Prof.

Yolanda Ibarle MARKMA-1

YANG SONG April 24 2010

Session 4: SHAPING THE MARKET OFFERINGS

DELIVERING VALUE

Observable, services constitute nearly 40% of national income (the other major part

comes from manufacturing) which need great attention. Students are thus asked to

research and report on the many types of services (banking, savings and loans, bulk

and retail selling, department stores, restaurants, medical care, education, legal

services, etc.) and their corresponding revenue streams.

Since the end of the 1970s, China's service industry has developed rapidly. It is

reflected in two aspects. First, the scale of service industry is expanding. Statistics

show from 1978 to 2002, China's service industry's added value increased from

RMB86 billion to RMB3.45trillion, 39 times up. Its average growth rate stood at

10%, higher than the GDP growth rate during the same period. Service industry's

added value accounts for 39.7 % in 2005 from 21.4% in 1979. In 2003, although

SARS, floods or draught affected China's service industry, it still had rapid

development.

Banking: Years of government-directed lending has presented Chinese banks with

large amounts of non-performing loans. According to the Central Bank’s report, non-
performing loans account for 21.4 percent to 26.1% of total lending of China’s four

big banks in 2002. In 1999, four asset management companies (AMC) were

established to transfer the non-performing assets from the banks. The AMCs plan to

repackage the non-performing loans into viable assets and sell them off to the

investors.

Now, we use the example of Chinese banking. In addition to The People’s Bank of

China (It is national central bank), there are four state-owned banks controlled assets.

They are the Industrial and Commercial Bank of China, China Construction Bank,

Bank of China and Agricultural Bank of China. If you just use their name to

distinguish the nature of their respective share of the market. Then you are wrong.

Features of their respective products by their own users to determine the

characteristics and market characteristics of the decision of the. ICBC customers to

ordinary citizens, the products mainly ordinary savings products; as a branch of China

Industrial and Commercial Bank of China the largest number of the most extensive

coverage, most employees work.

China Construction Bank is the largest private sector bank to establish business

accounts, is the most advanced financial products rich bank. The financial a spects of

the bank is the most transparent, so favored by corporate customers and high customer

favorite intellectuals.

Bank of China is the most comprehensive financial products, foreign exchange banks.
Because it is the largest overseas branch, the establishment of enterprises is also the

longest number of years. If you want to go abroad to study or work, you have to select

it.

Agricultural Bank of China is the best choice for small loans in agriculture. It is the

most in-depth China's rural banking system. If you want to buy agricultural machinery

or agricultural materials, hope to provide you with a number of small loans,

Agricultural Bank of China is the only option. Because their peasant clients with

special care.

Of course, there are businesses between them cross. This is inevitable. However, most

Chinese state-owned banks to these four initial impression, which is self-management,

and market choice given the value of their products.

Bulk and retail selling

Wumart Stores Inc. is a chinese retail company that was founded in 1994. The

company has about 430 stores, 330 of which are convenience stores and 100 of which

are hypermarkets. The stores are located primarily in the Chinese cities of Beijing,

Hebei, and Tianjin, and the cities’ surrounding areas. The company’s stores sell

products that range from food to general merchandise from Chinese and Western

brands such as Procter & Gamble, Unilever, and Colgate. Wumart is often compared

to the American company Wal-Mart due to their similarities in business models.

The name is familiar and a stranger in China might do a double take. But Wumart of

Beijing is proudly independent of the world's largest supermarket group.

In just over 10 years, Wumart has become the leading retailer in Beijing with 453

stores. it has ambitious plans to double in size within five years. China is one of the

hottest turfs in retail. International players from Tesco to Carre-four to Wal-Mart and

Auchan have piled into the country, desperate to woo its 1.3bn consumers and win a

share of an under-developed store sector.

But Wumart, which floated on the Hong Kong stock exchange in 2003 and saw sales

rise by 47 per cent over the three months to March 2005, is showing foreign operators

how it is done.

Wumart's roots can, in fact, be traced back to America but not for the seemingly

obvious reason of its monicker. Indeed, the story of Wumart's gestation is intriguing.

So the resourceful Wenzhong decided to open a living, breathing store of his own, to

showcase his software. And so Wumart was born. "The first store was very successful.

It had annual sales of over 100m renminbi, so this just encouraged me to spend more

time on supermarket development in China.

So the chain that started by accident grew. Pre-tax profit for the year to December 31
was R175m, up 62 per cent on the previous year, on sales of R2.6bn, again up 62 per

cent. Profit is forecast to grow by 45 per cent, 35 per cent and 21 per cent over the

next three years, according to US bank Citigroup.

Wumart's format is simple. It sells low-priced branded and own-label food and

consumer goods from stores of three distinct types: hypermarkets, supermarkets and

mini-mart convenience stores.

Wumart's growth has been helped by booming economic conditions. Retail sales grew

by 13 per cent in China last year, outpacing GDP by 4 percentage points. And for

store groups, Beijing is the most wonderful market. The city has a population of 15m,

four times that of New Zealand, and has seen sales through so-called "organised retail

chains" (as opposed to markets) grow by 40 per cent a year since 2000. The Beijing

region sees annual retail sales of a whopping R600bn. Wenzhong wants to capitalise

on this and is planning to have 1,000 Wumart stores within five years.

Department stores:

ogo Co, Ltd is a department store chain that operates an extensive network of

branches in Japan. It once owned stores in locations as diverse as Beijing, Hong Kong

and Taiwan in China, Jakarta in Indonesia, and Kuala Lumpur in Malaysia, Singapore

and so on, but most of these international brenches are now operated by independent
franchises. Sogo was founded in 1830 in Osaka by Ihei Sogo as a retailer of used

kimono.

ogo also has two main stores in Beijing. The store located in Beijing's southern

district is one of the largest and most prestigious department stores in the city. In

2004, Jiuguang Department Store in Shanghai was opened as a joint venture between

Lifestyle International Holdings of Hong Kong, the owner of Sogo Hong Kong and

the state-owned Joinbuy Group of Shanghai.

ollowing Sogo Group's collapse, the business of Sogo Hong Kong, including the

40,500-square-meter retail property located in Causeway Bay, was sold for US$453.6

million to two local billionaires, Thomas Lau of Chinese Estates and Henry Cheng of

Chow Tai Fook Enterprises when the Japanese Sogo went bankrupt. They took Sogo

public by injecting this asset into Lifestyle International in 2004.

ecause their stores are independent franchise, so when the mother’s company will

bankrupt, however, the whole network and SOGO system didn’t drop down. Maybe,

This is the reason that it can continue growth.

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estaurants

UANJUDE, a famous historied brand of China, was established in 1864 (the third

year of Tongzhi of Qing dynasty). During the 136 years, QUANJUDE has

experienced business vicissitudes and survived the arduous ordeal of time.

Throughout the years, QUANJUDE dishes have been greatly enriched due to

developing and innovation.

ith its long history, Quanjude roast duck enjoys a high reputation among domestic and

overseas consumers for the peculiar roast technique and outstanding quality. It ranks

the first not only in Chinese Famous Dishes, compiled by all-China famous chefs

under the organization of Ministry of Commerce in 1958, but also in Elite of Chinese

Famous Dishes, published by China and Japan in 1982. In many cases, Quanjude lists

the first among famous restaurants.

he foundation of China Beijing Quanjude Group ooon May 20th of 1993 ushers in a

new episode for QUANJUDE . The Group set its developing strategy as taking

advantage of QUANJUDE brand and expanding the business by scaling, modernizing

and franchising with quality playing the crucial role. Since the implementation of the
strategy, QUANJUDE’s business has been booming and more positive meanings are

being brought to the image of the old renowned brand. Currently, the Group has over

60 company-owned and franchised restaurants in China. The annual sales reaches 500

millions yuan (RMB); the number of roast duck annually sold amounts over 2

millions; guests annually entertained top 5 millions. The Group lists one of the largest

food service enterprises in China with 600 millions yuan (RMB) of assets and 700

millions yuan (RMB) of intangible assets.

edical care

Medical care is a special market for China, since most chinese choose govermental

hospital, only a little numbers of rich man choose private hospital. Since 1978, the

chinese government just open economic market, but it until mid-1980s join the WHO

and his medical care’s market was stepwise openning for the foreign medical care’s

communication. Under these words to get two special sample for talk about chinese

medical care’s market.

