Milk Powder In China Case Study

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BACKGROUND
Despite the favorable market conditions to export powder milk to China, establishing this type of business, successfully, requires more than approved sanitary requirements. This briefing paper will highlight the capacity of WHF infant formula to enter into the Chinese market and the obstacles it might face regarding the relationship between the government and business in China. This relationship differs from western practices, hence an strategy will be proposed. The demand for milk powder is growing in China because of two important facts. The first one refers to structural characteristics of the Chinese society. This includes the new flexibility on the "one-child" policy which will be translated into 1-2 million of new births each
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The first part of this strategy is based on the Chinese expression "guanxi". This means reliable personal networks which can be the stepping stone that the company needs in order to enter the Chinese market. In China, individuals establish bonds with others in order to obtain favours or services in exchange of gifts or other favours (Rühle S. 2011). This is called "Guanxi" and is developed regardless hierarchy, what generates guanxi is the bond among individuals (family, friends, classmates). Practices of guanxi are rooted in the Chinese everyday life and are essential features when doing business in China (Rühle S. 2011). For WHF, it is essential establish guanxi or strong connections with relevant officials of the …show more content…
In order to achieve this, the lobbying approach among social actors is required. The strong ties between the embassy and commercial offices of China and Australia will serve as links to canalize events and presentations of the WHF new product. The goal is to establish and maintain "guanxi" among government officials, members of regulatory agencies and supermarket corporations. Moreover, considering the strong corporatism between private corporations and the state, there is the need to make allies within the China Dairy Industry Association. As a usual strategy of business with foreign brands in China, WHF can propose share technology and best practices of powder milk industry. In this sense, this could represent a win-win negotiation with government officials of the Communist Party. On the other hand, WHF will concentrate efforts to build trust among customers through traditional marketing strategies. In this sense, WHF will work closely with the biggest supermarket chain China Resources Vanguard Co. developing food testing and fairs. It is also important to understand the needs of customers by analyzing health claims and packaging

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