Đang tải... (xem toàn văn)
Brazil also has better established distribution channels anda massive e-commerce sector, which will be critical for the apparel business.Although being inferior to Brazil in terms of dem
FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS -*** GROUP ASSIGNMENT Major: International Business Economics SOUTH AMERICA – A NEW MARKET FOR UNIQLO: AN ANALYSIS ON UNIQLO POTENTIAL EXPANSION Subject: International Marketing Lecturer: Nguyễn Thị Thu Thảo Class code: MKTE401 Group: No Student ID Full Name Class 2115113059 Nguyễn Dương Đông K60CLC8 2112153151 Bùi Anh Tuấn K60CLC8 2115113134 Lê Hoàng Phong Lâm K60CLC8 2114154010 Nguyễn Duy Minh K60CLC8 2112153138 Nguyễn Minh Quân K60CLC8 2114154011 Lâm Thành Nam K60CLC8 Ho Chi Minh City, March 2022 INDEX INDEX LIST OF GRAPHS LIST OF TABLES I EXECUTIVE SUMMARY II MARKET OVERVIEW III MARKET SELECTION PROCESS Preliminary Screening Fine-grained Screening 10 2.1 Market Attractiveness 10 2.2 Competitive Strength of UNIQLO .12 2.3 The Market Attractiveness - Competitive Strengths (MA-CS) matrix 13 Brazilian Market and Waterfall Approach 14 IV MARKET ENTRY MODE 15 Market Entry’s Criteria Evaluation 15 1.1 Psychic Distance 15 1.2 Demand Uncertainty 15 1.3 Market Size 15 1.4 Intensity of Competition .15 Select Joint Venture as the Market Entry 16 Advantages and Disadvantages of Joint Venture .17 Mid and Long-Term Objectives 17 V UNIQLO’S RECOMMENDED TACTICS 19 Tactics on Product 19 Tactics on Communication and Advertising in Brazil .19 VI CONCLUSIONS 22 REFERENCE 23 LIST OF GRAPHS Graph 1-1: Distribution of UNQLO retail stores globally as January 31, 2023 Graph 1-2: Uniqlo’s annual sales and the number of stores worldwide from 2003 to 2013 .4 Graph 2-1: Age structure graphs of Brazil & Argentina, 2021 Graph 2.2: Inflation Rate (%) of Brazil and Argentina, from 2017 to 2021 .6 Graph 2-3: Year-on-year growth of sales generated by small and medium-sized retailers .7 Graph 4-1: The Hofstede’s Cultural Dimensions between Japan and Brazil .15 Graph 5-1: Most popular social media platforms in Brazil as of 3rd quarter 2022 21 LIST OF TABLES Table 4-1: Retail Sales of Fashion in Brazil in 2020 16 I EXECUTIVE SUMMARY The Asian apparel industry keeps growing in global markets while the global apparel industry becomes highly volatile with increasing internationalization (Lopez & Fan 2009) The active international expansion of Asian apparel brands is one noticeable industry trend One of the leading Asian brands, Uniqlo from Japan, is the case With more than 800 retail locations in Japan alone, the brand has expanded to more than 2416 stores in 25 countries across Asia, Europe, and the United States as of January 31, 2023 (Figure 1.1) Graph 1-1: Distribution of UNQLO retail stores globally as January 31, 2023 (Source: Data from Fast Retailing, graphed by author group, 2023) Based on its vertically integrated business model, which encompasses product design, manufacture, distribution, and retail, Uniqlo has experienced rapid expansion by providing low-cost, high-quality casual wear The net sales of Uniqlo's owner, Fast Retailing, have consistently climbed In the most recent period, Uniqlo International's sales were nearly twice as high as Uniqlo Japan's sales according to the Uniqlo Annual Report in 2021 As shown in Figure 1-2, the overall number of retailers worldwide keeps growing It is now clear that the brand is becoming global Graph 1-2: Uniqlo’s annual sales and the number of stores worldwide from 2003 to 2013 (Source: Data from Uniqlo Annual Report, graphed by author group, 2023) Although Uniqlo has a sizable global retail store footprint, the South American market, particularly Brazil and Argentina, still presents significant untapped potential Thus, the focus of this paper will be on analyzing entries for those two countries (in comparison to the region) II MARKET OVERVIEW Brazil and Argentina have two of South America's major economies However, both countries have undergone significant economic and political changes in recent years, causing its current stressing political status and economic instability, which affected their desirability as attractive foreign investment destinations The table below highlights some key features of both countries: Brazil Argentina Population (million) 214 45,8 GDP (Billion USD) 1,649 486 Demographics Large population, especially in the Relatively older population legal working age Economy Strong in agribusiness and mineral production Making progress in combating poverty Hypermarkets, supermarkets take up the most market share Large Sales Channels in e-commerce market ($18 Billion in 2017) Currently facing significant economic instability Hyper and supermarkets taking more of market share Growth in e-commerce, $5.1 (2016) to $5.9 billion (2017) These features make Brazil more enticing to international enterprises than Argentina Brazil has a huge population and a falling poverty rate (Alcides Costa Vaz, 2014), which contributes to overall demand Brazil also has better established distribution channels and a massive e-commerce sector, which will be critical for the apparel business Although being inferior to Brazil in terms of demographic aspects and recessed economy, Argentina has tremendous prospects due to its expansion in the retail business, particularly in the e-commerce sector Document continues below Discover more from: International Marketing Trường Đại học… 245 documents Go to course 74 58 Snacks in Vietnam(Full Market… International Marketing 100% (4) BÀI TIỂU LUẬN GIỮA KỲ International Marketing 100% (2) Summary about Global Marketing ( A… Graph 2-1: Age structure graphs of Brazil & Argentina, 2021 75 (Source: PopulationPyramid.net) International Marketing 100% (2) VGCC Vin Fast Goes Global - Official Cas… International Marketing 100% (2) Investigative 13 Marketing Report OF… International Marketing 100% (1) Graph 2.2: Inflation Rate (%) of Brazil and Argentina, from 2017 to 2021 (Source: Data from FocusEconomics, graphed by author group, 2023) International 38 Marketing - EXAM… International Marketing 100% (1) Graph 2-3: Year-on-year growth of sales generated by small and medium-sized retailers in Argentina in February 2020, by category and channel (Source: Statista) III MARKET SELECTION PROCESS Preliminary Screening The preliminary Screening is conducted based on the criteria listed in the BERI index The following scores are graded based on the overall situation in the country in terms of each criteria in comparison to South America and also the world Criteria Political Stability Brazil Argentina Democracy but with certain instability High debt GDP declines since 2018 Economic Growth Stable, minimal growth Currency Convertibility Highly inflated Stable, fully convertible USD ~ 190 Argentine USD ~ Brazilian Real Peso Labour cost/ Productivity ~ 100 million labor force ~ 25 million labor force Short-term credit 13.75% interest rate High interest rate (75%) Long-term loans/venture capital Funds are fairly accessible for technology sectors Regulatory risks Attitude towards the foreign (taxation and fiscal investors and profits system) Foreign investment friendly Nationalization Encourage government intervention in economy Monetary Inflation ~ 6% (Normal) ~ 94% (significantly high) Balance of payments Trade deficit Trade surplus Enforceability of contracts Left-wing party leads the country Average in rankings of Corruption, Rules of law and Government effectiveness Bureaucratic delays Relatively complex despite changing efforts Communications: phone, fax, internet access Developed and effective Leniency program and promoting private litigation Total: 3.7 3.45 2.3 The Market Attractiveness - Competitive Strengths (MA-CS) matrix The scoresheets have been transferred into the MA-CS matrix below as the Brazilian market, in contrast to Argentina, shows a high value and can be considered an attractive market to enter according to the matrix Brazilian Market and Waterfall Approach Both the preliminary screening and fine-grained screening show the potential of two countries However, due to high risks arising from Argentina’s recent recession, the market becomes less attractive and friendly Therefore, the Brazilian should be the first market to further in-depth analysis in entering while remaining aware of Argentine situation This also indicates the use of the Waterfall approach, which is to enter and grow in a particular market first then expanding to another; in this case, market entry to Brazil is conducted first 13 IV MARKET ENTRY MODE Market Entry’s Criteria Evaluation 1.1 Psychic Distance Japan and Brazil fairly have great physic distance especially in cultural aspects The Hofstede insights gave an overview of the cultural differences between Brazil and Japan Brazil shows low scores in Individualism, Masculinity and Long Term Orientation, thus signifying the easy-going, emotionally attached lifestyle of Brazilians Graph 4-1: The Hofstede’s Cultural Dimensions between Japan and Brazil (Source: Hofstede Insights, graphed by author group, 2023) 1.2 Demand Uncertainty The Demand uncertainty of Brazil, deriving from its underperformed growth in recent years, has affected the purchasing power of Brazilians as they are less likely to spend on consumer goods in a recessive economy 1.3 Market Size Brazil constitutes the tenth largest apparel market in the world In 2022, the apparel industry was valued at nearly 30 billion US dollars 1.4 Intensity of Competition 14 The retail market in Brazil is dominated by a wide range of local brands that have the know-how of the market and are adored by the customers due to their cheap prices and local preferences Rank Company 1st Renner 2nd 3rd 4th Net revenue in 2020 R$ 6.660 billion Guararapes R$ 4.332 billion C&A R$ 4.085 billion Grupo Soma + R$ 2.317 billion (R$ 1.243 billion Soma + R$ 1.074 billion Hering Hering) 5th Marisa R$ 2.139 billion 6th Arezzo R$ 1.612 billion 7th Restoque R$ 598.8 million 8th Inbrands R$ 300.7 million Table 4-1: Retail Sales of Fashion in Brazil in 2020 (Source: InfoMoney) Select Joint Venture as the Market Entry There are three main groups of ways to approach a new market, based on the amount of commitment and flexibility that a company wishes Export modes are safe and most suitable for small businesses in small markets Hierarchical ones thrive in great and rich oceans, but they mean a huge gamble for the Japanese retailer Considering some aforementioned factors of the Brazilian market, we recommend UNIQLO to seek for some assistance from the locals themselves and approach the market through intermediary modes instead, including licensing, franchising and joint ventures While licensing and franchising can be less costly, with such stature that UNIQLO yields, along with some problems that can emerge from weak yet complex regulations and corruption in Brazil, decent operation costs are acceptable; therefore, hindering this advantage that these two modes bring about With more budget at disposal, UNIQLO can look to establish a stronger foothold in the market through joint ventures