SUCCESS STORIES

For inspiration and best practices, consider the following examples. Both are large companies, recognized world over. But in entering difficult
markets, both did their due diligence to achieve successful footholds in their target region.

Huawei Enters India

Huawei is second largest supplier of telecommunications equipment in the world. Huawei set out to enter India in 2000. There were several
challenges to be overcome. The Indian telecom supplier market was heavily saturated and to make an impact, Huawei needed to separate itself
from the rest and create a distinct identity as well as a reputation for reliability. Historically, Indians have viewed Chinese companies as hard to form
relationships with and Chinese made products as subpar and inferior. In addition, China and India have relatively uneasy diplomatic relations.

To counter these issues Huawei employed carefully thought out strategies. Contrary to the market view of inferior products, Huawei channels
10percent of its yearly profits into research and development. Given high sales figures, this is a substantial amount. Huawei began establishing its
foothold in India by setting up R&D and service center facilities in India and hiring predominantly locals to show commitment to creating value for
Indians rather than just extracting benefits. India is now Huawei’s second largest research center outside China.

In addition to this, Huawei works with local producers at its manufacturing plants in Chennai. Sourcing components locally is cheaper and allows
local companies to raise their manufacturing standards to international levels of quality and become more competitive and skilled.

Huawei is now working on positioning its smartphones as aspirational products by working with local English Language channels to hold contests
and beat the stereotype of a low quality Chinese product. As an employer, the company rewards R&D talent and promotes Indians to managerial
positions. By establishing a strong research and innovation reputation in India, Huawei can boost its image worldwide.

Huawei’s entry into the Indian market is a great point of reference for any company. The lesson to learn is that establishing trust, building and
sustaining relationships and showing continuing commitment to the new market can lead to a successful foothold and increased opportunities.

Starbucks Enters China

Starbucks has a strong presence all over the world. Over the years, the company has developed an internationalization strategy that allows it to
enter new countries. Market research plays a key part in Starbucks’ major market entrance strategies.

In its bid to enter China, Starbucks needed to be as inoffensive as possible to the Chinese culture. Through research it was established that the
usual advertising methods may come across as a direct attack on the tea culture that prevails. Instead, stores were opened in busy areas with high
traffic and visibility to promote brand recognition. In addition, products were introduced that included tea based ingredients, helping bring together
the tea and coffee drinking cultures.

Negative views towards elements of capitalism were also a key consideration. Starbucks carefully researched this aspect and discovered that the
middle class in China accepts Western brands and luxury items as a means to pursuing a certain lifestyle of quality. The no longer consider these to
be signs of over indulgence or decadence and neither do they see it as contrary to nationalism. Major cities in China now rank high in sales of
luxury goods and availability of luxury stores.

Through market research, the company was also prepared for the fact that China is not one similar market. Instead, different strategies were
created for different areas. Northern Chinese culture differed substantially from eastern China. Spending power was considerably lower inland as
compared to more prosperous coastal cities. This complexity was catered for by establishing partnerships with local companies to ensure
successful expansion. This strategy helped Starbucks customize its offering according to regional tastes. Starbucks also understood that western
brands are perceived to higher quality than Chinese brands and are therefore seen as premium brands. Through trained Baristas that act as brand
ambassadors, the company ensured consistently high service and product quality.

Fearing illegal copies of its business model and brand, Starbucks anticipated the need for copyright protection. Within four years of opening its first
café, all major trademarks had been registered in China. Any effort to build a copycat enterprise have therefore been unsuccessful.

Through an extensive study of a potential new market, Starbucks has perfected the art of localizing a globally recognized brand. A global brand
does not have to mean uniform products. Instead, by catering to many different local tastes and preferences, the brand is strengthened and
manages to gain a strong, long term foothold in each new market it approaches.

LESSONS TO LEARN
The key to success in a new market therefore seems to be in the correct understanding of what the market is and what the unmet needs are. This
knowledge followed by a well-rounded and well researched strategy and action plan may be the difference between success and failure for a
business.