1. Abigail Yoong (exch.)Alexey Abramov (MM-1)Ivan Ulitin (MM-3)Julia Borshkova (MM-1)Julia Gorokhova (MM-1)Zoya Shakhova (Mark)

2. Product: Luxury AmberChopsticks & Plate21 cmFully amber or amber + expensive wood (beech)

3. Luxury Amber ChopsticksReasons to successLocalization of product to suitthe market (Eg. Dragonengravings)Increasing affluent marketcreates a demand for exquisiteluxury productsNiche market- Need notcompete head on with theChinese competitors in terms ofpriceRussia has an upper hand incontrolling the supply of amber

4. Country report: ChinaCountry statistics:Population:1.3 billionGDP (PPP):$11.3 trillion9.2% growth10.5% 5-year compoundannual growth$8,382 per capitaUnemployment:6.5%Inflation (CPI):5.4%FDI Inflow:$124.0 billionCountry facts*: Chinese GDP could overtake the U.S. as soon as the early 2020s. By 2025, China will build 10 New York-sized cities. China already consumes twice as much steel as the US, Europe and Japancombined. There are already more Christians in China than Italy, and China is ontrack to become the largest center of Christianity in the world. 50% of counterfeit goods come from China.* Based on http://www.businessinsider.com

5. Country report: ChinaPopulation densityChina income distribution

6. Reasons to choose SWOT as amarketing tool Combines external environment with internalone helps to understand how does selectedproduct fit selected market Reveals weaknesses of the product helps tounderstand: whether product can be modified to have successon the selected market or not; If yes provides the direction and ways of productmodification to fit the market better

7. 1. Meaningful as a present2. Uniqueness: each piece is different from the other3. Proximity to resources4. Product is exquisite and alluring5. A luxury product as it is made solely from amber6. Chopsticks are the main utensils used by the Chineseconsumer7. Red is attractive as it is a symbol of prosperity forthe ChineseSWOT -S

8. 1. Fragility2. Low compatibility of usage as cutlery3. Lack of market expertise4. Lack of brand5. No distribution channelsSWOT -W

9. 1. Social networking and good relationship are of greatimportance2. China is projected to become the largest economy by 20273. Largest economy in terms of purchasing power4. Growing affluence with 1.6 million well-off families inChina in 2008, the figure is estimated to reach four millionby 20155. Quick & booming urban development, rising foreign & localinvestments, regional cultural influences6. Most populous nation (Approximately 1.3 billion)7. A strict hierarchy in the Chinese business culture8. Popularity of chopsticks as cutlerySWOT -O

10. 1. Chinese rules and regulations are not so transparent2. Communist party exercises absolute power over legislation3. Tendency of Chinese competitors to compete head on withglobal players on price4. Existence of amber products imitation5. Existence of Chop sticks in porcelain, jade and other formof precious resourcesSWOT -T

11. 1. S3O3O6: Entering all the big and growingcities due to enough supply and high demand2. S3O4: Creation of new products, futurepossibility to widen product assortment3. S1O1: Promotion as a luxury giftS-O

12. 1. W2O8: Possibility to promote as cutlery2. W1O8: Product modifications (partly amber)3. W4O5: Create a strong brand name4. W3W5O3: Conduct market research, useconsultants, establish partnerships to getlocal knowledgeW-O

13. 1. S7T2: Stress on the red color2. S3T3: Skimming strategy to compete3. S2T4: Make an emphasis on quality anduniqueness of the productS-T

14. 1. W4T4: Lack of strong brand is weaken byexisting competitors2. W3T3: Existing imitating products couldbecome more attractive on price3. W5T5: Existing products become strongerwith better distributionW-T

15. USED stage UUse of strengthSWOT Items underconsiderationConsequences expected Actions / CounteractionsDemand for luxury products The niche is open for newcompaniesPenetrate the market withgoods in demandUniqueness (Product isExquisite and Alluring)Not many substitutes made ofnatural materialsDo not allow imitations on themarketProximity to resources Relatively low costs oftransportationProduction facilities near theresourcesChopsticks are the mainutensils used by the ChineseconsumerHigh demand in every day lifeand low competition from theside of producers of otherutensilsResearch the special form ofchopsticksRed is attractive as it is asymbol of prosperity for theChineseProduction in red colours is inbetter demandInfuse production with redcolours

