Group Paper: Sweeties Co.

Introduction and Executive Summary

Our company has been asked to be a consultant for a Sweeties Co. that is planning to sell

fast-moving food products to retail and wholesale buyers. Our main focus is the launch of a new

luxury sweet snack that we will be launching in China. Throughout our research, and with prior

knowledge, we know that China isn’t the most diverse or open country. They operate mainly in-

house and very exclusively. China has a known history of exclusion and strong nationalism, so

we face challenges as a country breaking into the market in this country.

Something we as a country must focus on is the importance of cultural understanding and

proper training. The managers of our country must have this to have any hopes of being

successful in this less than diverse community. In this paper, we will talk about our

recommendation as far as cultural literacy and what will be needed to ensure we conduct

ourselves in the way that is expected in the country we chose to sell in. As stated, we think it is

very important to make sure that the managers of the launch project are appropriately prepared to

conduct themselves in a way that will be positively received and meet national standards.

Another key thing we wanted to focus on is symbolic viewpoint training for our

managers. The symbolic viewpoint can be defined as the view that managers have a limited

effect on the outcome of a situation because there are and always will be factors outside of their

control. We think it is important to understand this and have the knowledge to be prepared to

handle it so that they can properly handle situations. In training our managers to hold a symbolic

viewpoint we are making managers who will be able to adapt to unexpected situations, which

can be expected because of the situation. We want our managers as well as employees to

understand the importance of being a well-operating team and not play the blame game when

extenuating circumstances that are out of their control take place.

Group Paper: Sweeties Co. 2

Country Overview

Nearly occupying the entire East Asian landmass, China is the largest of all Asian

countries and has the largest population of any country in the world at 1.3 billion people. Before

the formation of the Republic of China, China was a battleground for rival city-states. This ended

in 1949 with the inauguration of Mao Zedong and ever since, China has not looked back as a

communist-led republic consisting of multiple branches of government (Mühlhahn, 2019). The

official language of China is mandarin, and their source of currency is the renminbi. In the

following paragraphs, the Five Dimensions of Hofstede about China’s societal structure will be

addressed.

Power Distance Index is one of the five dimensions of Hofstede and can be defined as

how much a society accepts unequal power. Power Distance Index can be large, where people

have respect for their elders and without status, you have no power; it can also be small, where

people try and look younger and powerful people try not to show their status or power. In China,

they have a large power distance within their culture. According to Durriya and Zahid

Khairullah, “the subordinates acknowledged the authority of managers to make decisions in

organizations. The decision-making was a top-down process. The mindset of the employees was

“follow my leader”. The employees would not disagree with managers in front of their

colleagues. If they had questions or disagreements, they would approach managers on a one-to-

one basis” (Khairullah & Khairullah, 2013). Ultimately, the subordinates do not have any power

as they have to do as their managers say.

Group Paper: Sweeties Co. 3

The second dimension of Hofstede is individualism/collectivism. A society-based

individualism relates to those who only focus on themselves and their immediate family, while a

society based on collectivism relates to those who focus on the community at large. According to

Durriya and Zahid Khairullah, “the Chinese workers were group-oriented, and the Chinese

society is collective. Since Chinese value respect, friendship, saving face, group goals, and long-

term objectives more than short-term objectives, managers attempt to make decisions that will

reflect the long-term perspectives and collective goals of the organization. In other words, how

the decisions will benefit the entire group members as opposed to certain individuals only is an

important consideration” (Khairullah & Khairullah, 2013). Overall, we can see that China is a

textbook definition of what a Collectivism society is.

Masculinity vs. femineity is the third dimension of Hofstede. Masculine dominant

societies can be described as assertive or competitive ways of thinking and acting and Feminine

dominant society can be described as a society that cares for others and the quality of life.

According to Durriya and Zahid Khairullah, “Managers sampled said that they have to be polite

and avoid openly aggressive behavior, which reflects Chinese cultural emphases on restraint and

moderation” (Khairullah & Khairullah, 2013). With this being said it can be concluded that

Chinese society can be described as a feminine society rather than a masculine society.

The Uncertainty Avoidance Index is the fourth dimension of Hofstede. This indicates

how much members of society feel at risk about uncertain and confusing situations. In China,

they tend to be on the safer side of things and don’t take as many risks in life. This statement is

supported by Durriya and Zahid Khairullah who state that “In following the cultural values of

harmony and avoiding uncertainties in life, managers in China make relatively safer and less
Group Paper: Sweeties Co. 4

risky decisions” (Khairullah & Khairullah, 2013). Overall, this depicts China’s evident

avoidance of uncertainty.

