mexico Sale from exporting accounts for about 30-50% of company's annual
sale.
Source: http://www.bitis.com.vn

EXHIBIT II
Image of Biti's website and products
Source: http://www.bitis.com.vn/default.aspx?

EXHIBIT III
INVESTMENT PROJECTS
With the strong growth, Biti's have also penetrated to real estate investment field, building trade
centers and many apartments in the North, in the Middle and in the South of Vietnam in order to meet
the requirement of Vietnamese people in doing business and requirement of houses to live in the
situation of integrating to the world market.

Lao Cai International Border Gate Trade Center

Lao Cai International Border Gate Trade Center
Location: Right after the Interdisciplinary Controlling Center (Custom, Border-guard Office, Tax
Organization), at Lao Cai International Border Gate; around 200m far from China Border gate.

Construction Area: 22.494 square meters.

Grand investment: 40m USD
Construction scale includes: 3 blocks (4 Floors, 11 Floors and 7 Floors)

Biti's Northern Trade Center in Ha Tay

Biti's Northern Trade Center in Ha Tay
Located on International Road No 6, Ha Dong City, Ha Tay province, around 12km far from the center
of Ha Noi City the in the West. The total area is 13ha with the grand investment is 30m USD.

"Lady Hill" Ecotourism Area in Sapa - Lao Cai

Lady Hill" Ecotourism Area in Sapa - Lao Cai
With the area 27,9ha on 03 hills which is 2km far from the center of Sapa town. Biti's is believed by the
Lao Cai People's Committee to be the project-owner and attract the investment with overseas
countries.

The Cold Storage at Kim Thanh Trade Area - Lao Cai

The Cold Storage at Kim Thanh Trade Area - Lao Cai
With the area of 4.2 ha, this project is invested in order to supply the cold storage service for the small
volume import-export activities, for the border markets in the Area of trading in Lao Cai - Ha Khau.

The Apartment - villa in Dong Nam Pho Moi - Lao Cai

The Apartment - villa in Dong Nam Pho Moi - Lao Cai
The total area is 1,8 ha. The grand capital: 4.3m USD. It is estimated to be finished in 2012

Biti's An Duong Vuong Trade Center and Apartment

Biti's An Duong Vuong Trade Center and Apartment
This project is designed modernly in Binh Tan Dist - Ho Chi Minh City
This project has 02 front gates in East-West Avenue (178m) and An Duong Vuong Street (50m) -
which is the important street in Ho Chi Minh city and connect all province in the West.
The construction area: 17.582m2. This project is designed by Campell Shillinglaw and partners
Company. They are one of the leading consultants in Hong Kong in designing modern construction.
There are 03 blocks 30 floors, in which there are 04 floors for Trade Center, Entertainment and Sport
Center and more than 900 flats for the people who have medium and low income.
This is really an excellent design, whish is pure and quality, could meet all demands for everybody.
Especially, with new method in construction, with nice location and so many advantages, this project
will bring new development images for Binh Tan Dist and Ho Chi Minh City as well. The process of this
project: Start the construction of the basement in 2010
Finish in 2012.

The Apartment and Trade Service in Long Thanh - Dong Nai

The Apartment and Trade Service in Long Thanh - Dong Nai

The total construction area: 10ha
The grand investment capital: 40,000,000 USD
Introduction: This project has 02 front gates in East-West Avenue (178m) and An Duong Vuong Street
(50m) - which is the important street in Ho Chi Minh city and connect all province in the West.
The construction area: 17.582m2

Source: http://www.bitis.com.vn
EXHIBIT IV
Value of footwear export from Vietnam to China in 2009-2010 (USD'000)
Source: Vietnam General Statistics Office

Value of footwear export to China USD'000

Jan-09
5,060
Jan-10
Feb-09
9,255
Feb-10
Mar-09
9,274
Mar-10
Apr-09
5,988
Apr-10
May-09
6,807
May-10
Jun-09
9,486
Jun-10
Jul-09

9,368
Jul-10
Aug-09
6,506
Aug-10
Sep-09
5,600
Sep-10
Oct-09
8,801
Oct-10
Nov-09
11,146
Nov-10
Dec-09
10,711
Dec-10

EXHIBIT V
Total footwear export value of Vietnam in the period 2003-2009
Year
2003
2004
2005
2006
2007
2008
2009
Value

USD billion
2.26
2.66
3.04
3.59
3.99
4.7
4.07

G rowth (%) in comparison with the preceding year

n/a
17.7%
14.2%
18.2%
11.2%
17.6%
-14.7%
Source: Vietnam General Statistics Office
http://www.gso.gov.vn/default.aspx?tabid=629&idmid=&ItemID=10584