Smartphone Export to China

Product Description

The products of choice for export are the latest smartphone models. One of the significant features of the smartphones to be imported is that they must appear sophisticated physically to appeal to the modern age market. Also, the smartphones will have an improved battery life, having discovered that battery life is one of the reasons why smartphone users wish to upgrade. Smartphones also charge quickly.

Another outstanding feature of smartphones is that they will have a big screen. Although customers do not necessarily want a big phone, smartphones with a bigger screen have a unique appeal (Stieg, n.p). Apart from screen size, smartphone consumers also prefer a more durable phone, which they will get. The phones have stronger glass and frames to withstand unavoidable day-to-day accidents.

Besides, phones have fast processors. Processing speed is a crucial consideration for smartphone buyers since most use them for multiple tasks (Stieg, n.p). A fast processor coupled with reliable network data offers an impeccable experience for users. Finally, the new phones have HD-quality cameras to allow customers to take quality selfies and photos.

Target Customers

The key target customers for the new phones are young Chinese users. For instance, new students joining college will be a vital target of the phones export business. This consumer segment prefers phones they can use to stream videos and play games with. The export phones have outstanding graphics to support this need. The processing speed is equally great to ensure that the phones support the needs of the target consumers.

Potential Market Size and Attractiveness

China’s smartphone market offers great potential. In 2013, there were only about 490 million smartphone users. However, this number has since increased to 690 million users. China is the leading smartphone market at 30%, followed by the US at 12%. This means that there is enough market. The young consumer segment is attractive because over half of all users are young people aged 18-34 years (International Trade Administration, n.p).

Export and Import Tariff quotas

China customs is responsible for assessing and collecting customs and taxes. The business will benefit since China applies the most favored nation (MFN) to the US since it is a member of the World Trade Organization (WTO). The business will also likely benefit from China’s Customs Authority’s preferential treatment for what it terms as the development of a key industry. Smartphones from outside China are subject to a 25% duty (International Trade Administration, n.p).

Policies encouraging the purchase of local products and services

There are limited barriers to entry of US-manufactured products in China. During China’s bid to join the World Trade Organization (WTO) in 2001, the country lifted a significant portion of restrictions against the entry of US-based products. This was done in a bid to enhance the country’s role in global trade. Despite the efforts, however, multiple restrictions still exist. The US has lately tried to push China to lift the restrictions to comply with the US and global trade laws. The Chinese government has tried to limit Products in the telecommunications sector (Lighthizer, p 52).

Transportation and distribution channels

Doing business in China means sales representatives and other business partners have to move from one place to another to distribute items. China has a well-organized and coordinated system to support business activities. A good example is the metered taxis that are usually packed just at the front of hotels. However, there is a growing concern regarding the existence of ‘black’ taxis in which Americans have been either sexually or physically abused. Foreigners in China are encouraged to use registered cabs (International Trade Administration, n.p).

Advertising and media

Social media has taken over advertising in China, just like it is the case throughout the world. However, the advertising media in China are different from the global channels. For instance, Weibo is the country’s version of Twitter. 80% of the platform’s income relies on advertising; hence, the platform has a marketer-friendly platform.

Also, just like the rest of the world, Chinese search engines are powerful advertising platforms. However, the Chinese are not averse to clicking on these search engines, as is the case with the rest of the world. As a result, the Chinese search engines feature many advertisements, creating more competition on the platform.

Exchange rates and currency fluctuations

The Chinese Yuan is relatively stable and fluctuates relative to other currencies based on the forces of demand and supply. Currently, the Chinese Yuan is stable despite the effects of the pandemic. Thanks to the pandemic that hit the US harder, the Chinese Yuan continues to strengthen against the dollar. Thus, investing now means that the business may lose due to currency fluctuations.

Decision/Conclusion

Exporting smartphones to China is a viable business idea based on the existing market factors. One key attraction in the market is the growing young population that demands sophisticated phones for multiple tasks besides ordinary mobile phone use. Other favorable factors are the low tariffs and the high market potential.

Works Cited

International Trade Administration. “International Market Research.” Www.trade.gov, 2021, www.trade.gov/international-market-research.

LIGHTHIZER, ROBERT. “2020 NATIONAL TRADE ESTIMATE REPORT on FOREIGN TRADE BARRIERS.” International Trade Administration, 2020, ustr.gov/sites/default/files/2020_National_Trade_Estimate_Report.pdf. Accessed 4 Aug. 2021.

Stieg, Cory. “The Psychology behind a New IPhone Release—and Why It’s so Hard to Resist.” CNBC, 8 Dec. 2020, www.cnbc.com/2020/12/08/the-psychology-of-new-iphone-releases-apple-marketing.html. Accessed 17 Jan. 2021.

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Question

Student should select a product or group of products to investigate and a country to consider as an export market. Students should compile information on its product(s), as well as the potential market, and make a decision regarding the viability of exporting to that market. In addition, the student should decide on which export route would be most appropriate for it product(s) and market(s).