Beijing United Family Hospital and Clinics (BJU) is the first international standard

full service hospital established in 1997. As joint venture between Chindex

International, Inc. and the Chinese Academy of Medical Sciences, BJU is the first

foreign-invested hospital to operate in China. The hospital has 50 beds and sees over

2,500 patients every week with its 17 departments and services.

As an international standard level healthcare provider, BJU operates on the

foundations of excellence of service, quality of care and the highest levels of safety.

Their 24 hour emergency and intensive care services are among the most advanced in

Beijing.

BJU is the first hospital in China to receive accreditation from the Joint Commission

International (JCI). This means that the facilities, quality and standard of care at BJU

are on an international standard and are comparable to the best healthcare providers in

the United States and many European countries. BJU remains the only healthcare

provider in Beijing to hold this accreditation.

The hospital is staffed by an international team of over 100 physicians from 20

different countries, including the United States, China, the United Kingdom, Canada,

France, and Australia. These specialists are supported by a team of English-speaking

nurses. BJU has over 500 support workers. It’s not every hospital that can provide

english-speaking service for all patient. Right now, Beijing is beame to a international

city, more and more foreigners choose to settle here.

BJU has a sister hospital in Shanghai (Shanghai United Family Hospital). United

Family Hospitals currently has facilities in Beijing, Shanghai, and Guangzhou. The

medical care’s market is limited-open market, coastal and first-line city allow to open

foreign capital hospital, but inbound city not allow to establish that kind of hospital.

Peking Union Medical College Hospital (PUMCH), an institutional Faculty of

Clinical Medicine affiliated to both Peking Union Medical College (PUMC) and
Chinese Academy of Medical Sciences (CAMS), is a renowned general hospital in

China with a prestigious historical background. Designated by Ministry of Health,

PUMCH is the national medical technical support center for diagnosis and treatment

of severe and complicated diseases. Founded by Rockefeller Foundation in 1921, the

hospital, with its gathering of notable experienced physicians, medical professionals

and scientific researchers of various specialties, has maintained its leading position as

one of the top-ranked hospitals in China for over 80 years.

fter 85 years of development, PUMCH not only expanded in terms of experience

accumulation, but also developed a completely unique medically professional culture.

All medical records from history are meticulously preserved since hospital

establishment, PUMCH’s library stores a prolific amount of medical records and

papers in various languages, and numerous professors are acting as national leaders in

various medical specialties.

he PUMC Hospital consists of two campuses comprising over 170,000 ㎡ of clinical

and research working area,1800 hospital beds, with more than 40 medical equipments

and apparatus valuing over RMB 2 million as well as approximately 10 medical

apparatus valued over RMB 10 million. There are 40 clinical departments and 15

adjunct departments, including 10 national key disciplines (in 12 departments) and 2

municipal key disciplines. A hospital based research center was introduced through a

modern Central Lab, Clinical Trial Research Base, and the Animal Research

Laboratory. Over the past decade, patient visits steadily increased, last year alone

tallying up to 1,850,000 outpatient visits, 48,000 inpatient admissions and 28,000

surgical operations, with inpatient admission occupancy above 90%.

UMCH includes 3,980 staff members, including 500 professors and associate

professors and including one Chinese Academy of Sciences academician and two

Chinese Academy of Engineering academicians. Fifty-seven professors serve as

honorary presidents, presidents or vice-presidents in various Chinese Medical

Association (CMA) specialty societies and or the Chinese Hospital Association

(CHA), with 36 professors residing over the CMA’s Beijing Branch. Moreover, 46

professors serve as editor-in-chief or vice editor-in-chief in over 79 state-level

medical journals.

he hospital has 71 doctor degree mentors for 13 programs and 149 master degree

mentors for 19 programs. PUMC post-doctoral training program in clinical medicine

is located within PUMCH. As one of the nation’s top-ranked clinical training centers,

the hospital provides advanced training to over 600 physician fellows and 300 nursing

fellows from various nationwide hospitals annually.

