North South University

SBE, Department of Marketing and International Business

International Business

Course Code: INB372

Semester: Fall 2021

MIDTERM

Section:16

Submitted to: Mehnaaz Samantha Kamal, Lecturer, NSU

Group No. 4
Group members

Name ID
Sumaiya Sharmin Raya 2014087630

Tahalila Hossain 2011863030

Md. Sharukh Ahsan 2013855630

Adiba Jafrin 2011388630

Nahid Khan Rashna 2011297630

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Apple (china)
1.Introduction
A multinational company worth more than 2 trillion which successfully made world recognition none
other than apple. A brand with its extraordinary innovative devices which made its way worldwide.
Apple's headquarter is located in California, United States; Apple started its remarkable journey with a
computer by Steve Wozniak and Steve jobs in 1976(Rogerson, 2021). Apple first iconic device was
iPhone, in 2007, which created hype worldwide. Through thick and thin apples, 20-year journey faced its
fair share of lows and ups; still, it managed to become the world's finest and niche brand. In today's date,
apple has more than 500 retail shops worldwide. Some countries like the US, China, Japan, Australia,
etc., are the primary user of Apple, and Apple gets their most profits from them.
2.Market Analysis:
i. Globalization of market:
As a global company, Apple China operates in more than just one country. Various barriers like price
instability, culture, currency fluctuation, etc., can become a problem while dealing with foreign countries.
But Apple manages to grab all the market's attention by serving the finest products that are also user-
friendly, at a significantly cheaper rate. Apple manufactures their products in China, and China's
beneficial government policies, stability, low-cost, high-end products, more accessible export policies,
etc., makes Apple China an enchanting sight to the global market. According to some analysts, Apple
became the world's first US Company to become a firm of $2 trillion, primarily because of China. (Apple
Makes History, Chinese Market Helps, 2020)
Globalization of production:
By globalizing production, companies can lower their overall cost and improve product quality.
Outsourcing materials from foreign suppliers helps determine the final product's quality because they are
the experts in that field.
 Apple used to outsource its raw material from various countries and assemble them in the home
country USA. Most of its material used to come from China. To reduce costs, Apple shifted all of
its manufacturing operations to China, which helped them cut costs to the shipment of raw
materials and save time and a considerable number of skilled workers with low
wages. (BUSINESS ENVIRONMENT IN CHINA: ECONOMIC, POLITICAL, AND CULTURAL
FACTORS, 2010)
ii. Political environment:
China is a socialistic country controlled by the Chinese Communist Party (CCP). China's political system
framework is based on the systems of people's congresses, multiparty cooperation, regional ethnic
autonomy, and self-governance at the primary level of society. (BUSINESS ENVIRONMENT IN CHINA:
ECONOMIC, POLITICAL, AND CULTURAL FACTORS, 2010)
Cost
Currently, China's overall political situation is stable. The government successes to increased economic
interdependency and increased the number of trade and investment flows. (Atradius, 2021)
Risk
There are some risks involved, and one of them is knowing the rules because of the constant battle
between the central government and local governments. (BUSINESS ENVIRONMENT IN CHINA:
ECONOMIC, POLITICAL, AND CULTURAL FACTORS, 2010)
Opportunities
One of the big reasons the multinational companies are shifting their manufacturing process to China is
low cost. Not only that, China's common tax policy and competitive currency practice helped to grow
global businesses like apple and reduce manufacturing costs. (Schwartz, 2021)
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iii. Economic environment:

China has a socialist market economy, where the government controls a part of the economy and a free-
market economy. This economic system falls under a mixed economy.
Cost
Being a diverse economic country, China opened the door to multinational companies to invest in China
more because of low cost and a greater workforce. By doing so, Apple can cut production costs and lower
their final product prices, bringing more customers to the company. Just in China, Apple sold 228 million
iPhones in 2017, leaving behind their home country (Statista, 2021a)
Risk
China started to show a slow market economy. Before 2010, their GNI was booming and used to reach
nearly 20% each year. That number began to decline after 2011, and by 2015 the growth became single
digit, which raised concerns to multinational businesses like Apple. (China GNI Per Capita 1962–2021,
2021)
opportunity
After joining WTO, China opened its resources to the world; by doing so, multinational companies started
coming to China. Apple switched its manufacturing process from the USA to China because of low
material cost and skilled workforce. So, from the perspective of multinational companies, business
opportunities in China will be huge soon. (When Barack Obama joined Silicon Valley's Top Luminaries
for Dinner in California Last February(2011), Each Guest Was Asked to Come with a Question for the
President., 2012)
iv. Legal Environment:
China is a totalitarian state with far more rules and regulations than the United States, which is why it's
challenging to establish a successful business for foreigners following China's legal system.
 Employee's safety law
 Working hour: On average, laborers should not work any more than eight hours per day and 44
hours per week
 Companies are obliged to contribute to employee social insurance.
Risks
China's Regulatory Difficulties (Froese, 2019)
 Protracted administrative procedures
 Lengthy and unclear procedures of permissions, registration, and licensing of foreign countries
(Schwartz, 2021b)
 Taxation
 The constant change of business policy
 IP issues
Problematic Governmental Behavior: (China - Market Challenges, 2021) The Chinese government is
far more involved in the economy, and the regulations and restrictions are harsher than in the West
Opportunities:
Many organizations seeking to extend their distribution network find China an attractive market, and
there are numerous reasons to pursue prospects in this country. In China, each company's scope of
business is specified in its registration documents. This is the lawful range of goods and services that a
firm can provide.
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v. Cultural environment.
China is a conservative country. Its work environment is based on Confucianism (Business Practices in
China - Santandertrade.Com, 2021); China is all about respect and belief in cultures.
1. Loyal and trustful values at work.
2. Respect towards the upper-level authority.
3. Correct dress code
4. Smalltalk.
5. Punctuality
6. Prefers Building friendly relationships among the party they are working with.
According to Hofstede's theory, apple china has quite the opposite business culture than USA apple home
country.

