AUSSIEBUM 1. 0 Introduction AussieBum is an Australian men’s swimwear company designed by Sean Ashby, a keen surfer and swimmer himself who was in search of a good pair of men’s swimmers made from nylon which is what he grew up with. It is a fashion and lifestyle brand in demand for many reasons. The brand has managed to branch out to many international countries while still maintaining its iconic Australian culture in every way. This is achieved through the visuals of Australia’s beautiful and famous beaches, to the embodiment of the iconic, fit and muscular bodies of the Aussie bloke.
These qualities of adventure, sexiness and confidence personify the brand and anybody involved with it. The company started of back in 2001 and is already turning over 20 million, and has gone worldwide very quickly. The company still chooses to manufacturer all its goods locally in Australia where product quality could still be maintained even if its mean costs were higher unlike if they were to produce in another country. AussieBum is now looking to expand into a new international market, China.
China is the world’s most populous country and has been for centuries; making up one-fifth of the world’s population, reaching over 1. 3 billion people. The state covers approximately 9. 6 million square kilometres. Since the late 1970s China has dramatically changed. Moving from a closed, centrally planned system to a more diverse, market oriented one that carries a major global role, in 2010 China officially became the world’s largest exporter and stood as the second largest economy in the world after the US, in the value of services it produces.
Its success has been essentially due to manufacturing as a low-cost producer. This is attributed to a mix of cheap labour, good infrastructure, relatively high productivity, favourable government policy, and a possibly undervalued exchange rate. Though still, per capita income is below the world average. (http://www. indexmundi. com/china/economy_profile. html) AussieBum hopes to make an impression on the Chinese Market. China’s coastline stretches over 18,000 km. In the time of summer, the most famous beaches are located on the island province of Hainan.
Its shores are also touched by the waters of the Bohai, the Huanghai, the Easy China and the South China seas. With a vast coast line and high population, AussieBum anticipate that their popular swimwear line has a potential in Chinese Market. 2. 0 Environmental Analysis of the Potential Overseas Market 3. 1 Climate Factors: Summers in China tend to get very hot, starting from June to September. The hottest time comes in July and August, with more than 10 days at the temperatures above 35c. The coldest time is from late January to early February.
Seeing as AussieBum is a seasonal product, the company should expect greater sales only in the warmer periods, unlike in Australia where aussies don’t have any issues surfing all year round. AussieBum is may be a seasonal product in China, but it is still capable of generating a successful amount of sales. With the high population density plus large stretch of beaches along the coastal line, AussieBum just may have potential in the Chinese market. (http://www. travelchinaguide. com/climate/shanghai. htm) 3. 2 Demographics: AussieBum aims to mainly target males from the ages of 18 to late thirties.
However due to China’s one-child policy, the country has a relatively small youth population. With the country’s growing economic strength, along with its demographic might, ensures the country will stay in the limelight for a long time to come. This is a vital factor that will contribute to the success of AussieBum. At the moment, China is facing a sex ratio crisis; with there being too many males. Though this may be a crisis for the nation, for AussieBum this comes to an advantage as AussieBum only targets the male population. AussieBum will need to consider its advertising carefully for if they are to be successful.
Research must be conducted among the Chinese market in order foresee the acceptance of the brand. The brand name and designs may be need to be modified in order to adapt to its target markets wants and needs. (http://www. prb. org/source/59. 2chinaspopnewtrends. pdf) 3. 3 Economic Conditions: The economic conditions in China are currently rapidly rising for the better. Chow (2011) states that there are three main factors that contributes to China’s fast growth. They include; high- quality human capital, functioning market institutions, and early stage of development that allows China to catch up.
Morrison, Wayne (2009) agrees, asserting that China has been one of the world’s fastest growing economies while emerging major economic and trade power. The countries growth has improved the Chinese living standards for many; assisting millions of people away from intense poverty. This is highly due to foreign companies, trade, and investments sending the nations into a booming economy. The large purchase of foreign currency (particularly dollars), has assisted in making China the world’s largest holder of foreign exchange reserves at 2. trillion. Though China did undergo a global economic crisis back in late 2008, the country has been on a road to recovery ever since. It is predicted to grow as much as 8 percent per year, eventually exceeding the US market by 2019. At the end of last year, 2011, the GDP stood at 8. 9 percent. (see appendix for annual GDP). Therefore AussieBum will be entering a safe and stable environment with its product line, and if successful it be also make an impact on the China’s unemployment rate, assisting further in diminishing poverty numbers. 3. Political Factors: Politian’s in China are attempting to avoid any acceptance on a leadership role in the world economy. They claim that China is still behind other countries in technology and has much lower power per capita GDP compared the world’s leaders; US. (Leo, 2010). Due to these 2 factors, lack of technology and economic developments, this presents more opportunities for international businesses. The reason being why China maintains to be an eye-catching destination for international markets. 3. 5 Barriers: When entering a new country, there will always be several barriers along the way.
It is best to be aware of these barriers prior entering the market. The business executives in China perceive advertising effects as the most important entry barrier and capital requirements as the least important. When to enter a new market is also one of the critical decisions that international companies must decide on. ( Karakaya, Stahl, 1989). Other more obvious barriers include; language barriers, time difference, cultural differences, and currency rate. 3. 6 Unemployment: The increase of unemployed workers in China is a result of various processes.
The process that is shared among many richer countries is raped education expansion leader to a great number of young adults not working for an income due to study commitments (Riley, 2004) . The next process is the structural change provoked by China’s transformation from a planned economy to a market economy. These changes have influenced school-leavers as well as middle-aged and older workers. This may affect AussieBum as the aforementioned group above is the companies intended target market. If the targeted market isn’t receiving any income, how will they purchase the product? . 7 Manufacturing: China has been successful largely due to manufacturing as a low-cost producer. Along with a mix of cheap labour, relatively high productivity, and good infrastructure (Banister, 2005). Due to this, AussieBum should really consider manufacturing its good in China for its Chinese market, and any other international markets they may be located around the Chinese Borders. Changing place of manufacturing doesn’t necessarily mean that the products design or quality needs to be decreased, all can still be maintained. 3. Trends: China’s changes in demographics have overlapped with their fundamental social and economic changes. (n. a 2011). China is undergoing increasing levels of migration, the rising importance of ethnicity, population aging, environmental degradation, and increasing social and economic inequality. Some of these trends; for an instance population aging, is largely due to the result of demographic changes and other concerns involving the environment and ethnic identity. Example; increased consumer spending on their children or on their new living arrangements for elders and families, create demographic changes. Riley, 2004). 3. 9 Exchange rate: At the moment; 1 AUD = 6. 5605 CNY, and 1 CNY = 0. 1524 AUD . AussieBum will need to keep up to date with the currency change. The currency change will effect more so AussieBum as it is their responsibility to convert the rate prior making any business deals with China; this is a rule of courtesy and manners, also building good customer relationship for future business arrangements. 3. 0 Licensing: Before entering the Chinese market, international companies are often required to undergo lengthy licensing and accreditation processes. In the AmCham Business survey (n. a. 011) , showed that more than half the respondents found that the international markets either cannot obtain the same licenses as domestic competitors of the process for the international companies was far more complicated, less transparent and took much longer. AussieBum will be sure to complete all its licensing correctly, and with its good reputation in other foreign markets, this will give the company a more trustful image and acceptance among the Chinese market Appendix: 2. 3 Annual GDP http://www. tradingeconomics. com/china/gdp-growth-annual China Economic Review Volume 21, Issue 1, March 2010, Pages 123–135