Case Analysis Ab In China

Strategic Planning and Management
(MGT492A)

Week 9

Case 4:   AB in China (page 30)

Introduction
According to this case China had always cast a powerful spell over the world’s entrepreneurs. The size of the market, its population, and its natural resources presented huge opportunities for the right company. But unfortunately, throughout the twentieth century any excitement over the prospects was often not realized. Global corporations had, with a few exceptions, failed to achieve the promised results.

According to this case, the beer market in China was not national - it was an aggregation of local markets with each region having specific tastes, preferences and spending pattern. As a result of the localized nature of the beer market, small regional breweries dominated these fragmented markets. These regional local brands had a nationwide market share of less than 2%.

Anheuser-Busch with its global presence and finances entered the Chinese market through joint ventures and partnerships with other domestic breweries. In fact, many global firms, mostly in partnerships with national breweries had grown by acquiring the small regional players. But despite Anheuser-Busch’s and other large breweries efforts to dominate the Chinese beer market the industry was still a fragmented market with the top four breweries in China controlling only 45% of the total market share. Despite this intense focus, there were few success stories. According to the case there were several recurring issues that almost all foreign entrants to China faced:

• Navigating the political and legal environment
• Joint venture versus wholly foreign=owned enterprise
• Chinese solutions and Chinese leadership
• Chinese brands over global brands

According to the case there were many failed entry strategies with similar results.   In the end, many investments made by foreign beer companies resulted in low brand value and chaotic and fragmented distribution. In fact, expatriate...