16. USED stage SStop weaknessSWOT Items underconsiderationConsequences expected Actions / CounteractionsFragility Losses in case of unsafetransportationSpecial package to be appliedLack of market expertise Lack of partners anddistributorsAccumulation of experiencefrom different sourcesLack of brand Low sales, low brandrecognition from customers,mistrustResearch brand loyalty, createstrong brand image or acquirean existing oneNo distribution channels Problems with productplacementExtend the business network

17. USED stage EExploit opportunitySWOT Items underconsiderationConsequences expected Actions / CounteractionsSocial networking and goodrelationship are of greatimportanceRelationship-orientedbusinessEstablish good relationshipswith suppliers and partnersLargest economy in terms ofpurchasing powerLuxury goods are in demand Opportunity to rise pricesMost populous nation(Approximately 1.3 billion)Big market, diverse tastes Increase the production andrange of productsA strict hierarchy in theChinese business cultureNo easy way to compete Research Chinese culturaldifferencesPopularity of chopsticks ascutleryHigh demand Capitalize upon this popularity

18. USED stage DDefend against threatSWOT Items underconsiderationConsequences expected Actions / CounteractionsChina rules and regulationsare not so transparentHidden rules of the game Alliances and JV with ChinesecompaniesCommunist party exercisesabsolute power overlegislationUncertainty in legislation,rules may change in a whileAlliances and JV with ChinesecompaniesTendency of Chinesecompetitors to compete headon with global players onpricePrice dumping Counteract with exclusivity ofproductsExistence of amber productsimitationLow quality products withlower pricesMake an emphasis on qualityand uniqueness of theproductExistence of Chopsticks inporcelain, jade and otherform of precious resourcesLoss of market share, profits Capitalize upon cheaperresources (amber)- strongcompetitive advantage,

19. Direct export: leaveDirectexportvia InternetDirect exportviamiddlemanTransmutation No expertise on Chinese market (knowledge of localcustomers) Large cultural difference (doing business in China) Language difficultiesWHY?

20. Contracting with middlemanAdvantages Disadvantages Possibility to concentrateresources on production No need in directly handling ofexport processes Fast market access Relatively low risks of failure onthe market Little financial commitment Less control over distribution(relatively to direct export) Inability to learn how to operateoverseas

21. Type: consignorChoosing middleman obtains product information responsible for product sellingAdvantagesCompensation 20% of the retail price retain ownership of the goods control of sale price

22. Further internationalization Access to local managerial practices Access to the distribution channels Knowledge of market peculiarities Avoiding problems with unfamiliar legislation Reducing misunderstandings arising from cultural differencesEntering a joint venture with a local partner

23. Product description Market niche: luxury eating ware Basic need fulfilled: unusual present Packaging: expensive box with holder forsticks to be installed on the shelf Price on Russian market: 60

24. High price, comparable with other luxury dishes Cost oriented:Russian price ($60)+ transportation costs ($10-15, fragile, smallquantity)+ import duty (luxury goods: 15-25%)+ VAT (17%)+ amber is more valuable resource in China+ profit margin (50%, skimming pricing)+ 20% to consignor= $200 for set of 2 amber chopsticksPrice

25. 1. On-line sales2. Gift & souvenir shops3. Luxury dishes stores4. Brand-own storesPlace

26. Scale of DevelopmentMegacities, affluent,hyper-urbanised,melting-pot ofinternational andregional cultures.Smaller cities, slowerurban development,industrial regions,regional culturalinfluencesQuick & booming urbandevelopment, risingforeign & localinvestments, regionalcultural influences{Target}Place

27. Company web site (catalogs, customer referencestories) Context advertisement (luxury products, luxurydishes, Russian souvenirs) Social Media (Facebook, Twitter) Print advertisement (luxury products reviews, ad infashion magazines) Trade faires and exhibitions Developing of recognisable brand logoPromotion

28. Action plan 1st stepObjective: get to know the new customers purchasinghabits, introduce the brand to the marketTools: cheap online sales, collecting customer feedback,sending small prizes or discounts for future rebuy, socialmedia promotionSales via internet

29. Objective: entering the market without big investmentsTools: selling products to souvenir and dish shops,POS-materials, printed advertisementAction plan 2nd stepSales through intermediaries

30. Objective: 5% souvenir dish market, enhancing brandimageTool: establishing own-brand stores, agressive upper-market promotion (using product placement and well-known people)Action plan 3rd stepJoint venture

31. 1. Reasonable to enter - high potential on themarket2. The greatest weakness could be overcome3. Entry mode choosing a middleman4. Promotion strategy: developed distributionchannels, creating of brand nameConclusion

32. Thank you for your attention!