Lego in China
3. ECONOMIC China has several factors that contribute in strengthening their economic position. One of the contributors is their government policy.
‘Chinese government has stressed the importance of develop IT sector to the whole economic development of the country, with considerable commitments to massive investments in infrastructure positive effects of IT on its economic development’ stated by (Li, n. d. ). With more advanced IT departments, China is able to attract more investments from foreigners.
Not only that, China also created flexible investors policies. With developed IT structure and a supporting policy, Lego will have no trouble penetrating China’s market. China was known as the most populated place on Earth, hence creating a high demand for products available in market. This will keep the market activity going, given that there is enough supply for everyone. Hoshiko (2011) demonstrated that ‘Cheap labor rates are the keystone to the Chinese economic boom’. With a population above 1. 2 billion, labor isn’t one of their main concerns.
With low cost of labor, production cost will also drop, this enable them to produce inexpensive goods. If Lego decided to enter China’s market, they will also gain this advantage; they’ll be able to produce their products at a lower cost. Bradsher (2012) has written that ‘China’s exports to all countries rose 9. 9 percent in September from a year earlier, led by especially strong exports to Southeast Asia’. All of these factors in the end helps China’s economic activity, and making it more appealing for investors to come in and plant their money inside of China. The government said Tuesday that it planned to nurture as many as 50 state-owned enterprises to become globally competitive companies while maintaining control of companies engaged in key industries’ (Anon. , 2006). We can see what the government is doing here, they are trying to nurture their companies to complete globally, and giving less concern in internal competition. But global companies have started coming in and practiced the same thing too. Lego may do the same as well; it will give them a new experience curve to see how they should run their business in China.
Even though the specific strategy might not be the same in any other country, but Lego will be able to realize what are the steps and actions needed to succeed in foreign areas. Knudstorp (2012) as cited in Hansegard (2012) ‘We’re seeing growth in most Asian markets ‘. Recent findings have found that Lego’s sales have been increasing in Asian countries, why? ‘Disposable incomes in China have been growing faster than GDP growth, making toys more affordable for parents and children. ’ (Anon. , 2012). Take as an example China; the people have more disposable income to be spent on their children.
Moreover due to the baby-boomer the generation of China, there are a lot of parents now, and now with China’s one child Policy parents are more willing to spend for their loved ones. 4. CULTURE Chinese culture is not as interchangeable, the people held on to it and still respects it as we speaking, and they respect relationship, ranking and protocols. Saying ‘no’ isn’t as easy as it looks like in the Chinese culture, because they believe to deny someone would cause both parties to be embarrassed causing a loss of face. Kjerulf (2010) ‘The Culture in Denmark tends towards the individualistic rather than collective and is very feminine’.
We can see there is a difference between Lego and the Chinese culture. We can directly tell, Chinese people are higher in power distance; they call others by their title and last name. Also the Chinese are very more likely to be collectivist, actions that they decided are for the greater good of their people. Lego is very flexible in case of their products itself by having a lot of product lines. With a lot of movie based product lines, such as Indiana Jones, Lego is able to market and alternate their products according to other cultural preference.
We found a difference in between China’s Lego official website with the other such as US, Lego in China had excluded the Monster Fighters edition. This can be understood, judging that Chinese people are not that keen on all these western monster theme and Halloween. So Lego figured they would rather not produce this product line, and focus on the others. If Lego had made an investment in Xiamen China, there should not be any problem. To begin with the Chinese people are more uptight towards ranking, and collectivist. While the employer has more of a flexible style, which gives the employees a new working experience and probably a better one.
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