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urrently, the PUMCH Healthcare Center will be established on a 750,000 ㎡

foundation, and the construction of outpatient and surgical buildings will be built over

220,000 ㎡ . Upon completion of the two complexes, patient service, research and

educational environment will greatly improve, providing an elevated plateau and

quality standard for patient care, contributing to medical research and the education of

medical professionals.

Chinese believe governmental hospital have best medical skill and best medic, after

outside of hospital, patient can submit an expense account to treasurer’s office. But if

you hold private hospital’s receipt, you are not allow to submit an expense account.

Because the most private hospital’s target market is rich chinese and foreigners, they

didn’t care about to submit an expense account. So chinese medical care’s market

have particularity.

Education:

Right now, the Chinese market is improving fastest in the world, so more and more

education corporation wants to enter this huge market, but what the present situation

in the Chinese education market? The international students’ situations are about

700,000 Chinese students studying in 103 countries and regions. About 200,000 students

from 188 countries and regions are studying in Chinese universities.

 In the future, they will have more students who would abroad to other countries, and

the English country is main destination, so the English education must be have good

future.

For example, EF (Education First) is the leader of the English education in the

world, EF Education First (abbreviated as EF) is an international education company

that specializes in language training, educational travel, academic degree programs

and cultural exchange. EF was founded in 1965 by Bertil Hult[1], in the Swedish

[2]
university town of Lund. The company is privately-held by the Hult family and

operates 400 schools and offices worldwide. With headquarters in Lucerne,

Switzerland, EF has 9,000 employees and a network of 22,000 teachers and guides.

EF in China, EF is very proud to be chosen to support the 2008 Beijing Olympic

Games—the first Olympics held in China. This epic event will be an opportunity for

China to show the world its culture, history and traditions. We are very excited to be

part of the team that will help make sure that athletes, officials and staff from around

the world communicate effectively.

he Olympic Games are not only a major sporting event, but also a platform for global

cultural exchange. “EF’s mission of tearing down the barriers of geography, language
and culture that separate people fits well with the Olympic cause," says Bill Fisher,

CEO of EF in China. “It’s a natural extension of our brand and what we represent to

become associated with the Beijing Olympics.”

hitbread 1998

F made a giant splash in 1998 by entering two boats in the famed Whitbread Round

the World Race, a 31,600-mile, eight-month yachting event. The EF Education boat

carried the Whitbread’s first all-female crew, and the EF Language boat won the

treasured Whitbread Cup. The Whitbread is the third largest sporting event after the

Olympics and the World Cup in terms of TV viewers.

Legal services:

I frankly talk that I didn’t want to say about this part of any words. Because the

socialism coutry only have 5 countries, they are China, North Korea, Vietnam, Cuba

and Laos. And the reason is most country didn’t want to understand them and their

legal system. China especially like this, because China is high-speed development.

Chinese legal system came from Soviet Russia. In the cold war, Soviet Russia lead

socialism camps, USA lead capitalism camps; but right now, China already replaced

the position of Soviet Russia, China still emphasize that he never became super

country in the world, but no country can believe its words. More and more country
was exceedingly envy China, because their GDP already exceed China so much

before, but present is different now. So the western country deeply have mistake for

China.

At first, those countries started to ask China doing this or doing that, if China did

not follow their words, they will announce bad news for China. For example, they say

that Chinese president is kaiserism, Chinese legal system always do inequitable

verdict, Chinese goernment can not be ensure judicial transparence. But their words is

false news, Mao Ze dong said “no investigation, no right to speak”(Mao Ze dong is

the first president in China. )

The origin of the current law of the People's Republic of China can be traced

back to the period of the early 1930s, during the establishment of the Chinese Soviet

Republic. In 1931 the first supreme court was established. Though the contemporary

legal system and laws have no direct links to traditional Chinese law, their impact and

influence of historical norms still exist.

Mao Zedong maintained that revolution was continuous, and he opposed any

legal system that would constrain it. Actually, the experience tell us that the thing is

not all wrong in the world.

Reference

ttp://members.forbes.com/global/2001/0319/034.html

ttp://www.ef.com/master/about_ef/company/olympics.asp
 h

ttp://en.wikipedia.org/wiki/Legal_history_of_China

ww.unitedfamilyhospitals.com

ttp://en.wikipedia.org/wiki/Healthcare_reform_in_the_People

%27s_Republic_of_China