For many years now China represents one of the most popular target markets of the internationalisation of enterprises. The speed of economic development and social changes of China during the last years is indeed enormous and far above average.
Today China is already the second largest economic nation and for many years receives the highest foreign investments worldwide. In 2002 China became Germany’s biggest Asian trading partner taking the leadership over from Japan. Additionally 2012 shall be the German-Chinese cultural year.
A comparable rapid change and development can be seen in the field of biotechnology. Over the last few years biotechnology became more and more important, popular and underwent a tremendous boom.
Pharmaceutical industry is a sunrise industry, especially the biopharmaceuticals, which just starts its large-scale industrialization process. Many large biotech and pharmaceutical companies are strengthening their presence worldwide and have already entered the Chinese market - Roche, Novartis, GlaxoSmithKline and Pfizer, to name but a few. Among these as well BASF operates a joint venture together with the Chinese enterprise Sinopec for the production of high-quality chemical products and polymers.
This seminar paper evaluates possible market entry strategies for the small and medium enterprise MediGene AG into China taking account of socio-cultural particularities.
In the second chapter this seminar paper gives an insight into the characteristics of the Chinese culture and the biotechnological market in the People’s Republic of China.
The subsequent third chapter contains information about the products and today’s internationalisation of MediGene.
The fourth chapter is addressed to the different market entry strategies into China, which MediGene could choose.
Finally, the seminar paper comes out with a conclusion and recommendation for MediGene considering the won findings.
Table of Contents
1. INTRODUCTION
2. CHINA – CHARACTERISTICS OF THE MARKET AND THE CULTURE
2.1 SOCIO-CULTURAL PARTICULARITIES OF CHINA
2.1.1 The Theory of Hofstede
2.1.2 China’s Socio-Cultural Particularities in Comparison to Germany
2.2 BIOTECHNOLOGY IN CHINA
2.2.1 The Development of Biotechnology in China
2.2.2 The Acceptance of Biotechnology in China
2.3 COUNTERFEITING AND PATENT LAW IN CHINA
3. THE BIOTECHNOLOGY COMPANY MEDIGENE
3.1 PRODUCTS AND PATENTS OF MEDIGENE
3.2 SERVING THE FOREIGN MARKET
4. ENTRANCE OF MEDIGENE INTO THE PEOPLE’S REPUBLIC OF CHINA
4.1 MARKET ENTRY STRATEGIES
4.2 EVALUATION OF POSSIBLE MARKET ENTRY STRATEGIES FOR MEDIGENE
4.2.1 Export
4.2.2 Joint Venture
5. CONCLUSION
Objectives and Research Focus
This seminar paper investigates the potential market entry strategies for the German biopharmaceutical company MediGene AG into the Chinese market, while accounting for significant socio-cultural differences and specific market challenges.
- Analysis of socio-cultural particularities of China based on Hofstede's cultural dimensions.
- Evaluation of the status and development of the biotechnology sector in China.
- Examination of legal obstacles, specifically concerning patent law and product piracy.
- Comparative assessment of market entry strategies, specifically export versus joint ventures for MediGene AG.
Excerpt from the Book
2.3 Counterfeiting and Patent Law in China
One of the biggest problems of foreign engagement in China in general is the protection of product and brand piracy.
Empirical studies lead to the fact that there is an original-fake ratio on the Chinese market of 2:1. Furthermore, foreign corporations, which have united to the Anti-Counterfeiting Coalition (ACC) in the meantime, estimate that they suffer from financial losses in the circumference of 15 to 30 percent of their turnover because of counterfeiting in China. In addition to financial losses, product and brand piracy can lead to considerable negative health and security-technical results for the consumers. One example thereof is that about thirteen infants died after they had drunk counterfeit baby food which lacked of life-essential nutrients. Similar cases have become known in the chemical and pharmaceutical industry.
Imported drugs are only affordable and available for the least patients in China. Only one of ten Chinese disposes of a health insurance and the state has moved back to a great extent from the financing of the health system in the meantime. Accordingly, generic drugs and product counterfeits from local production dominate the market in China. Particularly problematic for foreign enterprises are those counterfeits that are not evident. Cheated enterprises are considered to be the putative cause.
Summary of Chapters
1. INTRODUCTION: Provides an overview of China's economic development and its growing importance as a biotechnology market, outlining the focus on MediGene AG.
2. CHINA – CHARACTERISTICS OF THE MARKET AND THE CULTURE: Examines China's cultural dimensions, the current state of its biotech industry, and the significant challenges posed by local patent laws and counterfeiting.
3. THE BIOTECHNOLOGY COMPANY MEDIGENE: Details the company profile, its current product pipeline, and its existing international distribution model.
4. ENTRANCE OF MEDIGENE INTO THE PEOPLE’S REPUBLIC OF CHINA: Evaluates the feasibility of different entry modes, focusing on the risks and benefits of export and joint ventures.
5. CONCLUSION: Synthesizes findings to suggest that while the Chinese market offers growth potential, market entry is currently hindered by infrastructure and legal risks, favoring long-term strategic preparation.
Keywords
Biotechnology, MediGene, China, Market Entry Strategy, Hofstede, Cultural Dimensions, Patent Law, Counterfeiting, Biopharmaceuticals, Joint Venture, Export, Guanxi, Healthcare, Emerging Markets, Investment.
Frequently Asked Questions
What is the core subject of this paper?
The paper focuses on the strategic challenges and opportunities for a medium-sized German biopharmaceutical company, MediGene AG, entering the Chinese market.
What are the central topics addressed?
The main topics include cultural differences between Germany and China, the rapid growth of the Chinese biotech sector, patent protection issues, and various international market entry modes.
What is the primary objective of the study?
The objective is to evaluate whether and how MediGene AG should enter the Chinese market by considering socio-cultural particularities and market entry risks.
Which scientific methodology is utilized?
The study utilizes a descriptive and evaluative approach, applying Hofstede’s cultural theory and analyzing secondary research regarding market entry strategies and legal frameworks in China.
What does the main body cover?
It covers cultural analysis, the specific environment of the Chinese biotech industry, an overview of MediGene’s corporate strategy, and an analysis of the risks and benefits of exporting versus forming a joint venture.
Which keywords define this work?
Key terms include Biotechnology, China, Market Entry Strategy, Hofstede, Patent Law, and Joint Venture.
How does cultural perception in China affect the issue of product piracy?
The paper suggests that piracy is linked to Confucian values where imitation of a master is sometimes viewed as an act of respect rather than an unethical act of theft.
Why is MediGene not recommended to export into China at this time?
Exporting is complicated by the fact that most drug sales are handled through intermediaries in hospitals, leading to high commissions and potential exposure to anti-corruption legal risks.
- Quote paper
- Annike Stahl (Author), 2010, The Entrance in Foreign Markets in the Field of Biotechnology and the Consideration of Socio-Cultural Particularities, Munich, GRIN Verlag, https://www.grin.com/document/146877