The fifth and final dimension of Hofstede is Long vs. Short Term Orientation. Long-term

orientation can be defined as the building and completion of society’s future goals while short-

term orientation can be defined as the construction and preservation of society’s past and present

goals. This statement is supported by Durriya and Zahid Khairullah who states that “Since

Chinese value respect, friendship, saving face, group goals, and long-term objectives more than

short term objectives, managers attempt to make decisions that will reflect long-term

perspectives and collective goals of the organization” (Khairullah & Khairullah, 2013). In

conclusion to the statements above China is a long-term-oriented society that is focused on future

goals.

External Environment and SWOT

Threats: As a Western company, Sweeties Co. doing business in China can be tricky yet

full opportunities. Research shows that many different threats are involved

with becoming a foreign business operating in mainland China. American companies specifically

are drawn to investing in China, due to lower costs, however, “China can be a daunting

environment in which to start a business because of the opacity of the cultural norms and a

growing sense of nationalism,” (Anglès, 2019, page 54). While China has somewhat modern

business tactics like the West, within that modernity lay their unique traditional values. These

values can be hard to navigate and breakthrough as a company that follows Westernized ideas.

Another threat is that their foreign direct investment (FDI) from the EU and the United States is

now only accounting for eight percent. One of the reasons, “for the low level of Western FDI in

China is concern over the discretionary and possibly biased enforcement of local laws and
Group Paper: Sweeties Co. 5

regulations, the threat of counterfeiting by local businesses, growing nationalism, and an overall

lack of predictability in the business and political environment.” (Anglès, 2019, page 54). Unlike

the United States and Western culture that values stability, the Chinese view their country as

fluid and always moving in a cyclical movement. This unpredictability is a threat because there

is no guarantee that their laws or idealizations will progress and not regress in the future. This

uncertainty would make it exceedingly difficult for foreign companies to feel comfortable

investing in this country.

Opportunities: However, despite the seemingly great number of threats, there are major

opportunities when it comes to bringing business to China. An opportunity that is seemingly a

threat, is that China is actually behind the West in terms of technology, and “[a]lthough China

has enjoyed the benefits of an expanding market for production and distribution, the industry is

suffering from minimal innovation and investment in research and development and new product

development; the sector’s economies of scale have yet to be achieved. Most domestic

manufacturers lack the autonomic intellectual property and financial resources to develop their

brand name products,”(Anglès, 2019). This is where we can step in. Coming up with an

innovative way to sell or product will give us a competitive advantage. With more freedom, and

abilities to innovate, our company can get ahead when entering the market, as long as we follow

the rules and regulations set in place by the Chinese government.

To add to this China also has an initiative that they proposed in 2015 that pledges that

they will be self-sufficient by the year 2025 (Anglès, 2019, page 60). These are major

opportunities because China is so stunted in its technological growth. They need the

West to learn from their technological advances to gain experience. It would be

beneficial for a company to join the Chinese market because they essentially need Western
Group Paper: Sweeties Co. 6

companies to complete their endeavor of becoming a self-sufficient nation. To be even more

specific on the consumer side, China has a huge snack and confectionery market, “[i]ts total size

being more than £3bn, of which 35% comes from on-the-go products,” (Barston, 2018, page 29).

With that in mind, it is important to note that there is room to grow in this market, so it is

beneficial to join now. It is also important to note that joining this market not only has an

economical benefit, it also has a technological benefit, in the sense that we will be able to learn

and grow from the industry norms in China, and carry that on into our future endeavors;

wherever they may take us.

This is an extreme opportunity for a luxury snack company like Sweeties Co. This means

that the consumers of China are already large consumers of sweet goods and snacks and will

most likely be very receptive to a new brand on the market that is available to them.

Although there are many threats to starting a business as a foreign company in China, it is

not impossible to create an environment where Sweeties Co. can thrive. The first step to

succeeding

as a Western business in the Chinese landscape is to adapt to their culture and customs. Because

the people of China have a high sense of nationalism and unity, it is important as a company, to

appeal to, and be accepted by the surrounding community to take advantage of the opportunities.

