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Market Knowledge

India is relatively backwards in its economy compared to China but their technology is far advance evidenced by its nuclear technology. Thus, it may deducted that what can be exported to India would have to products that area cheap and would cater to its masses with low income. Basic essential commodities like sugar, wheat, corn can be much of regular traded products with India. Vietnam, on the other hand needs to expand its agriculture and forestry and it may need agricultural inputs and machineries to mechanize its agriculture.

Market Knowledge and Niches, Customs and Traits in China as an Example Why China has evolved into the largest consumer market is obvious, it is numerous in population, the Chinese have money to spend and their trade deficit maybe none existent. China has already acquired voluminous hard foreign currency that western companies are always after this “money trail”. China’s currency, the Yuan, has been subjected to devaluation pressures by the US dollar and has not yielded. This is one of the biggest reasons why the China market is of much importance to trading firms in the western world.

China’s exports maybe far larger than what it imports, and information about this is usually classified as confidential. Currently, the whole of China is controlled by a few (about 20) ruling families and the government policy is to eradicate trade deficit. How they do this poses difficulty for traders to penetrate the market. For one to appreciate the intrinsic process how to penetrate the market of China, it is best to segment what goods China is buying. Basically, there are three large categories of what kind of goods China buy outside, these are essential goods, raw material, and consumer goods.

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Topping the essential goods market list commodity is oil, oil products, coal, and ammonia fertilizer (also a petrol by-product). In 2005, the oil bill, or imported oil and oil products was estimated to be US$ 2 trillion. China does not have oil reserves and is heavily dependent on oil importation to meet its energy requirements and this is why the products mentioned above are essential. At the moment, China oil refineries are not geared to produce ammonia fertilizer (urea), an oil by-product, unlike the oil refineries in the Ukraine.

This is one of the economic pressures that the U. S. has bestowed on the China economy and probably a tactic to devaluate the Yuan. It is best exemplified by creating an artificial cut in the supply of crude oil in the world market leading to skyrocket world prices, probably an offshoot of the war of the U. S. with Saddam Hussein. China will inevitably import oil with no downtrend in volume from the existing levels of importation. Raw material imports of China pertain to scrap iron, fibers for the textile industry, ores (aluminum, iron, copper, magnesium) lumber, resins), are just some of the few examples.

During the last two years, Chinese demand for steel has pushed world prices for this commodity upwards. It was theorized that the need for steel was for construction of the structures for the 2008 Olympics. Though the construction is in the finishing stage at this time, demand for steel has not comparatively changed. This means that there is construction expansion somewhere in the mainland. The consumer market would vary in terms of goods, which could range from mangos, bananas, and pineapples or mainly food items, either imported fresh or processed.

Consumer goods mostly imported by China are edibles. Other commonly known consumer items such as clothes, apparel and shoes but China no longer have import these and has partially or wholly solved the supply problem. As early as the first part of the 90’s decade, some South Korean and U. S. companies were already in partnership with the Chinese and have established manufacturing plants in China mainland. These foreign companies have put up manufacturing plants in the mainland because of the relatively cheap labor.

Naturally, the Chinese now had a chance to copy the technology and that is what they exactly did. Machineries and equipment were copied and mass produced, thereby relieving the industries concerned on machinery maintenance, upgrade and total dependence on foreign technology. This has become their policy when it comes to foreign investors. When the Chinese produced their own machineries to manufacture clothes and shoes, they went into mass production themselves to come up with surplus. When there are surplus goods, there are also export sales.

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