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2017 GMIM Hangzhou Trip
2017-09-15
Learning outside the classroom is vital. UPEC provides a diverse learning platform for 2016 GMIM students to experience contemporary challenges which Chinese Companies encounter, at the Orientation Week to Hangzhou. UPEC also invites two professors coming with us,to be our academic advisers: ①Prof Xu, Yunjie, Professor/Vice Department Chair, Department of Information Management and Information Systems; ②Prof. Qiu, Lijin, Assistant Professor, Department of Marketing. 
 
Students don’t just listen to company presentations and have a tour. They are immersed in the company culture and business operations for two days. This time,they visited typical enterprises spanning e-commerce(Alibaba); kitchen appliance manufacturer (ROBAM) and retail giants (Wahaha). Let’s find out what they have taken away from this Orientation Week! 
 
 
Giuseppe Baldini – GMiM 2016
 
Alibaba--Never stand still
 
Lesson #1: In order to stay relevant, companies need to evolve with the market. 
Experimenting with different trajectories of expansion in order to find the right next step has been a core trait of the company history and one of the keys of its success.
Alibaba was able to continuously reinventing itself going from B2B to B2C and C2C, while also expanding in areas such as cloud computing, robotics and AI.
Lesson #2: Do not be afraid to set ambitious goals
Since its foundation, Alibaba has set important goals for itself. Pushing its people do go beyond what current companies were doing, it was able to establish a dominant position in the market.
 
 
Robam--Diversification to win them all
 
Lesson #1: Do not be afraid to focus
The most interesting point of the Robam company introduction was seeing how the company decisively went for a single category of product, potentially missing other business opportunity in nearby sectors.
It takes courage to ignore the push for horizontal diversification, but Robam managed to stay focused, and ultimately this strategy paid off, at least in China
Lesson #2: Differentiate yourself to win different segment of the market
On the other hand, Robam seemed to be particularly eager to expand vertically introducing ad hoc brands for specific customers.
This allowed them a fast expansion without compromising the core brand.
 
Wahaha group--Low-end markets
 
Lesson: The base of the pyramid can be profitable
The main insight from the Wahaha visit was the realization that the basis of the pyramid, the low-end market, can indeed be a profitable and rewarding segment to target.
Wahaha successfully proved this point by securing dominance in this part of the beverage industry, and defending it from bigger and more resourceful international incumbents.
 
 
Iris Shen 沈天惠-- GMiM2016
 
Through the Q&A sessions, the companies illustrate great importance of mass market and rural area in China. Besides the mid-to-high end market as many new brands are now targeting towards, the potential has not been fully discovered yet.
 
For ROBAM, aside from its premium and high-end image of De Dietrich and ROBAM, the company created the brand MQ to serve the low-end market.
 
For Alibaba, as the urban e-commerce market is slowly approaching saturation, the company started shifting its focus on rural China. Given that internet penetration in remote areas of China is still low, the company is presented with a relatively untapped business opportunity. Over the next two to four years, it plans to establish at least 100,000 Taobao Rural Service Centers to ensure that consumers in rural areas of China which are not serviced by courier companies can receive their products ordered online.
 
For Wahaha, from the very beginning, their major products are mainly positioned to the rural market, to meet the demand in second or third-tier cities. The products have very low pricing, and though the company’s revenue has declined drastically, the firm still believes that the rural China is important. Not much changes they are willing to do with the positioning.
 
 
Globalization of Chinese companies
 
All 3 companies demonstrated their strategies about going overseas, which suggested that globalization has been a major trend of many Chinese companies. Considering their different industries and business models, the pace and selection of market entry varied. Basically, the local market’s characteristics and their distribution channel is the major factors of their strategy.
 
For ROBAM, as the cooking habits of Chinese are quite different from foreign countries,  the main targeted overseas market is Southeast Asia and Australia where more things are shared in common. The firm tried to communicate their brand image through the value of family.
 
For Alibaba, they involves a highly complex holding structure of several business. Among them, the core commerce retail arm was the fastest growing unit of all segments, namely due to the consolidation of Lazada - leading e-Commerce platform in Southeast Asia, and re-acceleration of the revenue growth from Ali-Express. They highly relied on doing M&A to ensure their market place in different countries and emphasize their advanced technology as the core asset.
 
For Wahaha, they are much more conservative with doing business abroad comparing to other companies. Instead of selling the products overseas, they sold several product lines and the equipment to other Asian countries.
 
Dynamic market trends in China
 
From the company visits, the dynamic market trends are very critical and well-mentioned when the executives talked about their company and their decisions. Keep a close look at the market trend and make early movements can be very important when doing business.
 
For Alibaba, I was pretty amazed by their advanced technology across several industries. Its big push towards Big Data solutions helps to leverage the business through personalization, targeted marketing campaigns and synergic effects across different business units.  Moreover, the success of Alibaba proves that they strongly benefited from wider global trends such as the secular shift from brick and mortar to online shopping and the increasing demand for low-cost cloud solutions.
 
For ROBAM, the company ensured its market leading place as their well understanding of market trends. First of all, as consumers’ brand awareness continues to heighten, more emphasis is being placed on product design, functions and features, while price sensitivity is falling. The company keeps rising the price steadily and ensures great profitability. Besides, in step with the ‘holistic kitchen’ concept and as the mainstream consumer is getting younger and younger, built-in designs can best meet the demand of consumers. The company updated their product in-time with consumers’ preference.
 
 
 

 

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