October 2021

JACPACK
NEW MARKET REPORT
 Melissa Marie Gomes Pestana
Sane Davis
AUSTRALIA
USA
22719309@student.uwa.edu.au
sddavis@uncg.edu

New Market Selection, Chinese Market

Industry Analysis, Promotional
Analysis, Marketing Message, Pricing
Materials, Pricing Strategy
Strategy

Gabriela McHugh
USA
glmchugh@uncg.edu

Baandile Olekanste SWOT Analysis, Promotional Materials,

BOTSWANA Trade Regulations
201903227@ub.ac.bw

Promotional Channels, Trade

Regulations

Luo Yuting
Miguel Londono Betancur
CHINA
COLUMBIA
bb90211@um.edu.mo
mlondonb@eafit.edu.co

Shenzhen Market Analysis,

Competitor Analysis, Marketing
Promotional Channels, Market Entry
Message, Logistics

EXECUTIVE SUMMARY
SECTION ONE: MARKET

Jacpack is identified within the baggage and luggage industry

The baggage and luggage industry has been heavily impacted by the covid-19 pandemic but is globally
NEW MARKET REPORT
forcasted to grow over the next 5 years
Totto represents the main home town competitor, with 8 in 10 consumers recalling Totto as top of mind
awareness
Samsonite luggage presents the biggest threat globally
Considering this industry is non-discriminatory ie. any consumers regardless of (age, gender, race) can
purchase these products, there is an opportunity to reach a large potential of new markets
A market analysis on population, income, expenditure, lifestyle and education levels identified China as
being the most promising new market
With China having an extensive list of 56 officially recognized ethnic groups it was appropriate to make a
more specific choice being Shenzhen, a city with one of the largest working residential populations in China
SECTION TWO: MARKETING

China has the largest representation of internet users

Chinese consumers are heavily driven by peer perception and regularly influenced by the rise of new
trends
Legal restrictions on western social media sites mean Jacpack would need to utilised platforms most
recognised in the Chinese culture such as Weibo, Douyin (Tiktok) or live streaming services
Sponsorships of cultural holidays or festival events provides a great opportunity for Jacpack to center
their marketing around
Mandarin is the dominant language identified in Shenzhen therefor, meanings associated with logos,
brands names, colours have been analyzed when considering that unintentional negative meanings could
be present
Jacpack translated into mandarin means “Bèibāo" and nouns can be identified as a backpack
Jacpack’s identifiable logo of a fox is appropriate for a Chinese cultural context with meanings of a spirit
animal
#Jacmystyle is a hashtag utlised by the company which would be perceived highly in the Chinese culture
aligning with their values on
SECTION THREE: OPERATIONS MANAGEMENT

Findings continuously point to the rapid expansion of Chinese consumers becoming accustomed to online
shopping
A key recommendation for Jacpack is
to enter the market through a large online retail platform such as
Taobao, JD.com and Tmall
Discounted products are highly valued and sought upon by Chinese consumers
Exclusive discounting pricing in the form of referral and student discounts should be the main
consideration for Jacpack's future pricing strategies
The pairing of the second largest economy in the world (China) and the fourth largest economy in Latin
America offers a strong opportunity for plentiful business in importing and exporting trade channels within
Colombia
China and Colombia are both member nations of the World Trade Organisation (WTO) lending to more
favourable trade agreements
 TABLE OF CONTENTS

SECTION ONE: MARKET

1.0 Industry Analysis ................................................................................. 01

1.1 Competitor Analysis ................................................................................ 01 / 02
1.2 SWOT Analysis ............................................................................... 02 / 03
1.3 New Market Selection .............................................................................. 03 / 04
1.4 Chinese Market Analysis ............................................................................ 05
1.5 Shenzhen Market Analysis .......................................................................... 06

SECTION TWO: MARKETING

2.0 Promotional Channels .......................................................................... 06 / 08

2.1 Marketing Message .......................................................................... 08 / 09
2.2 Promotional Materials .......................................................................... 09 / 10

