In order to complete the assessment task 3 the author here has positioned himself as an employee acting on behalf a current employer to develop a market entry plan for China. The author is currently employed by The Even Hotels which is therefore owned as well as operated by the InterContinental Hotel Group which is a British Multinational Company. The author here will be discussing about Even Hotels market plan to enter the Chinese market. The Market Entry plan which will be discussed will be inclusive of a broad information such as the focus nation as in why Even Hotels are planning to operate within China, key factors such demographics, culture, and economical as well as political within China.
After the discussion of why Even Hotels plans to enter the Chinese Market the market entry plan will be discussed more in depth as in the expected timeframes, logistics as well as costs, the barriers/ challenges of entering the Chines Market and recommendations as to how such barriers/ challenges can be resolved.
Focus Nation (Why China and Advantages of operating in China)
It can be seen over a period of last two decades where international brands such as Hyatt, Hilton, InterContinental Hotel Group and Marriott have successfully entered the Chinese Market. Therefore, it has become a common practice for international hotel chains operating in China. The reason why hotels are investing heavily in China is because the country accounts for a large percentage of near-term development. (Hardingham, Sean, 2012, p. 3) A country like China has hosted several important worldwide events such as 2008 Olympics, Beijing and 2010 World Expo, Shanghai.
The reason why such a hotel has selected China is as there will be a better return on investment, it is therefore the 4th top international destination country and will be the top international destination country with over 137 million international arrivals by the year 2020 according to the World Tourism Organisations forecast. (Guillet, Zhang, & Gao, 2012). Chinas tourism industry is on the cusp of booming and flourishing wherein it therefore enjoys a strong influx of both domestic as well as international tourists. (HBI Staff, 2018, p. 1) China has seen a tremendous rise since the launch of the first joint venture hotel Jianguo Hotel in the year 1982. (Kong, 2009). It can be seen that in recent years tourism has exploded in China which has seen a significant amount of increase in the numbers of people traveling to China. (Hardingham, Sean, 2012, p. 6).
The hospitality industry here is therefore one of the frontrunners in economic development and privatisation. (Chan & Yeung, 2009). Beijing, Chinas capital and Shanghai are renowned to attract business as well as free independent travellers and the majority of such travellers prefer to stay in star rated hotels as such hotels are fully equipped with latest technology features and other important aspects. (Lee, Kattie, 2002, p. 4-8) There is a growing demand of travellers visiting China and in order to meet such a demand the international hotel chains will be needed. (Lee, Kattie, 2002, p. 4-8) As it stands now China is the worlds largest economy in terms of growth, which is predominantly one of the reasons why it is a sought-after investment destination not only for Even Hotels but also for numerous corporations across the world, seeking to take advantage of its market opportunities. (Chen & Yeh, 2012) Some of the other reasons/ advantages of why Even Hotels has chosen to enter in China is the big market which is its biggest advantage. Such corporations are also entitled to take advantage of the countrys huge man power knowing the fact that the countrys population is 1.4 billion, foreign corporations have to bear low labour costs because of the huge population and such corporations can make huge amount of profits and are eventually saving billions of dollars, friendly government, Chinas currency rates are very stable, there is better security, strong GDP which is mentioned below etc.
2014 GDP Global Ranking of APAC Economies:
Global Ranking Name of Economy GDP (millions of $US)
2) China 10,354,832
3) Japan 4,601,461
9) India 2,048,517
12) Australia 1,454,675
29) Thailand 404,824
Source The World Bank, 2014
Focus Nation (Key Factors)
A) Geography The population of China is 1,419,530,764. (United Nations, 2019) There is no doubt that in todays world China is the worlds third largest country. As per the World Bank China has been classified as a middle upper-class country with a total area of 9.6 million square kilometres. Shanghai (largest), Beijing (2nd largest), Guangzhou are some of the relevant cities of China.
B) Demographics Now moving on to the demographics China is considered as the most populated country in the world followed by India. There are five largest provinces which therefore accounts for 55% of land and 5.7% of population. When it comes to the ethnic groups there are 56 in China which are Han 91.9% of population, Zhuang 1.3% of population, Manchu 0.9%, Uyghur 0.8%, Hui 0.8%, Miao 0.7%, Yi 0.65%, Tujia 0.6%. In China the policy of one-child came into effect in the year of 1979.
1) Talking about the demographics the largest city in China is Shanghai which comprises of more than 20 million people, 17 districts and 1 county. Shanghai is known for being the biggest centre of commerce as well as finance. The city Shanghai has been tipped as the worlds fastest growing major economy. The official language is Mandarin but the common language in Shanghai is Shanghainese which has been classified as a dialect of Wu Chinese.
2) Now moving on to Beijing which is the 2nd largest city of China comprises of more than 17 million people, 16 districts and 289 towns. Beijing is renowned for its political, cultural and educational institutions.