Specialising in the human experience of Living with prostate cancer – warts and all

Can foreign brands survive a price war in China?

with 3 comments

Some of us think the global economy may collapse bringing about a ‘New World Order’ whilst others are banking on ‘Free Market Forces’ to bring the economy back to ‘Business As Usual

This news column will blog news items that might indicate one direction or the other

One of the key tools for competition in China is the price war, and so when I learned about foreign restaurants and other retailers starting a price war I was intrigued.

When they entered the Chinese market, Western consumer brands sought to set themselves apart from their Chinese competitors by charging more and presenting the mark-up as the price to be paid for better quality and service.
But now under pressure in their home markets and in a bid to shore up sales, foreign retailers are jumping into a price war in China to secure their share of the growth of the world’s third-largest economy.

McDonald's advertising

So, Wal-Mart and McDonald’s have got the shakes!

It has often been said that the value of a currency can be found in the comparative cost of a Big Mac. (Now, there is a currency that could supercede the US dollar as the global standard. 😉 )

Competing in a culture of small business, foreign retailers enjoy a profit margin of about 3.6 percent compared with about 1.2 percent for their Chinese rivals, giving them more room to discount, said Huang Guoxiong, a professor at China Renmin University in Beijing

So, we see the might of US corporations conspiring to destroy local businesses in another country. That is exploitation of another culture and in these days of global economic contraction, should not be condoned

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Written by Greg Naylor

28 February 2009 at 12:28 am

Posted in Uncategorized

3 Responses

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  1. This news column will blog news items that might indicate one direction or the other

    I haven’t seen these recent news items here, Greg:

    Melbourne property market holding up
    Retail sales in January up on last year
    Woolies to create 7,000 jobs
    Aldi to add another 2,000+
    New ASEAN agreement to provide $40 billion boost to Oz economy.

    Although I realise you’re looking at this as a global issue.

    Ray Dixon (Bright)

    28 February 2009 at 1:20 pm

  2. Fair comment Ray, I will do better!

    Greg Naylor

    28 February 2009 at 3:23 pm

  3. Try this one: Alpine Region Tourism boss says, “she’ll be right mate”

    Ray Dixon (Bright)

    28 February 2009 at 6:08 pm

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