International Markets

Global Marketing in the 21st Century
 The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows.  International trade is booming and accounts for 25% of U.S. GDP.  Global competition is intensifying.  Higher risks with globalization.

Deciding Whether to Go Global
• Reasons to consider going global:
– Foreign attacks on domestic markets – Foreign markets with higher profit opportunities – Stagnant or shrinking domestic markets – Need larger customer base to achieve economies of scale – Reduce dependency on single market – Follow customers who are expanding

Deciding Which Markets to Enter
• Before going abroad, the company should try to define its international marketing objectives and policies.

What Volume of Foreign Sales is Desired?

How Many Countries to Market In?
What Types of Countries to Enter? Choose Possible Countries and Rank Based on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage, and Risk Level

Foreign Market Analysis: JAPAN

The World's Champion Marketers The Japanese
• The economy of Japan is the 2nd largest in the world, after the United States • Keynotes:
high-quality, high-technology manufacturing, reasonable costs, high level of reliability, focusing on exports.

• The high position of Japanese exports and studying the global markets are involved in the production process

Imports came mainly from: China (21%), United States (12.7%), Saudi Arabia (5.5%), UAE (4.9%), Australia (4.7% ), South Korea (4.7%) and Indonesia (4%).
Export - the main customers include: the United States (22.9%), China (13.4%), South Korea (7.8%), Taiwan (7.3%) and Hong Kong (6.1%).

Exports • $765.2 billion Commodities • transport equipment, motor vehicles, semiconductors, electrical machinery, chemicals Partners • China, South Korea, Taiwan, Hong Kong. Imports • $636.8 billion Commodities • machinery and equipment, fuels, foodstuffs, chemicals, textiles, raw materials Partners • China, US, Australia, Saudi Arabia, UAE , South Korea , Indonesia

• Japan is known worldwide for its skyscrapers, its hyper companys, its strength of innovation in high technology, the international success of its brands and trans generational. • Japan is famous for its automobile brands, brands of watches, cosmetics brands, brands of high technology and telecommunications. • Automobile: Toyota, Nissan, Honda, Mitsubishi, Kawasaki, Suzuki, Yamaha, Mazda High Tech: Hitachi, Sony, Toshiba, Nintendo, Sega, Panasonic, KDDI • Photo: Canon and Olympus.

• Wholesale, retail trade, advertising, data processing, publishing, tourism, leisure industries, entertainment, hotels are dominant.


• After World War I, millions of people lost faith in democratic government. In response, they turned to an extreme system of government called fascism. Fascists promised to revive the economy, punish those responsible for hard times, and restore order and national pride. Their message attracted many people who felt frustrated and angered by the peace treaties that followed World War I and by the Great Depression.

What is the European Union?


Member States

Shared values: liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law. Largest economic body in the world. World’s most successful model for advancing peace and democracy.

Combined population of EU Member States

733 million

• •


Percent of world’s population

A unique institution – Member States voluntarily cede national sovereignty in many areas to carry out common policies and governance.
Not a super-state to replace existing states, nor just an organization for international cooperation. World’s most open market for goods and commodities from developing countries.

Percent of global GDP



Percent of combined worldwide Official Development Assistance

The triad: the European Union (EU)
• The EU (or EU27) is composed of the countries in the EU15 (Austria, Belgium, Denmark, Finland, Germany, Greece, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the UK) and twelve new, mainly Central European, countries that joined in 2004 and 2007. • The collective GDP of the EU is greater than that of the US and Japan. • The EU27 is the world’s largest importer and exporter.

World Population by Continents
Asia Africa Europe 3,737,000,000 823,000,000 733,000,000

North America
South America Oceania (incl. Australia) Antarctica


no permanent population

How does the EU spend its money
2011 EU budget: €141.9 billion = 1.13% of gross national income

Citizens, freedom, security and justice 1% The EU as a global player: including development aid 6% Other, administration 6%

Natural resources: agriculture, environment 41%

Sustainable growth: jobs, competitiveness, regional development 46%

European Central Bank
• • The European Central Bank (ECB) is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area. The euro area comprises the 15 European Union countries that have introduced the euro since 1999. The ECB operates independently from Member State governments.

The euro was introduced in 1999

EU Institutions
European Commission • • • 27 Commissioners, representing the European perspective, each responsible for a specific policy area. EU’s executive branch proposes legislation, manages Union’s dayto-day business and budget, and enforces rules. Negotiates trade agreements and manages Europe’s multilateral development cooperation.

Council of the European Union •
European Commission President Mario Draghi

EU’s main decision-making body, comprised of ministers of 27 Member States, representing Member State’s point of view. Decides on foreign policy issues. Council presidency rotates among Member States every six months.

