Green Beans Coffee Shop in China
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Green Beans Coffee Shop in China
Green Beans Coffee Shop is an American firm that operates in the industry of organic beverages and specializing in serving coffee to the residences of the U.S. The company has been in operation for more than two decades and has its coffee outlets in almost all the major states of the United States (Ching, Mia K2009 pp 499).The company has enjoyed super-normal profits and returns following it strategic and prime locations with the central business districts in the states of its operations. The company specializes in providing both in-door and out-doors organic coffee services to the residence within its localities.
Coffee Business in China
China is one of the best countries with efficient entry market services. The OCRA worldwide offers cost-effective solutions and expertise to the companies and young entrepreneurs who could wish to take any opportunity towards raising manufacturing operations in Chinese industries, in this case the expansion of bean coffee shops in china.
Expansion activity
I would propose that the kind of industry to be set be a retail store. This is supported by the many retail business stores which are set to allow dispatch and receiving of products to various communities in china to be sold.
Reasons why this company and country are good ideas
According to the recent statistics from Finland, over a million bags of coffee are consumed and 1.3 billion residents of china consume 400000 bags of coffee per annum. This means that china provides a good market for coffee consumption. This can put china on a higher level to compete with countries like USA in terms of consuming coffee (Gilbert, Sara 2008 pp 325).The growth analysis in china in terms of consuming coffee is around 30% annually while in contrast, the consumption in other countries is around 2% which means that china has the greatest potential in becoming the greatest or major consuming country. The country has many target customers such as from the big Chinese metropolitan areas of Beijing, Shanghai, and Guangzhou, meaning china’s consumer coffee market has great potential for future growth.
Why China for Coffee Shops Company
Reasons why there is demand in this country.
Many people according to the statistics in china, they consume a lot of bags of coffee per annum. People like those living in places like Beijing, Shanghai, and Guangzhou will provide a good market for the coffee shops.
In terms of the trade agreements such as those relating to taxation, they have been harmonized in the double taxation agreements. The Hong Kong department allows a deduction for foreign tax paid. Any business operating in Hong Kong does not have problems on double taxation of income.
There are a lot of plans especially with the setting up of new cafes in china in the Yunnan province. They will be opening up the community stores to donate coffee portions from the stores to sell. The president, John Culver says that, there are a lot of possibilities of selling both packages of coffee bottled drinks in the Chinese grocery stores.
Business custom of china
Starbucks has developed an internalization strategy study which is meant to enable the country open up many stores and franchises in several countries across the world. Use of internet is also employed in search for markets when they launched the Chazen web Journal international of business (Pride, William2011 pp. 345).
Population information
From statistical sources of china, there are many people who take coffee. The rate of consuming coffee especially in many of the cosmopolitan places is very high. This implies that there are a lot of people in china to provide a sufficient market for selling coffee.
Government & Leaders
The Chinese government is one of the key promoters of coffee production in china. It has regulated on incentives, donations and giving subsidies especially to the young industries setting up the coffee production firms. This is in line with the tax reduction policy in Hong Kong regions which is reduced significantly to make it friendly to the young innovators.
Economy
The Chinese economy depends on several goods and services if offers, but among them is the sale of coffee. They speculate that due to the high market demand of coffee and increasing rate of consumption, it is likely to grow and may surpass the American production of coffee supply in the world market. They research extensively especially on the hidden opportunities, data available, the economy understands on the current market analysis so that it plans on expertise policies and growth projections.
Culture & History
Historically, china is one of the best countries with largest population consuming coffee. Many people live in the cosmopolitan areas such as Beijing and Guangzhou. They provide a good market for the coffee industry to trade in. any business set will be profit making and it will continue expanding its operations due to high demand levels in china. Political Conditions
The political conditions are not bad in china. However if one wants to register a company there are procedures which needs to be followed, for example one should register the trademark in both English and Chinese versions to be in line with the first to file jurisdiction. Trade policy
In china, trade policies are very friendly since they are intended to reduce taffies and other trade barriers so that to encourage the country in trading with the coffee industry and also other manufacturing companies.
U.S. Relations
US relate well with the Chinese government, trade barriers have been regulated to allow partnership and hence market for their products. However in US, consumers purchase different brands than those they intended. The relationship between consumers and brands can be transactional and price sensitive for many product categories.
Customs & Etiquette
When it comes to the customs in china, they are greatly upheld. Selling of coffee in china to people is done using a process, and this encourages the customers to keep on shopping. Customer relation is well defined and sellers have well defined tactics of creating good rapport to the buyers thus promoting customer loyalty.
Possible Challenges that could be faced
Trade barriers are government induced restrictions, and they include; tariffs and non tariff barriers to trade. The non tariff barriers are;
Import and export licenses.
Import quotas
Subsidies
Voluntary export restraints
Local content requirements
HYPERLINK “http://en.wikipedia.org/wiki/Embargo” o “Embargo” Embargoes
Currency devaluation and trade restrictions
Ways they would affect my company
The trade barriers are very expensive to treat and maintain, and the application of this requires a lot of resources. They are likely to affect my company in terms of sales and hence profits.
If the government offers me subsidies, then it means that the company will be at a good position to expand due to large economies of scale and reduced cost of production.
Economists agree that trade barriers are detrimental and decrease economic efficiency of a country as explained in the comparative advantage theory.
Possible solution
Ways of dealing with these barriers will be for example signing of trade barriers with other nations such as the treaties to reduce them and make trade free. After allowing free trade, these countries should subsidize these industries heavily
Conclusion
To my observation in the Chinese, it is very prudent for one to strategize and invest in this business. Reasons being, there are many people who need the coffee industry thus the demand is high.
According to the law of demand, which states that; the higher the demand of a product or a good, the higher the price. It means that in this market, higher profits for the industry will be realized. The government is set to reduce trade barriers such as the taxes since they have a big effect
Works cited
Pride, William M, and O C. Ferrell. Foundations of Marketing. Mason, OH: South Western Cengage Learning, 2011. Print.
Ching, Mia K. Cfo Guide to Doing Business in China. Singapore: John Wiley & Sons (Asia, 2009. Print.
Gilbert, Sara. The Story of Starbucks. Mankato, MN: Creative Education, 2008. Print.
