Procter & Gamble And The China Market

1407 words - 6 pages

The Chinese market today is one of the hottest emerging markets in the world. After many years of isolation, China has finally decided to open up to the world and let foreign investors in. Inspired by the new opportunities in China and the tremendous growth of China's economy during the last few years, investors from U.S. and other countries are rushing to take positions in the Chinese markets.China has become a mass market, and Procter & Gamble is winning the race to dominate it. Originally created as a partnership that manufactured soap and candles, Procter and Gamble has greatly expanded its operations, now employing some 99,000 people in over 60 countries. Procter and Gamble markets a broad range of laundry, cleaning, paper, beauty care, food and beverage and health care products in more than 140 countries.The Cincinnati Company is prospering amid a swarm of government-owned competitor's, buying out many and stamping out others. Its nationwide distribution system may be the best in the country. Until recently, makers of cosmetics, beverages, shampoos, soap and other daily goods considered China a frontier outpost, a place to test the waters with small joint ventures and limited distribution. Now, P&G, invest lavishly and deem anything less than nationwide sales a failure.What China has to offer and why Procter & Gamble entered this market are, it's the largest consumer market in the world; has a stunning economic growth; privatization; and availability of cheap resources and market restructuring.Today China has the largest population in the world. Its population is approximately 1.2 billion and continues to grow at a constant rate of 1.5 percent a year. In addition, Chinese population is literally starving for Western goods and services. During the years of isolation, Chinese markets were flooded with low-quality, short-lasting Chinese goods. Western goods were, and still are, considered a luxury in China. Despite the higher prices, an increasing number of people are willing and able to afford such luxuries because of the higher quality and durability of Western goods.According to the International Monetary Fund, China is already the third-biggest economy in the world, after U.S. and Japan. It continues to grow at the fastest pace in the world. The majority of industries in the U.S. are presently at the point of maturity; growth is either very slow, or not present at all. In contrast, the output of some private companies and foreign joint ventures in China has been growing by up to 50 percent a year.The Chinese government is currently responsible for planning, managing and controlling the operations of most enterprises in China. Governmental management though, is extremely ineffective, and at least half of these state-owned enterprises are losing money. It is obvious that it is time for this vast industrial complex to change. The Chinese enterprises will need Western capital, management expertise and technology, if they are to...

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