Expanding Target To China Why Target Should Expand Into China And What They Will Need To Know

3449 words - 14 pages

IntroductionChina is, without a doubt, the fastest growing economy in the world today. Companies from around the world have wanted to tap into China's market to cash in on the tremendous success that it continues to experience. There had been many restrictions for foreign companies who tried to do business in China, limiting the number of foreign companies, and allowing only the big players to come into China. Even then, these big players from around the globe faced more restrictions and rules once they entered China. But things have changed since China joined the World Trade Organization (WTO) in 2001; a new milestone for this country, as well as for other economies. Since then, ...view middle of the document...

With this kind of statistics, Target has the potential and the resources to begin expanding into the international market, such as China. Comparing to Metro AG, a German retailer, which ranks a couple spots ahead of Target on the worldwide list, is not that much ahead of Target in terms of sales. And yet, Metro AG is one of the largest foreign retailers in China, along with Wal-Mart and Carrefour (6). Not only should Target continue to expand domestically, but it should also start looking to expand in other markets around the world as well, such as China. This will allow Target to become a multinational company and begin creating a global recognition for itself in the retail sector. Now of course Target cannot dive right into the China Market and expect everything to just work out. Like any other company entering a foreign market, there are challenges and factors that Target must consider and evaluate before doing business in China.In this report, different reasons why Target should enter China's retail market and the benefits it offers to the company will be presented. China's economic status, political status, and economic status, along with options of entry and other factors that will affect Target's business, will be discussed.China's Economic StatusChina is currently the world's most potential market for consumer goods. Its average annual GDP growth rate of nearly 10 percent for the last 10 years is the strongest among other major economies around the world (7). This is mainly due to the increase in manufacturing investment from foreign companies over the years because China is full of resources and cheap labor. Many products we see today are labeled "Made in China" since China has essentially developed into "a manufacturing centre for the world's consumer goods production" (8). With a population of 1.3 billion people and having more consumers than Europe and the United States put together, it is obvious that China is by far one of the most attractive markets to invest in for foreign companies that are in the retail and consumer sector (8). When combining the strong, continuous growth of the economy with a population of this magnitude, the results are more money in consumers' pockets, meaning more money to spend on goods. According to PricewaterhouseCoopers, "the retail sales of consumer goods in China quadrupled with a span of 10 years" (7). With this kind of statistics, it will be Target's best interest to pursuit an expansion into China's retail market. China's economy and consumer market will continue to grow. The more people there are in a market, the more money will be spent. Everyone will always need food and daily accessories regardless of how much money they have, and those that have more money to spend will spend that extra money on other goods. So by setting up operations there, Target will have a chance to go along with the ride and reap the promising rewards that China's consumer market offers, which is what other foreign...

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