This mode provides a greater amount of control and deeper understanding than the previous two, 15 meaning that problems such as miscommunication, though still happen, may less likely occur and pose less danger Forming joint companies with the natives may also help creating and solidifying a better relationship with government officials, which is even more significant in a nation that is politically infamous like Brazil Last but not least, risks of failure are shared, easing the pressure of success for UNIQLO in such a strange market All things considered, joint ventures tops the list of possible entry modes for UNIQLO if it decides to start its conquest of Brazil, as the initially higher costs can be covered by the stature of the company, and many risks can be reduced, while giving the company the amount of control it needs Advantages and Disadvantages of Joint Venture In deeper analysis, it is shown that there are advantages and drawbacks of the joint venture as the market entry for UNIQLO which need to be discussed: Advantages: Reduce Risk and Cost: UNIQLO shares the risks and costs with its partner, which would cause less severe damage if fail Access to Local Knowledge: UNIQLO leverages the local knowledge and expertise of partner to navigate the Brazilian market's unique cultural, legal, and regulatory landscape Access to the Distribution Networks: joint venture helps gain access to established distribution channels in Brazil, which speeds up the market entry process Brand Awareness: partnering with a local firm helps capitalize on the partner's current brand recognition in Brazil and build on its reputation to gain a footing in the market Disadvantages: Limited Control: joint venture means lack of control over critical aspects of the business, such as marketing and distribution strategies Working Cultural Differences: Cultural differences, especially in business practice could result in challenges in communication and decision-making processes Unequal Levels of Expertise: Differences in expertise levels might make it difficult to collaborate with the local business effectively Potential Conflicts: legal issues against local partners can negatively impact on the business’s operations In conclusion, while a joint venture can provide major benefits to UNIQLO in entering the Brazilian market, it is critical to carefully weigh the risks and benefits before making a final choice Mid and Long-Term Objectives 16 UNIQLO should concentrate on building a strong brand presence in Brazil over the next few years by developing flagship stores in strategic places and spending money on marketing and advertising efforts to increase brand awareness This would assist in building a devoted consumer base and developing a reputation for offering high-quality goods With the company's position as a minimalist, durable, non-trending fashion brand, UNIQLO's products not meet the fashion of the outfit While Zara is always copying the latest high fashion trends and H&M is always on trend, UNIQLO still only sells a few key lines year-round This makes UNIQLO clothing unable to meet the demand for diversity in clothing in some countries such as Europe and America Consequently, in the long term, UNIQLO should aim to expand its product offerings and develop localized product lines that cater to the Brazilian market's unique preferences and tastes It can also consider partnering with Brazilian designers and influencers to create exclusive collections that appeal to Brazilian consumers By adopting a long-term view and investing in its operations in Brazil, UNIQLO can establish a strong foothold in the Brazilian market and achieve sustainable growth 17 V UNIQLO’S RECOMMENDED TACTICS Tactics on Product Products in new market: Due to the high degree of volatile in physical environment and cultural environment in Brazil, Uniqlo will have to implement the dual adaptation by adjusting their production strategy, creating suitable promotion strategy and redesigning some of their products to better fit the market demand Considering the physical environment of Brazil, the target market, Southeastern Brazil, is rather hot and humid almost all year round UNIQLO can enhance their production of light and breathable garments and innovate in UV protection garments, antimicrobial fabrics to counter the local extreme climate Cultural difference is yet another concern for Uniqlo A too new dress may not catch the customers’ attention and a common Brazilian dress won’t catch the customers’ eyes In this case, collaborations with local brands and local designers will help launch the Uniqlo products into the market Product and brand positioning: Brazil’s median age is 33.5 years with a positively skewed age distribution, thus, Uniqlo should make itself be perceived as a trendy apparel brand with products revolving around middle-class under-40 customers Moreover, marking use of the country-of-origin effect is also a viable choice Uniqlo should advertise itself as an affordable Japan-Origin fashion brand, offering durable casual wear at a reasonable price Tactics on Communication and Advertising in Brazil As priorly stated, the product tactics and advertising and communication tactics should go hand in hand to create synergy Establishing effective communication schemes: In today's day and age, the advantages of online marketing, particularly social media marketing, cannot be ignored, especially for young customers-centric products Developing a comprehensive step-by-step online marketing involves the following steps 18