Hofstede's dimensions China business culture USA business culture

Power distance High power distance Low power distance

Individualism Vs. collectivism individualism

collectivism

Uncertainty avoidance Ambiguity Prefers diversity, innovation

Masculinity vs. femininity masculinity Masculinity

Long term Vs. short term Long term goal Short term goal

From these overviews, china business ethics is

 goal-oriented
 Thoroughly focused on work
 competitive environment between companies
Chinas work environment can be described as a go-getter. They are highly intellectual and focused; they
always come up with new, innovative, and advanced ideas that make the world one of the leading
countries of all time. Although there can be a resistance to new ideas as the inequality of employee level,
they like to work together and maintain a friendly working environment.
3.)How the home market conditions facilitated the success of the company in the international
market:
Apple's home market is in the US, which itself is a stable and welcoming market. These are some
conditions that benefit the company in the international market:
1. Open market: The US follows the rules of an open market, which means there are little to no
barriers that make trading easy. The open market attracts foreign markets and eventually benefits
Apple as an international company.
2. Larger markets with higher growth rates: larger markets with higher growth rates attract
international buyers more. The US market is already huge, and some statistics show that Apple's
global revenue reached 81.4 billion USD this year. (Statista, 2021)
3. Political and economic stability: When it comes to political stability, the US is no. 28, and its
economy's been immensely stable for the last ten years. These two factors can have a massive
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impact on international consumers. So, these are some main home market conditions that made
Apple what they are today.
4. Innovative ideas and competitions: Apple always comes up with unique ideas that no one has
seen before. Such as Apple Pay, biometric facial recognition, iMessage, and many more
innovative features; these new features keep on engaging more people in the market and help
reduce competition with other similar companies.
5. Customer-focused: They serve what consumer wants; that's why their demand is so high in the
market. All the complaints from the customers are answered within 24 hours.
Because of Apple's creative ideas and excellent niche market strategy, it became the world's biggest brand
and business.
4. Conclusion
In conclusion, we can see that there are quite a few obstacles for apple in terms of establishing a business
successfully in China and its home country USA. Although in the past few years, there have been a lot of
collisions between these two countries because of the decrease in sales, fraudery, replication, and
reselling of apple products illegally. Despite having all these risks, there are opportunities too. China has
the most prominent business market, population, and factories, which is beneficial for apple to produce
products and distribute globally. For these high opportunities, apple still has many ways to solve these
issues and grow on a larger scale in China.
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5.References
Atradius. (2021, March 9). Country Report China March 2021. Group.Altradius.Com.
https://group.atradius.com/publications/country-report-asia-china-march-2021
BUSINESS ENVIRONMENT IN CHINA: ECONOMIC, POLITICAL, AND CULTURAL FACTORS.
(2010). https://www.usi.edu/media/3654697/Business-Environment-China.pdf
Business practices in China - Santandertrade.com. (2021). Santandertrade.Com.
https://santandertrade.com/en/portal/establish-overseas/china/business-practices
China GNI Per Capita 1962–2021. (2021). MacroTrends.
https://www.macrotrends.net/countries/CHN/china/gni-per-capita
China - Market Challenges. (2021, February 3). International Trade Administration | Trade.Gov.
https://www.trade.gov/knowledge-product/china-market-challenges
Froese, F. J. (2019, August 22). Challenges for foreign companies in China:. . . Asian Business &
Management. https://link.springer.com/article/10.1057/s41291-019-00084-
0?error=cookies_not_supported&code=6820d567-b119-469f-83e4-8124a6cb4c60
Moorman, C. (2019, October 21). Why Apple Is Still A Great Marketer And What You Can Learn. Forbes.
https://www.forbes.com/sites/christinemoorman/2018/01/12/why-apple-is-still-a-great-marketer-
and-what-you-can-learn/?sh=4675d52415bd
Rogerson, B. (2021, November 10). Ultra-rare Apple-1 computer sells for $400,000 (and you thought the
new MacBook Pro was expensive). MusicRadar. https://www.musicradar.com/news/rare-apple-1-
auction-price
Schwartz, N. (2021, June 4). Advantages of Doing Business in China | Pros and Cons | Xinergy Global.
Global Business Strategy Consulting. https://www.xinergy.global/why-do-business-in-china/
Schwartz, N. (2021b, June 4). Advantages of Doing Business in China | Pros and Cons | Xinergy Global.
Global Business Strategy Consulting. https://www.xinergy.global/why-do-business-in-china/
Statista. (2021, September 10). Apple's revenue share by operating segment 2012–2021, by quarter.
https://www.statista.com/statistics/382260/segments-share-revenue-of-apple/
Statista. (2021a, June 3). iPhones installed base in the United States, China and ROW 2017.
https://www.statista.com/statistics/755625/iphones-in-use-in-us-china-and-rest-of-the-world/
When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February(2011),
each guest was asked to come with a question for the president. (2012, January 22). Tarpon’s
Swamp. https://tarpon.wordpress.com/2012/01/22/when-barack-obama-joined-silicon-valleys-
top-luminaries-for-dinner-in-california-last-february2011-each-guest-was-asked-to-come-with-a-
question-for-the-president/