Opportunity for Woolworths Supermarket Business in China Assessment Answers

Opportunity for Woolworths Supermarket Business in China
Executive SummaryThe report titled Opportunity for Woolworths Supermarket Business in Chinapresents a comprehensive analysis of the diverse facets such as market size, segmentation and the future projections for the supermarket business in China. The report offers the trends and development in the industry, government rules and regulations, analysis of the external environment, SWOT analysis and the challenges in the consumer market of the country. The report manifests the competitive landscape of China and analyzed the diverse domestic and international trends in the country. The increasing attention of the consumers for healthy and safe products could provide a great opportunity for the endowment of the Supermarkets in China. The expansion in the sheer size of the internet users in China indicates the operational opportunity for the Supermarket App in China.
Contents
TOC o 1-3 h z u Executive Summary PAGEREF _Toc5796767 h 2Introduction PAGEREF _Toc5796768 h 4Key Takeaways for Woolworths PAGEREF _Toc5796769 h 4China PAGEREF _Toc5796770 h 6Political and Legal Analysis PAGEREF _Toc5796771 h 7Economic Analysis PAGEREF _Toc5796772 h 7Social, Cultural and Ethical Analysis PAGEREF _Toc5796773 h 8Technological Issues in China PAGEREF _Toc5796774 h 8Environmental Issues in China PAGEREF _Toc5796775 h 9Market Challenges in China PAGEREF _Toc5796776 h 9SWOT Analysis PAGEREF _Toc5796777 h 9Conclusion PAGEREF _Toc5796778 h 10References PAGEREF _Toc5796779 h 11

IntroductionWoolworths, also known as Woolies, was founded in the year 1924 and is known as one of the largest supermarket chains in Australia. The company is headquartered at Bella Vista in Australia, and is a subsidiary of Woolworths Group Limited, which stands as the diversified company for its operations in supermarkets, online channels, and convenience stores. The company attains 39 of the supermarket share in the entire 82 billion grocery sector in Australia (S amp P, 2017). The history of Woolworths can be traced back as the fresh food store that began its operations 60 years ago with the revolutionalized technology of refrigeration and storage. The company is engaged in the procurement of the major raw materials from the Australian farmers and producers and resells them to diverse customers of Australia and New Zealand.
Key Takeaways for Woolworths
The growing demand for grocery and food
The growing distrust of the local food retailers and the sources has forced the Chinese consumers to go for the organics and healthier food items (Euromonitor International, 2014). The Woolworths is a renowned brand for the supply of fresh grocery and meat products to the consumers. The diverse needs and demands in the consumer market of China will be an aid for the Woolworths business in the nation.
Gateway for the premium products
The sheer expansion of the high-income segments in China with the gross income of 200 and above the average have paved the gateway for the consumption of the premium products in China (Euromonitor International, 2014). The increment in the income had resulted in the explosive demand of the organic food and the fortified items in the China market. The Woolworths seeks the tremendous opportunity for the supermarket supply of the fresh organics and the dairy products of better quality and standards.
Health conscious consumers
The changed focus of Chinese consumers from medicine to a healthy diet has led to the double-digit demand of foods like cranberries and blueberries in the country (Euromonitor International, 2014). The growing concern of the health-conscious consumers would be a market opportunity for the Woolworths to become a market leader in China. Further, the increased popularity of the healthy diet and exercise to avoid obesity and other maladies will boost the demand of the Woolworths healthy products in the country. Apples and foremost oranges stand as the most significant fruits in China with the figures of 14 kg and 10 kg per capita consumption (Euromonitor International, 2014). The Chinese consumers have manifested the tremendous concerns for the fresh healthy food, and the market found the exceptional growth of superfoods such as cranberries and foremost blueberries. Apart from this, the food items like nuts, poultry, and red wine, have reaped the advantages of the growing concern of the heath in the intellect of Chinese consumers.
The growing popularity of Western food
The high demand for the exposed Western food such as pizza and hamburgers gives the potential opportunity to the Woolworths for the supply of fresh and healthy cheese products like mozzarella and oysters. The western services have inflated the demand for imported cheese and have manifested the cheese as one of the most growing food items over the period of 2012-2017 (Euromonitor International, 2014). The inflated growth of the cheese and its after products gives a significant opportunity to Woolworths to acquire a sheer size in the Chinese market.
