How Should Foreign Firms Operate On The Chinese Food And Beverage Market?

The Chinese economy is booming since the opening up in 1978.Foreign companies decided to enter the Chinese market.The huge population and a strong consumer power makes China attractive for these companies However,this goes together with lots of challenges1.In addition,most of the foreign firms in China fail.Research has been done by lots of scholars to find out the exact reason,but this was unfortunately not enough.Therefore,the author of this dissertation tried to give it another try.The aim is to get a deeper insight in the "How and why"The initial aim of the author was figuring out why the failures rate is so high in different industries.Unfortunately,this topic is too broad and it was therefore necessary to choose one industry which is also representative for others.Another aspect,is that the author wanted to make the dissertation representative with the courses he followed.This dissertation contains Chinese Law,Chinese Management and Marketing,Culture and other relevant subjects which were discussed.Most reasons why companies fail in China can be found in these topics.To make the research more objective,a research question was formulated which acts as a guideline through the whole dissertation.This question is as followed:How should foreign firms operate on the Chinese food and beverage market?The author has chosen to execute a qualitative research2.The reason behind it is that already research has been done on this topic.But still,it is not quite clear why so many companies fail in this industry.Qualitative research is going more deep into the subject without questionnaires,but with interviews with experts in this industry.This is what the researcher has done to establish this dissertation.This report contains primary-and secondary data.The secondary data was collected through case studies.Primary data was collected through interviews with a China Expert,Chinese restaurants with western food and foreign companies active in the Chinese food-and beverage industry in a half-structured way with open and closed questions.The outcome of the research is as followed:Foreign firms should at first change their corporate culture.Afterwards they should keep in mind three basic pillars.These are Management,Law and Culture.This seems logical,but all of the three pillars contain factors which has not been clarified yet.One important result is that firms are not aware that they could be subsidized by the Chinese Government(If they meet the requirements).It is also important to implement localization and decentralization.In addition,extensive efforts should be made to change the corporate culture.Establish a crisis communication plan is necessary in case something goes wrong.Too much companies focus on the present,but they do not have a back-up plan when the other side decides to leave the business.This has been a huge problem recently.Focus on e-commerce instead of complicated business channels.Focus on imperatives like responsiveness,flexibility,improvisation and speed instead of focusing on Quality management,continuous improvement and just-in-time management3,the last three do not work in China.It will be more clarified in the research.The next chapters will discuss the external environment and trends in China.Like the Chinese law,economy,product customization,recycling and management.