CHANEL IN CHINA Research Paper Example | Topics and Well Written Essays - 3750 words

CHANEL IN CHINA - Research Paper Example As economy in China is rapidly growing, the Chinese who can afford luxury also increases. The country is considered as the third largest luxury market in the world, after the United States and Japan. This is the prime reason multinational companies of luxury goods extend presence of their products in the country. China is one of the most economically developed countries in the world. It has gained its momentum since the Chinese embraced economic transformation in the late 1970s. China has opened its market to foreign investors which attracted many multinational corporations (MNCs) to come and do business. The MNCs then become the engine of the country in its rapid economic growth that helped increase its participation in the international market. Due to global competition, many MNCs established themselves in the Chinese market mainly to seek for cost-reduction and new market. China became a favorite destination of foreign investors or MNCs because of fast investment return. The rapid economic growth opens more market opportunities but still provides cheaper but high quality resources and huge supply of inexpensive labor. This entices the idea of foreign investors to enter in the emerging market. ... One of the luxury companies that established a branch in China is the Chanel. Chanel with Mandarin name Xiang Nai Er, which means little more than fragrant is an international luxury goods company with over 200 boutiques worldwide. It is founded in 1909 by Gabrielle â€Å"Coco† Chanel, a famous haute couture which revolutionized women’s fashion and introduced timeless elegance and fashion. The mother branch is in Neuilly sur Seine, France. The company is one of the world’s preeminent fashions of the present genre. It offers a broad range of luxury products such as ready-to-wear clothes, make-up, fragrances, skincare, leather goods, fine jewelry and accessories. This paper will try to identify Chanel’s development of global strategic alliances, inter-company collaboration, and positioning for greater global competitiveness. Though MNCs such as Chanel have several strengths which include strong brand image, high quality products, and excellent management, th ey still need strategies to be able to compete in the market due to increasing number of luxury brands competing. Discussion Various business strategies are employed by companies especially MNCs in order to maintain presence, establish presence in new markets, and compete in their market segment against same products. In the case of luxury brand Chanel, its advantage may be its global presence for more than a century now, but this does not mean challenges are few. First off, Chanel like any other MNC that is new to China, needed strategic global alliance that will harmonize the market entry as well as reduce all possible risks that a foreign investor will go through. 1. Development of global strategic alliances Knoke (2009)