Stakeholder Evaluation

The Chinese Confectionery market has seen large and constant growth in recent years as

consumers increasingly turn away from traditional sweets and instead purchase more Western-

style Confectionery products such as Gum, Sugar Confectionery, and Chocolate. This is

highlighted by the high market growth rates, the second-highest in the world behind India, with a

CAGR of 5.6% during 2010-2015. This is forecast to reach a CAGR of 5.1% between 2015-2020
Group Paper: Sweeties Co. 7

as consumers opt for more Confectionery products instead of traditional offerings. Rising

disposable incomes and increased awareness about foreign treats are also driving the market,

with volumes now standing at 1,077kg million in 2015, compared to 821.4kg million in 2010.

Customers: Overall our customers are the general Chinese market. Our target market looks to

include women in general and mothers who look to buy candy for their children.

Women consume the most Confectionery products in China as they account for over 30 billion

consumption occasions annually compared to men, who account for 28.7 billion as of 2015.

Competitors: The companies holding the largest market share in the Chocolate & Candy

Production in China industry include Mars Foods (China) Co., Ltd., Nestle (China) Co., Ltd.,

Perfetti Van Melle Confectionery (China) Co., Ltd., Ferrero (China) Co. Ltd. and The Hershey

Group. Another major issue with the Chinese confectionery market is the competition between

the domestic and imported markets. The domestic candy & confectionery industry has been

expanding over the last 10 years, and various international candies, such as health-care-oriented,

low-sugar-oriented, fun-oriented, and ecotype are speeding up to enter China’s candy market.

Back in December 2011, MOFCOM (Ministry of Commerce) approved Nestle to purchase 60%

stock ownership of Hsu Fu Chi, the biggest candy brand in China. The competition of domestic

candy corporations mainly focuses on the price level and is relatively weak in the new field

development in comparison to foreign corporations. The product homogenization seriously

interferes with the competitiveness between domestic candy corporations and foreign brands and

leads to the result that profit for domestic corporations is far less than that of foreign brands.

Moreover, major markets for domestic brands are second and third-grade markets. Competing

with foreign corporations it is hard for domestic corporations to develop products in the Chinese

candy & confectionery industry.

Group Paper: Sweeties Co. 8

Recommendations

Although we live in a more diverse world, China is not known for diversity. It is

important to recognize that Sweeties Co. is a foreign entity. It can be hard to maneuver in a

country so saturated in nationalism and lacking in inclusion. Managers that are placed at

Sweeties Co. need to be equipped to handle the advanced yet diverse stagnant country.

The first recommendation is Cross-Cultural training for all managers. Cross-Cultural

training is important because it goes beyond the diversity that we experience in our own country.

Cross-Cultural training provides the toolkit needed to deal with the host country’s characteristics

in a way that facilitates peace and understanding. Cross-Cultural training would brush managers

up on proper etiquette as well as appropriate/inappropriate behaviors. The last thing Sweeties Co.

needs is to have a bad image/name, especially in a country that might not be the most accepting

to newcomers. Sweeties Co. needs to make sure that it is an authentic and responsible entity from

the beginning. If a new company were to burst onto the scene but was being trashed by the

media, it would be the talk of the town. Sweeties Co. should be a place the people of the country

want to work, as well as transplants. Cross-Cultural training could help American or Chinese

managers better understand and interact with the opposite nationality friendly and courteously.

Sweeties Co. is more likely to be accepted in a country like China if it maintains a good name as

a respectable company. The only way this is possible is if the leaders of the company can adapt

and accept a new culture.

Second, we recommend a symbolic viewpoint be a part of training for managers.

Employees and other leaders must understand that external factors can and will affect the success

or failure of Sweeties Co. This holds everyone accountable as opposed to pointing the finger.

The symbolic view fits better in team settings. To maintain a good name as a respectable
Group Paper: Sweeties Co. 9

company, Sweeties Co. needs to refrain from ideals that support finger-pointing and blame.

Problems like these attempt to unravel the foundation laid by cross-cultural training by

catalyzing problems between employees and managers. Managers still have responsibilities and

duties to fulfill, however, Sweeties Co. is not a one-man army. Sweeties Co. will be operating on

foreign territory, stereotypes and prejudice can affect the success of a company. Without a

symbolic viewpoint in place, the manager would be to blame for things outside of their control.

Symbolic viewpoint training can be implemented into cross-cultural training since they do

intersect each other at some point.

Authentic Leadership training is always important. Authentic leadership focuses on the

moral aspects of being a leader. While many rules and codes of ethics are second nature, all

managers must be on the same page. All managers should be required to take authentic

leadership/ethical training. Managers must be on the same page about what is right or wrong.