Limits in the domestic production
The limitations to the domestic production in China have urged the demand for the daily grocery in the Chinese market (Euromonitor International, 2014). The Woolworths could pave a great opportunity for Woolworths for the supply of fresh food and meat to the consumer market in China. As a consequence of the mentioned factors, Woolworths seeks a huge opportunity for meat, frozen foods, and cheese. Apart from this, the vegetables are marked as the largest category of fresh foods with the consumption of 310 million tonnes in the year 2012 (Euromonitor International, 2014).
Frozen Food
The processed food in the frozen category is marked for the significant increase of 8 in volume, indicating the tremendous demand for convenient foods (Euromonitor International, 2014). Further, the market expects the growth of the frozen red meat and the frozen potatoes in the upcoming years that could have a positive impact on the business of the Woolworths supermarket in China.
Packaged Food
The food items in the packaged category reached the figures of C177.6 billion in the year 2012 and are expected to grow at the increasing rate in the future years (Euromonitor International, 2014). The reason for the same lies in the preference of Chinese consumers for the fortification and the foremost organic ingredients in the food. The numerous safety scandals in China have to lead to the rise in the demand for packaged and healthier foods. The healthy habits of eating have contributed to the significant growth of 22.1 from the year 2007 to 2012 (Euromonitor International, 2014). The booming figures indicate the great opportunity for the Woolworths products in the consumer market of China and could be the contributing factor for the inflation of business in China.
Frozen Seafood
The rapid consumption of frozen seafood hit the consumption figure to 774000 tonnes in the year 2017 (Euromonitor International, 2014). The USA is the dominant supplier of frozen seafood in China, and the Woolworths penetration could lead to the highly competitive market in the Chinese consumer market. The Woolworths has a significant opportunity to penetrate and delight the Chinese consumers with juicy seafood and its segments.
Canned/ Processed Seafood
The tremendous sales of canned seafood touched the figures of C251.9 million in the year 2012. The consolidated share of the market makes the five local traders, leading to 83.3 of sales in the consumer market of China (Euromonitor International, 2014). The mentioned figures and the availability of only five players in the market indicate the potential growth for the Woolworths business in the consumer market of China.
Wine
The demand for wine witnessed robust growth in the year 2012 with the consumption figures of 4.3 billion litres (Euromonitor International, 2014). The figures highlight the inflated demand for red wine and grape wines in China. The rapid demand for imported wines could give Woolworths a great opportunity for the supermarket business in the consumer market of China. France is the dominant exporter of wine in the China market and with the time, perceived health benefits of wine could positively influence the consumption of the wine in China.
Frozen Food
The processed food in the frozen category is marked for the significant increase of 8 in volume, indicating the tremendous demand for convenient foods (Euromonitor International, 2014). The market expects the growth of the frozen red meat and the frozen potatoes in the near future. The predicted growth could have a positive impact on the business of Woolworths supermarket in China.
ChinaChina records the highest population with the approximate figures of 1.4 billion and hence gives the massive opportunity to the consumer products in China (Rahman, 2018). The second largest economy of the world, China has the endless potential of the consumer market, which offers enormous opportunities to the foreign investors and the foreign companies for the business operations in the country. The only challenge for the business in China lies in the diverse regulations that result in the slow business and the business transactions in China. China has scored good grades in the World Bank Report for Doing Business, but the country ranks low to entice the foreign investors in China. Chinas population aggregated to 1.4 billion in the year 2013 and shows the increment of 425 million consumers since 1980 (Euromonitor International, 2014). The sheer size of consumers in the China market has facilitated the business potential of Woolworths in China. The gradual rise of the median age to 40.3 years in 2013 shows the inflation of the median age by 17.4 years since 1980 (Euromonitor International, 2014). The economy of China indicates the planned economy, which is closely regulated by the government. The 76 of assets in China are regulated and controlled by the government, which shows the intervention of the authority in the business and its diverse operations. Further, income inequality has shown the increment in China, which is the consequence of the rapid economic growth in China. The needs and demands of the Chinese consumers has shifted to the organic and the foremost foreign foods as a result of the rising concern for the health and healthy foods.. The concerned needs gives the immense opportunity to the food retail sector for the business in the consumer market of the country.