• •

Partners in Global Leadership
• EU and U.S. work together to develop international standards:
– Fighting terrorism and transnational crime – Advancing global trade liberalization – Combating piracy and intellectual property violations – Spreading benefits of globalization
EU Commissioner Benita FerreroWaldner & U.S. Secretary of State Condoleezza Rice

• EU and its Member States are helping restore peace and stability in Afghanistan. • EU and U.S. work together in the Middle East Quartet to advance the peace process. • When the EU and U.S. agree, others tend to follow.

• European companies are the leading foreign investors in the U.S.
– The UK, Germany, France, and the Netherlands – top four sources of jobs created by foreign investment in the United States.
BMW’s assembly plant is South Carolina’s largest private sector employer.

• American companies invest far more in EU countries than in Asia.
– U.S. businesses make 5 times the profit in the Netherlands - alone - as they make in China. – In 2005, EU investments in Texas alone surpassed all U.S. investments in China and Japan, combined.

Train future scientis ts Access
to cuttingedge technologies

 Enabling interdisciplinary research  Creating synergies  Harmonizing and standardizing of the European research landscape  Attracting and retaining world-leading scientists  Collaboration between academia and industry

Strenthening knowledge for innovative research

Development of new technologies and methods

EU Agenda for 2020: 5 targets
An EU strategy for smart, sustainable and inclusive growth 1. Employment 75% of the 20-64 year-olds to be employed 2. R&D / innovation 3% of the EU's GDP (public and private combined) to be invested in R&D/innovation 3. Climate change / energy greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990; 20% of energy from renewables; 20% increase in energy efficiency 4. Education Reducing school drop-out rates below 10% at least 40% of 30-34–year-olds completing third level education 5. Poverty / social exclusion at least 20 million fewer people in or at risk of poverty and social exclusion

China Trade and Economic Developments

Economic Update
• • • • • • China’s economy grew 8.1% in 2011 China’s GDP $7.298 trillion– world’s 4th largest Foreign direct investment (FDI) – US$115 billion . Foreign trade volume – US$ 1,422.1 billion Foreign currency reserve – US$ 3,305 billion Total household savings in banks – US$ 1,838.1 billion


American Chamber of Commerce Survey: Number One Goal for China Business
Serve as regional headquarters Produce goods or services for other (non-China, non-US) market Others

Q: No.1 goal of the US investment in China? A: China domestic market opportunities. (62%+ 11% = 73%)
5% 3%

Export to China




Produce goods or services in China for the China market

Produce goods or services in China for the US market

100% = 345 companies

Source: 2005 AmCham-China and AmCham-Shanghai Member Questionnaire

Emerging Market Opportunities

Manufacturing in China
• Take advantage of low cost, skillful labor force and collegegraduated engineers, lower manufacturing cost • For some products, Chinese government only allows those manufactured in China to enter into China domestic market • Good OEM/ODM capability, covering almost all industrial sectors of consumer and capital products.


US Companies – China Manufacturing Facilities


China Procurement
• • • • • Direct purchase from manufacturers Access to a larger manufacturer and supplier base Lower purchasing cost Better quality control Better supply chain management


Domestic Service and Distribution
• WTO opens the door of China domestic and distribution market
– – – – – – – – – – – Distribution: retail, wholesale, franchising and direct marketing Banking, consumer lending and insurance Telecommunication and content driven providers Freight forwarding, transportation and package delivery service Customer service Entertainment: film and TV production, audiovisual products distribution, movie theatres Construction engineering and consultation Hotels and restaurants Education Professional services: legal, accounting, tax, medical, dental, management consulting and advertising services etc. Business process outsourcing/offshoring (BPO)

Industrial Zones
• Industrial zones provide various incentives and opportunities for US companies with different business models
– – – – – – – Special Economic Zone (SEZ) Economic and Technological Development Zone (ETDZ) Free Trade Zone (FTZ) High-Tech Park Export Processing Zone (EPZ) Bonded Logistics Zone (BLZ) Bonded Port


Shanghai Bonded Logistics Park


Looking at the Global Marketing Environment
The International Trade System: Restrictions—tariffs, quotas, embargos, exchange controls, and non-tariff trade barriers.

The World Trade Organization and GATT: Helps Trade—reduces tariffs and other international trade barriers.
Regional Free Trade Zones: Groups of nations organized to work toward common goals in the regulation of international trade.

GATT Founded in 1948
Replaced by the World Trade Organization in 1995

155 Members as of 2012
substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis The organization is attempting to complete negotiations on the Doha Development Round, which was launched in 2001

GATS is same as GATT but is For Services and came into being in 1995


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