SECTION THREE: OPERATIONS MANAGEMENT

3.0 Market Entry Mode .......................................................................... 11

3.1 Pricing Strategy

.......................................................................... 11 / 13
3.2 Trade Regulations .......................................................................... 13
3.3 Logistics .......................................................................... 13 / 14
1.0 Industry Analysis
Jacpack is predominantly identified within the “Baggage and Luggage” Industry. The products within this
industry are generally non-discriminatory, meaning consumers of these products can be of any age, race,
gender, and sexual orientation. Products are specifically recognized for traveling needs with book bags,
suitcases, duffle bags, totes, briefcases, among the extensive variations of bags (Shahbandeh, 2021). These
bags and luggage's can be divided up into 3 types: travel, casual, and business. Samsonite luggage company
is currently the largest player in global travel goods (Shahbandeh, 2021).

In a graph published by Samsonite, in their annual report for 2020, the market value forecast worldwide
from 2019 to 2025 can be identified (Shahbandeh, 2021). There is evidence of a huge decrease in 2020 as a
result of the global pandemic pandemic with fewer people traveling and country lock-downs. As countries
start to open back, it is predicted that the market value for bags and luggage's will continue to rise back to
how it was "pre-covid" in 2019 and even continue to grow and exceed the original amount (Shahbandeh,
2021).

Figure 1. Worldwide forecast for Bags and Luggage industry

This industry can be recognized in every region of the world but it affects differ. For example, figures in
Appendix A are from the Hong Kong stock exchange news, surveyed by China Insights Consultancy
Limited, an independent professional market research and consulting company. They show the retail sales
value of the luggage market from 2013 to 2018 with forecasts unit 2023 in China, North America and the
Asian Pacific region. The order of the regions’ sale values from highest to lowest when the results were
captured was the Asian Pacific region, North America, then China.

1.1 Competitor Analysis

In Colombia, the main and direct competitor of Jacpack is Totto. Findings have suggested that Totto
is the top-of-mind awareness within 80% of Colombians when it comes to consumers being able to
recall a brand within tthe bags and luggage industry (Vargas et al., 2021). More specifically, this
means that per 10 people asked about backpacks brands, 8 think of Totto (Vargas et al., 2021). The
other 20% is divided into some national and international brands, such as Nike, Puma, and Adidas,
that people have a good experience with (Granados, 2019).
10
An acquired value of Totto is that they are focused on a multi and diverse target market. There aim is
for any and all consumers, from a low-income earner to upper class consumers. They design products
in a large price range in order to be accessible for everybody in the market, without matter of age,
gender, occupation, and others. Their value proposition statement aims to portray that the functionality
and fashion combined can elaborate products that could help you to bring your belongings from side-
to-side beings always with style (Granados, 2019). In addition, an emphasis is placed on the protection
of a consumer's personal items with the design of pockets and the development of new technologies
that compliment the product.

Some years ago, the brand re-evaluated their product segmentation into 3 categories inclusive of
clothes, accessories, and backpacks, all of which still remain as the main selling items. The brand aims
to attract a significant proportion of the market which explains the development of Casual, Study,
fashion, and travel backpacks (Colombia, 2021). To start growing in Colombia and Latin America,
Totto offered some master franchises and sold them successfully (Vargas et al., 2021). Thanks to that
for of market entry mode, the brand has a presence in more than 15 countries in Latin America and the
Caribbean. In addition, Totto has become successful in running their own store fronts in the main cities
of the country, which helps the brand to consolidate itself on the market. Nevertheless, as with all the
brands, it has a weakness that is very common in the country, and it is the illegal copy and re-distribute
the product. As a result of being a highly recognizable yet successful brand other companies have been
known to take advantage of this and sell "knockoffs" at a lower price, which strongly damages the
brand. This turns these sellers into strong direct competitors.

1.2 SWOT Analysis

Figure 2. SWOT analysis for Jacpack

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 Backpacks have been around for a long time therefore it is evident that reinventing them poses a difficult
task. One strength of the Jacpack is the level of diversity and creativity in each product. There is a bag to
suit the needs of anyone. For example, creating a range of diaper bags is uniquely differentiated as they
aim to attract the target market of parents ("DIAPER BAGS | Jacpack", 2021). In addition, to the wide
range of products the colour selection of their bags is highly unique. People can express their true inner
personalities through the selection of Jacpack’s products, choosing a bag and colour that is reflective of
them. Each bag is one of a kind with a “psychedelic design.”