Managers should understand how to conduct themselves. To keep a good image and to keep

employees happy and engaged, ethical training is necessary. Without ethical training, Sweeties

Co. could find itself back to square one. The managers represent the company, without ethical

training they could easily ruin the image of Sweeties Co. Again, Sweeties Co. is a foreign entity,

they will be watched closely.

Lastly, leadership training and conflict resolution should be a part of managerial training.

Leadership training is important as it touches on some very important topics like:

● Contextualization- learning set in strategy and culture.

● Personalization- learning related to aspirations.

● Trust building- build trust amongst the team.

● Mentoring
Group Paper: Sweeties Co. 10

● Situational analysis- assess and analyze a situation to determine the best outcome.

Leadership training is the last recommendation but certainly not the least. Some parts of

leadership do intersect with other recommendations because they all have a common goal.

Leadership training is the foundation for how Sweeties Co. will run its business. Oftentimes, the

worst managers lack simple leadership training, and it shows. It is okay to mix-match and

combine different training recommendations to create one robust training crash course.

Sweeties Co. must remember, they are the transplant in a host country, the company structure is

being watched by big brother.

The fact that China is growing in economical and political power(Grosse, et al. 2021) is

something that needs to be taken into account when making recommendations. China ranks

second, behind the United States, in GDP at just over 14 billion. While the coronavirus pandemic

has plagued many nations and businesses, China seems to be on the right track with Xi Jinping in

charge.

Our market recommendations coincide with China’s growing liquid sugar market. While

North America is expected to dominate, China is a close second. The liquid Sugar market and the

Europe Liquid Sugar market are predicted to follow the North America Liquid Sugar market

within the global Liquid Sugar market in phrases of revenue(AP, 2021). This is a sign that

Sweeties Co. should set up a shop in China. Make no mistake, China being second to the United

States in GDP and the liquid sugar market does not make China a weak second option. China’s

economy has a lot of potentials.

Children, ages two and older, will be targeted due to their increase in snacking habits

after 2004 (Wang, 2012). Although these children are not necessarily snacking on sugary items
Group Paper: Sweeties Co. 11

all of the time, we are confident that Sweeties Co. does have an audience. With the liquid sugar

market growing and hungry kids ready for a fun snack, Sweeties Co. could have a lot of success

in the market. Higher-income families and Urban communities still enjoy snacking.

Kids love social media and trying new things. Sweeties Co. needs to align itself with

social media platforms like YouTube. There are hundreds of videos of people trying snacks and

treats from other countries. If Sweeties Co. could enter the market with a fun snack that people

need to try, they can align themselves with a trend. Once one person on a platform tries this new

snack, other kids will follow suit. Sweeties can collect consumption data pretty easily from a site

like YouTube. Sweeties Co. needs to align itself with social media by making the snack stand

out. Sweeties Co. needs to understand what makes Sweeties Co. different and capitalize on it

through the use of social media. Preferably in the form of a challenge or trial and error. Similar

to how African delicacy Fufu Egusi soup has taken off and generated revenue because everyone

wants to try it.

To successfully launch Sweeties Co. managers need to understand the culture of Chinese

children. Thankfully, most kids around the world are doing the same thing: social media.

Managers need to understand the culture to keep the target audience entertained and engaged.

Everything leads back to cross-cultural training and market training. Managers need to stay in

the “know” and be aware of sudden market changes. The newest challenge or fad comes quickly.

Managers need to be ready to do the Junebug challenge if they have to relate to the target

audience. To do this there need to be strong cultural ties. It is important that like Microsoft,

employees, and managers have a sense of purpose and are working together as a team to push a

brand they believe in forward.

Group Paper: Sweeties Co. 12

Based on the research completed, we recommend that Sweeties Co. does enter the

Chinese market. In addition to China seemingly having control over the coronavirus pandemic in

their country, China: is also growing economically and politically, has a growing liquid sugar

market, and has children who snack often. With all factors taken into consideration, Sweeties Co.

has great potential in China. Although there are mild adversities, proper managerial training at

Sweeties Co. will give the company the tools they need to attain success overseas. Managers

need to understand the importance of accepting and participating in other cultures. Managers

need to have a strong sense of self and must feel like a part of the company’s culture. If the

foundation is laid correctly, Sweeties Co. will have no problem taking over the market.
Group Paper: Sweeties Co. 13

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