Political and Legal AnalysisThe political force stands as one of the most fluctuating factors for the business operations in a country but the Communist Party of China manifests the stable political system in the country. The amalgamation of the formal and the informal rules have a significant impact on the political influence of the country and China seeks inadequate political freedom in the country. The government of China has a sheer focus on the effective development of the e-commerce business in the country and the blend of stable political environment and the robust infrastructure makes China as the third largest destination for FDI (Rahman, 2018). The mentioned support of the government could have a positive impact on the Woolworths Supermarket App and the online merchandising. Apart from this, the feuding leaders of China are struggling for the political life that leads to the failed implementation of the sound policies and regulations in China (Chang, 2016). The absence of sound policies could pose serious hindrance in the efficient operations of Woolworths business in China. China has numerous laws and regulations that control the operation of businesses in China. The PRC Labour Contract Law of 2007 and PRC Labour Law of 1995 regulate the labor standards and the employee benefits in the country (Rahman, 2018). Further, the Industrial Catalogue regulates FDI in China. The Catalogue segments the FDI in the four parts that is encouraged, prohibited, permitted and restricted (Rahman, 2018). The Woolworths business would fall in the encouraged and permitted category of the business.
Economic AnalysisThe economy of China has shown the tremendous growth of GDP in the past five years (PESTEL Analysis, 2015). The reports have predicted that the current pace of growth could lead China GDP to surpass the US GDP in the future years. The decent figures of the GDP support the business of the Woolworths in the China market. The people of China possess strong purchasing power and have to lead China as the worlds largest economy in accordance with the purchasing power of the people (Rahman, 2018). Apart from this, the labour cost in China is significantly low and could be an add-on factor to the economy of the Woolworths business. The country has made an alteration from the centrally planned economy to the market-based economy and the GDP growth of the country has averaged at the rate of 10 a year (The World Bank, 2018). The concerning facts for Chinas economic factors lie in the rising rate of inflation and the increased prices of property. The Woolworths needs to craft strategic plans tactics to deal with the higher rate of inflation and the magnified prices of property.
Social, Cultural and Ethical Analysis
The constant change in demographics reflects the cardinal role of the social and cultural dimensions in China. China records the highest population with the approximate figures of 1.4 billion and hence gives the massive opportunity to the consumer products in China (BBC, 2018). China has a sheer focus on the absolute upliftment of the poverty by the year 2020 and the country has witnessed the 68 million people lifted from the poverty in the past five years (Brand, 2017). The growing concern of the country for the removal of poverty would be an aid for the sustainable programmes of the Woolworths business in Chinese market. Further, it would assist the Woolworths business in creating the sustainable image in the intellect of the consumers and the market of the nation. The literacy rate of China exceeds the figure of 90 and the majority of the population have a clear emphasis on education on the well being (PESTEL Analysis, 2015). The Internet users in China have a base of 420 million and people prefer to shop online for the requisite essentials. The figures of internet users could facilitate the business of Woolworths in China. However, the preference of diverse groups for physical shopping would also enhance the supermarket business of Woolworths and would support the various operations of the business. The Chinese culture is very sensitive for the new business and its operations. Hierarchy is an integral part of China for doing the business, with the managers being more segmented than the managers of the countries (Martinez, 2017). China has witnessed the long history of exploitation from the western counterparts, so as a westerner in China the culture of China imposes a heavy challenge for the westerner business and its operations.
Technological Issues in ChinaChina has the focussed vision to become the global leader in the domain of science and technology (Rahman, 2018). The country promotes the entrepreneurship and innovation at the mass level and so could be the facilitating factor for the business of Woolworths. The sheer technological problem posing a threat to the B2C business lies beneath the unsecured development of the online payment framework in China. The buyers in China manifests the high degree of avoidance to the online payment and the situation has created the panic for the long term development of the online business. Further, the report had examined the penetration of 1 credit card in China and the mentioned payment system holds a very low response for the transaction of the online payment system (PESTEL Analysis, 2015). Apart from this, the assistance to the innovation process in China could enhance the innovation vision of the Woolworths business and would facilitate the technical operations of the business.
Environmental Issues in ChinaThe rapid urbanization in China has emerged the environmental concerns of the government and the country. The authorities are continuously engaged in drafting the robust policies for the business and its operations to curb the increasing pollution in the country. As a consequence, the major stakeholders in China are promoting the greener market and the energies to reduce the carbon footprint of businesses in China. So the Woolworths business needs to develop the policies and strategies that assist the environmental concern of the country. The sustainable policies could assist the business for the enticement of the stakeholders and building the sustainable brand image in the consumer market of China. The figures predicted 40-60 of the wastage of the food before reaching the consumers in the country (Brubaker, 2015). The mentioned figures highlight the need for sustainable policies in China and the Woolworths business could gain competitive advantage with the adoption of the sustainable policies for the business and the country.