Jacpack as previously mentioned is solely manufactured in Colombia, as a result the flow of revenue made
is likely to stay within the Colombian market. Whilst the overall idea of revenue staying within the home
market seems attractive, it also means lends to the idea of the consumer market becoming restrictive. A
weakness of Jacpack is that it doesn’t have any global suppliers getting their products out to the rest of the
world. Their current consumer market is smaller than the potential of what it could be and it is hard for
them to compete against larger companies with more of a global presence. Due to the limited global
presence, there are opportunities for them to expand. Jacpack is still a relatively new company first
operating in 2015 although, for how new they are, the success within their home market has been of
particular strength. There are many potential countries Jacpack could expand production too, leading to
increased brand recognition. Increased investment for more marketing would be of great opportunity
considering they are a smaller in size when compared to more established competitors.

Consequently, global expansion comes with certain threats. The costs associated with going global and
having multiple production sites is of the biggest concern (Harding, 2015). Being global can also present a
threat to take away the success in their home market and making them more of a corporation than a small
business. Many Colombian workers and families are dependent on the production of Jacpack for a
working income (Culture Whiz, 2016). Moving productions to another market can distract the jobs away
from Colombia. The bags and luggage industry has a strong force for threats of new entrants. Whilst Totto
was considered the biggest competitor the introduction of new threats such as The North Face, Nike, or
JanSport should be considered of equal importance.

1.3 New Market Selection

To determine the most promising new market, there are important aspects to consider such as the
population size including their age and education levels. Consumer-level of income and expenditure,
lifestyle patterns, the level of consumer travel, cultural similarity compared to the origin country of
Columbia, and geographical boundaries that may hinder shipping operations.

Population: Population in the case of determining the most suitable market has been considered an
attractable feature. It is often used by businesses in an attempt to absorb the potential level of demand for
a product or service on an international scale ("Demographics & Lifestyle Analysis", 2021). Although it is
important that this factor is not the only consideration, many businesses fail to take into account the
proportion of consumers who can afford the product.

Income and expenditure: Therefore, both income and the level of household and individual expenditure
is a direct indicator of consumer spending power ("Demographics & Lifestyle Analysis", 2021).
Ultimately, there is a positive correlation between the income level of income and expenditure. The
overall median household income within a particular market is an essential evaluating factor to determine
whether the people who live in the relative market can actually and would be willing to purchase
30

Jacpack’s products.
Lifestyle (Travel): Lifestyle market research will enable Jacpack to create ideal customer profiles
through the use of analyzing particular interests, hobbies, etc. (Esselstrom, 2020). Due to the large
emphasis surrounding the concept of designing and selling travel bags and accessories, an assessment of
the market with importance on travel and outdoor leisure activities would be an ideal market
attractiveness factor.

Education Levels: Education levels were seen as an important consideration specifically when looking at
the items Jacpack aims to sell. Whilst the company initially looked at creating a portfolio that attracts
consumers who travel, attracting a market that has high education levels to which consumers can utilize
Jacpacks products for schooling purposes would be ideal. Technavio, a global technology company,
released findings to show the market size of the global school bags would increase by (3.14 Billion USD)
during the period of 2019-2023 ("Global School Bags Market 2019-2023", 2019). Further noting,
lightweight bags were of growing preference due to the growing use of electronic devices ("Global School
Bags Market 2019-2023", 2019). In addition, education levels have a direct correlation to socioeconomic
status for example higher educational attainment is likely to lead to a higher income. Alternatively, less
educated populations have lower income levels resulting in less spending power.

It is important to mention that the similarity of Jacpacks product line breadth being mainly a variety of
backpacks has meant we have considered the potential for all products to be involved in the analysis of
looking for a potential market. These aspects previously mentioned have been compared throughout
different countries to draw out a single target market.

