Globalization's Impact on the Food Industry in China

Assessment Submission Instructions

Assessment Submission Instructions
i) Assignment should be submitted by electronically through Turnitin 
ii) Academic dishonesty of any kind is strictly prohibited
iii) assignments should be submitted by its due date as scheduled by the Course Instructor

 

Course Learning Outcomes Assessed
1. Demonstrate a broad based knowledge of the economic, social, cultural, political, legal & regulatory and trade environment in different countries as well as how they are linked.

 

2.Explain how basic marketing concepts and theories can be interpreted and applied in terms of international business situations.

 

Case Study
The brands in the busy supermarket in Beijing may be recognizable to most Americans, but the flavors certainly are not.  Lays potato chips sold in Beijing are blueberry flavored rather than sour cream and onion.  Cheetos come in strawberry and milk, and Minute Maid sells aloe juice instead of orange juice.  American companies hoping to capitalize on China’s $186 billion fast food and processed food market have entered the country en masse.  However, while they are selling the same brands they sell in the United States, they have developed much different flavors in the hopes of better attracting Chinese buyers. 

 

Frito Lay recognized early on that Chinese taste buds were quite different from American taste buds.  Popular flavors in the United States did not appeal to Chinese consumers prompting Frito Lay and other U.S. companies to research Chinese preferences and develop products specifically for the local market.  Accordingly, Tropicana sells cantaloupe juice, Chips Ahoy cookies are orange flavored, and Wrigley’s sells Chinese herbal medicine gum.   Even toothpaste companies are selling products designed to tempt Chinese consumers.  Crest sells a lotus flower flavored product, while Colgate offers salt flavored toothpaste.  U.S. companies focused on the Chinese culture as a starting point for developing new product flavors.  Product researchers inspired by traditional Chinese cooking came up new flavors like Szechuan spicy, sweet and sour tomato, and mango.  Pepsi Co’s Harry Hill points out that because the market is so competitive, new products are being launched on a regular basis.  

 

The same trend is changing the strategies of fast food companies in China.  McDonald’s has introduced purple taro pie, Starbucks sells drinks with jelly cubes on the bottom, and spicy squid on a stick is available at Kentucky Fried Chicken.  Analysts note that while the flavor game may seem a bit outrageous to some, in China it is serious business.  The country will soon be if not the largest, the second largest consumer market in the world.  Companies need to ensure they are doing everything they can to capture a share of the market. 

 

Discussion Questions 

1. Discuss the implications of globalization on the food industry in China.  

 

2. What makes China so attractive to U.S. food companies?  Discuss why it is important to gain market share in the country.  How has Frito Lay approached the market? 

 

3. Reflect on the standardization versus adaptation debate as it relates to marketing fast food and processed food in China.  Using the ‘4Ps’ of marketing, discuss how companies should approach the market.  Which elements in the marketing mix can be standardized?  Which elements must be adapted to suit local preferences?

 

4. Discuss how companies like Frito Lay and McDonald’s are contributing to this change.  What are the implications of this trend?