Market Challenges in ChinaThe enormous potential of the consumer market in China is favouring the business environment in China and is enticing foreign investors in China. But, the volatile regulations are the main challenge for executing efficient business in China. In the World Banks ranking for the ease of doing business, China ranked 91 in the 189 selected countries (Euromonitor International, 2014). The cardinal strengths of China lie in the enforcement of the contracts while the dominant weakness lies beneath the terms and conditions to penetrate the consumer market in China. The market report revealed the figures of 31.9 of Asia Pacifics Total for the flow of FDI in China in the year 2012 (Euromonitor International, 2014). The mentioned figure indicates the challenge for the Woolworth to inaugurate its supermarket business in China.
SWOT AnalysisStrengths
The broad range of products
Segment penetration
Robust brand image
Strong reputation in the retail market
Employee Policies
Efficient operations
Market leadership
Effective amalgamation of brick and mortar sales and the online channel
Sheer financial figures of the business
Robust customer tracking
Efficient Supply chain network
Low Prices
Effective CSR program (S amp P, 2017)
Diversification
Multi-option shopping
Economies of scale Weakness
The increased cost of operations
Confused positioning of the company
Price wars
Limited presence in the global market
The sheer increase in debts
Competitive market
Loss of competitive advantage in the market
The increased overall cost of the business
Delayed entry in the online retail sector
Governments intervention in the operating hours of business.
Opportunities
The potential of the business to enhance the customer base
The giant population of China
The diverse needs and demands of the consumers
Opportunities for growth in the sector of health and food
Strategic acquisitions in China
The huge potential of the business to increase the market share of the business
Threats
Uncertainty in the China market
Intense competition in China
Rising costs of the raw materials
The growth in the unemployment figures
The advancement in the technology
The dominating power of the suppliers in China
The rules and regulations of the Chinese government
Barriers for the FDI in China
ConclusionThe research conducted indicates the potential of the consumer market in China for supermarket products. The population explosion in China has generated the genuine needs of the consumer, and the inadequate supermarket trend in the countrys market would boost the Woolworths business in the country. The inadequacy of the food retail market in the country provides enormous opportunities for supermarket growth in China. The robust rules and regulations of the government could be the barrier to the business operations but the World Bank report of ease of doing business in China manifests the Governments support and assistance to the foreign investors in the country.
ReferencesBBC. (2018). China Country Profile. Retrieved from http//www.bbc.co.uk/news/world-asia-pacific-13017877Brand, D. (2017). China Says It Wants to End Poverty by 2020. Retrieved from https//www.globalcitizen.org/en/content/china-end-poverty-2020/
Brubaker, R. (2015). Reframing sustainability for China, and future cities. Retrieved from https//www.forbes.com/sites/ceibs/2015/06/02/reframing-sustainability-for-china-and-future-cities/16d5010b697a
Chang, G. G. (2016). Chinas political turmoil worsening, Affecting the economy. Retrieved from https//www.forbes.com/sites/gordonchang/2016/04/24/chinas-political-turmoil-worsening-affecting-the-economy/1e438dff4c08
Euromonitor International. (2014). Market opportunity report China. Retrieved from https//www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/agriculture-and-seafood/statistics/exports/market_opportunity_report_china.pdf
Martinez, B. (2017).6 Challenges of doing business in China and how to overcome them. Retrieved from https//www.kaplanfinancial.com/resources/pdc/6-challenges-of-doing-business-in-china-and-how-to-overcome-them/
Rahman, M. (2018). PESTEL analysis of China. Retrieved from https//www.howandwhat.net/pestel-analysis-china/
S amp P. (2017). Woolworths limited SWOT and PESTLE analysis. Retrieved from https//www.swotandpestle.com/woolworths-limited/
Shira, D. (2018). An introduction to doing business in China 2018-19. Retrieved from https//www.china-briefing.com/news/introduction-business-china-2018-19-new-publication-dezan-shira-associates/
The World Bank. (2018). The World Bank in China. Retrieved from http//www.worldbank.org/en/country/china/overview

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