Countries that have been considered in this analysis were:

China, Australia, South Africa, Brazil

40

Figure 3. Selection criteria for New Market

1.4 Chinese Market Analysis
Overall, there have been emerging trends throughout many countries that show the evidential negative
impact on the bags and luggage industry in 2020. Impacts of the global pandemic, COVID-19 such as
travel restrictions and the closing of non-essential retail stores were the biggest reasons. Whilst some have
seen a return to growth in 2021, consumers' behaviors in terms of their reasoning for purchasing these
products have shifted in different countries. The process of choosing the best potential market meant
looking at the predicted future sales within this industry. It was vital to consider the presence Jacpack
already had in other countries such as the US, Canada, and insignificantly throughout Australia. Initially,
we made a judgment that a further rapid expansion throughout more of Australian states would be an ideal
consideration for a potential market. Although, after extensive data analysis we concluded that overall
sales performance for the “bags and luggage” industry with Australia would be foretasted to decline by
2026 (Euromonitor international, 2021). When identifying the relative bags and luggage retail sales by
overall regions Asia pacific reported to have the biggest representation (Euromonitor international, 2021).
With foretasted retail sales of 362,738 USD by 2026 and the main usage areas of bags and luggages being
commuting, school trips and short tours (Euromonitor international, 2021). The final selection of our ideal
market is for Jacpack to expand its operations into China.

It is evident that China is the second largest economy in the world (Baker, 2020). Columbia on the other
hand is considered the fourth largest economy within Latin America (Baker, 2020). Therefore, a pairing
like this offers a strong opportunity for plentiful business in importing and exporting trade channels
within Colombia (Baker, 2020). A PESTEL analysis is a widely used tool used by a business to
strategically evaluate new markets before entering. PESTEL is an acronym for political, economic, social,
technological, environmental and legal, analysing all these factors within the Chinese market will aid to
Jacpacks understanding of whether there is a future for selling their products along with identifying
factors that may hinder the success.
Figure 4. PESTEL analysis for Chinese Market

50
1.5 Shenzhen Market Analysis
Based on the above information and the comparison with other countries, we have identified that China
has an extensive list of 56 officially recognized ethnic groups therefore the team believes the choice of a
specific city within this market would be most appropriate (Coy, 2020). Shenzhen is a city with one of
the largest residential populations in China and a highly look upon economic development (Shenzhen
tongji, 2020). The country has a large presence of the working population from all over the world and is
more receptive to unique products from the outside world, most of which are affordable (Shenzhen
tongji, 2020). In 2020, the gross domestic product (GDP) at the current prices of the city will amount to
around 2.77 trillion yuan ($429 billion) (Global Times, 2020). With a population of 17.56 million, the
residents’ disposable income per capita in 2020 was 64,878 Yuan ($10,033 USD) (Shenzhen tongji,
2020). In terms of geography and the cost associated with transportation Shenzhen has the largest
number of ports in China, close to Hong Kong (Shenzhen Government Online, 2021). Supporting sea
transportation from Colombia can reduce shipping costs. At the end of 2019, there were 2,642 schools at
all levels in Shenzhen (Trines, 2021). There are 514,900 graduates, 639,700 students, and 2,3222,400
students on campus (Trines, 2021). These levels present a significant opportunity for Jacpack to target
this market. As the consumption level increases, parents in Shenzhen become more willing to spend
more money on their children whilst the younger population emphasis consumption on foreign light
luxury products (Shenzhen tongji, 2020).

Trendy brands such as Jansport, Herschel, Fjallraven are the main competitors within Shenzhen
("Phb123", 2019). These brands are popular among the younger population, the price is cheaper than
light luxury but has a stronger awareness than ordinary brands. As these brands become more popular,
their initial styles and colours become familiar to the general public, resulting in a lack of excitement for
consumers that value new, unlimited and fresher products. Among the three brands, Jansport is a slightly
cheaper brand, and the quality is less comparable. Backpacks from this brand are priced between $30
-$70 ("JanSport Australia", 2021). Herschel has better quality and is more expensive than Jansport.
Prices range from $40 - $100 ("Herschel, 2021"). Fjallraven is the most expensive brand out of the three,
with prices ranging from $75 to $110 ("Fjällräven Australia", 2021) The situation is similar for Jacpack
compared to the competitors(Jansport, Herschel, Fjallraven) in the planning market because both are
imported products, which need to be transported from abroad
.

2.0 Promotional Materials

There has been an increasing transformational shift in the way Chinese consumers have sought to buy
products. As previously identified within the figure 4. PESTLE analysis China has the largest
representation of internet users in the world. This market has become the world's largest e-commerce
market. Knowing that Jacpack’s main source of sales is via their website or the result of their popular
Instagram page, it was important to consider promotional channels that have a similar aspect in terms of
straying away from nontraditional forms of marketing. However, it is vital to recognize that non-
traditional social media sites such as Weibo and WeChat are the two largest networking platforms
(Global Times, 2021). More predominant western platforms like Facebook, Twitter, and Instagram are
difficult for Chinese consumers to access with internet bans and censorship introduced by the
Government (Global Times, 2021).
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The best way to promote Jacpack’s products in the new planning market of Shenzhen, China:

Figure 5. Chinese Promotional Platforms

Live Streaming: is recorded and played in real-time through online streaming media.
Streamers have bcome a new and upcoming profession in 2020, with around 40 percent of
streamers aged 24 to 30 (Hallanan, 2021). Austin Li and Viya have become the most famous live
streamers in China with impressively large platforms of 40 million followers on Alibaba's live
streaming platform, Taobao live (Hallanan, 2021). It has become apparent that they can sell tens of
thousands of products in seconds through advertising products and brands in the midst of their live
stream (Hallanan, 2021). With this in mind, Jacpack should approach streamers on live streaming
platforms such as Taobao live aiming for them to promote the brands products with the likely
chance of becoming brand ambassadors in the future.

Promotional Steps
Step 1: Choose streamers with mid - to high-level follower counts (4-10 million), is focus on
fashion trends or clothing collocation direction of the anchor choice so that the face of consumers
more close to who need to buy a bag (Jacpack)
Step 2: Find the live streamers and negotiate a contract, such as:
$10,000-$15,000 for live streaming once a time
Live every two to three months
How to introduce the brand, how to make the backpack more attractive to consumers to buy
(need the streamer to write the script)
What is the minimum guaranteed purchase rate?
Businesses need to tell streamers how long it will be before backpacks start shipping
Step 3: Set the date and duration of the live streaming, live streamer needs to advertise in advance
to inform consumers
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"AD Breaks": Since China has the most internet users Jacpack there is an opportunity for the brand to
capitalize on the use of internet breaks to advertise their product. This is more effective as ad breaks
are known to be tailored to appear where the client least expects and can generate a large consumer
reach (reference?). AD breaks can be utilised on any and all social media platforms. Aligning with the
new market choice we specifically look at Jacpack investing into AD breaks on both Tik Tok (Douyin)
and Weibo.
Tik Tok (Douyin): Not only would it be beneficial for Jacpack to create an account on this
platform another opportunity arises when considering aiming to attract an affluent target market,
through the use of one or more of Ad types on Douyin. Open screen ads and Feed ads are the most
effective (“Marketing in China”, 2021). Open screen ads would see Jacpacks product displayed
every time the app is opened by a user, the costs associated with this type of ad may be
unattractive, being charged a Cost Per Mille / Cost per thousands impressions(“Marketing in
China”, 2021).
Weibo: In addition to the creation of a TikTok account, a Weibo account would be another option
to consider as a result of being a largely identifiable local platform. There are four main types of
ads to consider when using Weibo. Fan headline, fan tunnel, display ads and webio search engine
("The Complete Guide to Advertising on Weibo", 2020). Fan headline is considered to be the most
effective with not only the placement of the ad being at the top of a user’s personal account for 24
hours but targets the accounts existing followers and their personal connections ("The Complete
Guide to Advertising on Weibo", 2020).

Sponsorship / Cultural Festival Collaborations: Alongside the largest population in the world,
Chinese consumers have an intensive cultural aspect associated with holidays and festivals
(reference?) thus, Jacpack should capitalize on this aspect . There is a positive opportunity for Jacpack
to become a sponsor of popular events in China where possible and having dedicated campaigns during
the time frames of cultural holidays. With the majority of the population aligning and attending events
like such there is a huge following potential to have the Jacpack logo become a reputable and easily
identifiable brand.

2.1 Marketing Message

Chinese consumers are heavily driven by peer perception and regularly influenced by the rise of new
trends through social media therefore peer recommendations are highly sought and looked upon
(“Marketing in China”, 2021). As a result, if consumers were able to recognize an identifiable
influencer promoting a Jacpack backpack or any other product belonging to the brand there is a strong
probability of them resulting in a purchasing decision. Similarly, consumers are more willing to pay
more for a product if it can bring them a sense of prestige and respect among their social peers (Ma &
Li, 2017). Jacpack aligns with the tendencies evident in Chinese consumers, the brand emphasizes a
focal point on fashion, keeping up with trends and the level of quality of their products.
80
Meanings associated with logos, brands names, colours etc, are important to analyze when considering
that unintentional negative meanings could have sustainable effects on the sales and the success of a
business within a new market. Both end user consumers and distributors have the bargaining power to
avoid the use/purchase of a product when it doesn’t align with something they ultimately believe in.
Mandarin is the dominant language identified in Shenzhen. We consider the brand name “Jacpack'' in
translation to the most predominant language in case it may have an unperceived or negative meaning
when directly translated. We found that Jacpack translated into mandarin means “Bèibāo'' and nouns
can be identified as a backpack consequently there is no need to modify the brand name. Furthermore,
symbolism is strongly relevant within Chinese culture consequently, it was vital to consider Jacpack’s
identifiable logo of a fox. Foxes within Chinese culture are seen to be a spirit animal, one that
possesses magical powers by transforming themselves into multiple forms including human forms
therefore the logo would remain ultimately acceptable in the new market (Borza, 2017).

#Jacmystyle is one of the hashtags utilised by the brand on their social media platforms. A message
simple enough to be easily understood as well as catchy enough for consumers to recognise and recall
in from their memory. The team found that this message would be perceived highly within Chinese
culture as it is reflective of the fashion, peer perception and rising trends of fashion that is emphasised
within the lifestyle and buying decisions of consumers. Currently the hashtag #Jacmystyle is only
presented in the bio of the company’s social media sites or in the description of posts. Another
consideration of presenting the hashtag would be to use it on the actual content or as the ending scene
on a reel, potentially making the message more identifiable. In addition, creating a story surrounding
the hashtag could be seen to have an influential effect on the consumers buying decisions. For
example, recording the process of a consumer receiving their backpack and then showing it to a friend
resulting in the friend essentially “Jacking” their style by copying their purchase.

2.2 Promotional Materials

Figure 6. Jacpack advertisement to host a life streaming event on Taobao

90
 Figure 7. Jacpack Tiktok Account

Figure 8. Jacpack collaborating with the Double Nine Festival to support the tradition of climbing mountains.

01
3.0 Market Entry Mode
As continuously presented throughout our findings, statistics show China as the world's second-largest
e-commerce market, with millions of internet users the nation positions itself as one of the world's
most advanced and mature technologies in this field (Hallanan, 2021). In recent years, Chinese
consumers have become accustomed to using mobile phones and computers for online shopping and
payment ("Top 10 e-commerce sites in China 2020 - Disfold", 2021). Young users are not the only
consumers adapting to this phenomenon but in addition, middle-aged users have rapidly increased in e-
commerce purchasing decisions. Therefore, our team strongly recommends Japack sells products on a
large online retail platform in the planning market: Shenzhen (China).

The three most popular retail platforms:

1. Taobao: In 2003, Taobao was founded by Alibaba Group, Recognised as a consumer-to-consumer
e-commerce platform that allows almost all types of vendors to sell goods, including individuals,
retailers and wholesalers ("Top 10 e-commerce sites in China 2020 - Disfold", 2021).
2. JD.com: Founded in 1998 Jingdong in Chinese, is a business-to-consumer online retailer. The
company also offers a wide range of products, similar to Taobao ("Top 10 e-commerce sites in
China 2020 - Disfold", 2021).
3. Tmall: A business-to-consumer retail platform, launched by Taobao Mall (Alibaba Group) in 2008
("Top 10 e-commerce sites in China 2020 - Disfold", 2021). Compared with the previous two
platforms, Tmall pays more attention to products in Hong Kong, Macao, Taiwan and foreign
markets, and most of them are directly operated stores.

In terms of setting up a business on these large retail platforms, there is no need to have a special
contact, very detailed instructions are presented on these platforms and websites for how to open an
online shop, you just need to follow step by step. Among these e-commerce sites, monthly traffic
levels are significant. Taobao for example can reach 450 million views, JD.com and Tmall also can
reach 200 and 150 million views ("Top 10 e-commerce sites in China 2020 - Disfold", 2021). The
sheer volume of views shows that these platforms have great potential, and it's a big data era where
when you search for the type of backpack you like, similar brands' suggestions show. If Jacpack can
invest some financial resources into advertising on the front page of these platforms, the exposure
would be immensely high.

Jacpacks website will still be a vital platform for online buying transactions. Currently, there is an
option to translate text into US from Columbian, if this new market is chosen, an option for a text to be
translated into Mandarin would have to be a consideration for a purely online-based market entry
mode.

3.1 Pricing Strategy

The first step in recognizing appropriate prices is to acknowledge the difference in currency between
the market Jacpack is already in and the new market it could expand to. The currency used in Shenzhen
is RMB (yuan) the renminbi (RMB) or Yuan known as the “people currency” (Majaski, 2021). 1 (COP)
Colombian Peso= 0.0017 (CNY) Chinese Yuan and 1 Chinese Yuan = 593.3719 Colombian Peso.
According to the current Jacpack website, Jacpacks products average from $20 USD with pencil cases
up to $75 USD with diaper bags being the most expensive. This is equivalent to 388 - 453 in Yuan.
11
It is often recognised that new companies struggle to initially gain popularity and provoke online
visibility within the Chinese market (“Marketing to China”, 2020). This is partially due the growing
popularity of many networks and a large number of local and international companies already taking
advantage of the shopping/buying habits of consumers through these sites. A series of findings through
research go on to support the belief that the Chinese only buy discounted products (“Marketing to
China”, 2020). The Euromonitor voice of the consumer lifestyle survey conducted in 2021 found that
in China the ability to use a loyalty rewards app or program was the second most identified shopping
motivation at 23% behind the security go warranty and ease of use (Euromonitor international, 2021).
This survey further noted that 92% of respondents extensively research products before they make
their final buying decision (Euromonitor international, 2021). Alluding to the idea that consumers are
likely to consider a range of alternative brands, therefore pricing could in light be the final determining
factor that sets Jacpack apart.

Figure 9. Consumer types in the Chinese market / Shopping Motivations

As a result, a discounting pricing strategy has been the main consideration for the future of Jacpack’s
pricing strategy in the new market. It is important to be mindful of the fact that continuous use of
discounts could be detrimental to the public image of the brand with the potential for consumers to
make associations or connotations of the brand being low quality as a result of many offered discounts
(Dolan & Gaurville, 2014), which would not be ideal for the Jacpack as they emphasis on their level of
quality. Consequently, fixed prices should be the main point of sale with the addition of discounts
although, strictly on an exclusive basis. Therefore, referral discounts and student discount offerings
have been identified as two primary pricing strategies that best correspond with the needs and interests
within the Chinese market.

Referral Discounts: With previous mentions of peer perceptions recommendations and the need to
keep up with social trends referral discounts is an appropriate strategy in meeting these needs valued
by Chinese consumers. It would see Jacpack encouraging their current customers to refer their product
to an expanded network of other friends and family for a discount incentive (Miller, 2021). For
example, the referral program should be a predominant feature on the companies website with simple
instructions such as "Refer a friend and get $25% off".
21
 Student Discounts or Differential pricing: The team believes the implementation of a pricing
strategy to attract the target market of consumers studying would be beneficial for retention and
building a premise of loyal customers. Differential pricing means certain groups of consumers pay less
for the same product (Yelkur & Herbig, 1997) although, there is a general assumption students are
earning a lesser income throughout the duration of their studies and as a result value discounts in
aiding their purchasing decisions. In fact, 86% of college students surveyed By SheerID say they
would shop at stores more often if student discounts were offered (Boehmer, 2015).

3.2 Trade Regulations

The world trade organisation (WTO) is an international organisation responsible for acting/dealing
with the negotiation of trade agreements between member nations (“WTO”, 2021). Both the home
nation of Columbia and the new market China are recognised members of the WTO. Colombia joined
in April of 1995 although, more recently China wanted access to new trading partners and as a result
joined the WTO in 2001 ("Colombia and the WTO", 2021).

China's trade agreement with the World Trade Organization initiated China to be recognised as the
“Most Favoured Nation” with the average applied tariff rate lowered from 15.3% in 2001 to 9.8% in
2018 (FAS China Staff, 2019), thus reducing the costs of importing into China by Jackpack. These
regulations allow the Most Favoured Nation to trade at a lower rate.

In China, the average tariff associated with agricultural products is of a much greater percentage than
non-agricultural products, 15.6% and 8.8% respectively (FAS China Staff, 2019). Since Jacpack is
importing non-agricultural products we place an emphasis on the analysis of 8.8% concluding, it would
be much cheaper to import to the chosen market. Importing consumer goods to China is a bit cheaper
since the average tariff rates of the goods involved have been reduced from 15.7% to 6.9% (FAS China
Staff, 2019), furthermore they have separated thus the average import tariffs for apparel, footwear,
have been reduced from 15.9% to 7% (FAS China Staff, 2019), In China import goods are now
subjected to VAT (value-added-tax) at 13%. (China Imports Guide-decchina.org)

3.3 Logistics
The load that is planned for an initial negotiation is approximately 10 pallets of 1 m3 each. Each pallet
would have approximately 220 bags if we use the average bag which is 40 x 31 x 12 cms ("Jacpack -
Morrales, Loncheras, Pañaleras, Cartucheras y más", 2021). In Conjunction with an average cost of 50
USD for a bag, the total average value for each pallet is estimated to be 11,000 USD. The total cost of
the merchandise in the factory, not including any logistics or transport costs, would be approximately
USD 110,000 since the 10 pallets are taken into account.

With the assumption that a considerable volume of Jacpacks products would need to be shipped in
addition to considering transport by sea, we have considered the case of sending it by air. The price of
the shipment would be based on the volume or weight and since in our case there are 10 pallets of 1
m3 each. Regardless of the fact that the COVID-19 pandemic has increased the price of freight
containers from America to China by approximately 200%, the price can be located around the figure
of 2000 USD. If we use half a 20-foot container, we must pay a sum of approximately 1000 USD, a
figure that would not be possible to achieve by air (Londoño, 2021). If shipped by sea, the value of the
shipment is reduced by the amount of merchandise that a ship can carry ("Incoterms 2020", 2021).
31
After analyzing the different ways of sending merchandise from Colombia to China, we concluded that
since we are going to negotiate with a retailer, the most economical way to transport the product would
be by sea. The idea would be to negotiate with the retailer under Incoterms FOB (Free on board) or
Cost, Insurance & Freight (CIF) terms depending on the negotiating power of the product ("Incoterms
2020", 2021). In addition, as the units that we would negotiate are not enough to fill a 20-foot or 40-
foot container, it is necessary to negotiate with the retailer to consolidate the container and obtain
loads similar to ours so that there is no inconvenience.

In this case that CIF is negotiated, Jacpack is responsible for packing the merchandise appropriately so
that it arrives in optimal conditions at the destination, it must take the merchandise from the city of
Medellín to the port of Buenaventura by land (since it is the port of Colombia with the closest exit to
China) and must be responsible for all the necessary documents for export customs. In the event of a
problem in the port, you must pay for storage and handling costs in the port of Buenaventura, you must
pay the freight from the port of origin to the port of destination and finally, you take care of the
insurance of the freight in favour of the importer in case something happens to the merchandise.

The importer will take care of the rest, which refers to the import customs (taxes, documents, permits,
etc.), unloading the merchandise at the port and transporting the destination port to its warehouse.
Freight costs, transportation from the factory to the port of origin and other expenses are added to the
price of the merchandise negotiated. A shipment from the Port of Sociedad Portuaria Regional de
Buenaventura to the Port of Shenzhen will take approximately 32.2 days with a ship going a minimum
of 20 knots ("Port of Shenzhen, China to Port of Cartagena, Colombia sea route and distance", 2021).

41



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 Appendix A: Forecasted retail sales of luggage in North America

Appendix B: Forecasted retail sales of luggage in China