STRATEGY ASSIGNMENT

Submitted to:

Sir Shafqat Hameed

Submitted by:

Maria Iftikhar

Roll No: 01-120082-030

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 Research Design

It is said in a report that by 2025 China will become the world’s third largest consumer market as it
moves from being a “Made in China” to a “Sold in China” society. Small to medium-sized businesses
(SMEs), traditionally the motor for entrepreneurial growth worldwide, already account for more than
99% of all China’s enterprises, 55% of its GDP and 75% of its workforce. Aside from the normal
resources and skills needed to initiate and successfully develop businesses, especially those dealing in
international markets, SMEs in particular need access to excellent “hard“ (roads, railways, ports) and
“soft“ (phone, internet, regulatory) infrastructure.

Methodology:

In light of the information about Chinese retail market, the best method of progress for Pakistan
retailers operating and/or intending to operate in China is formulated. Most of the studies are
conducted on luxurious brands existing in china who have managed to become market leaders through
their strategies.

Findings:

Chinese market is tied with demographic, economic, cultural and industrial factors as well as
consumers’ highly positive perceptions of foreign brands seen as status symbols that have attracted
foreign investors. However, when entering the market consideration should be also given to structure
of retail environment, brand image, distribution formats and positioning efforts recalling that the
Chinese market is relatively not brand educated. Based on the information obtained emphasizes that
diversity is the key in defining the market and limited localization should be the main concern of
product mix.

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 China Strategy

China is a rapidly growing market which is currently sufficient in almost all kind of products. The last
few years have seen remarkable growth in the number of US companies establishing operations in
China. China is a great growth opportunity for US firms if the strategy is practical and put into
practice correctly. Up till now many US companies are rushing to China the way gold prospectors of
the mid 1800’s rushed to California--blind and overly optimistic! Success in China requires an iron
clad vision and a strategy consistent with the overall business strategy.

The majority of brands functioning in china are of European foundation and extend across various
sectors such as jewellery, clothes, accessories, footwear and cosmetics. The China is a collective
culture with strong values and distinct buying habits. According to the large business research
companies of China, the attitudes of people towards luxury goods are equally positive among
different age groups and income levels.

Starting a business in China:

Starting a business in China is a profitable idea for any business houses. To successfully launch a
business in China and to ensure growth of business, one needs to have thorough understanding of this
complex market. Along with having comprehensive knowledge of the market trends and customer
behaviour, one also need to have clear ideas about the laws of the land.

Introduction to HSY (Hassan Shehryar Yasin) Designer:

HSY is a promising South Asian fashion label started by Pakistani designer Hassan Sheheryar Yasin
in 2000. Fashion designer Hassan Sheheryar Yasin (HSY) is one of the biggest names in Pakistan
Fashion industry. As of winter 2005, HSY employs 350 employees. It is based out of Lahore,
Pakistan. Traditionally a bridal and formal wear couture house, HSY has begun to shift towards other
genres of design. Currently the collection includes the traditional formal line, a 'made-to-order' line, a
studio line, and a ready-to-wear (R2W) line. A men's line is planned for spring 2006. The launch of
HSY Living in late 2005 introduced a collection of home furniture, interior accessories, and soft
furnishings.

As of winter 2005, HSY garments typically start from approximately Rs. 4000 ($70 US) for the R2W
line, and Rs. 20,000 ($330 US) for the formal line. Current customers include rich families in the
Middle East, social elites in South Asia, and more recently, social elite from the US and Europe.

HSY has the following specialities:

Hassan's website (www.hsystudio.com) has also won the designer two major international awards. A
revamped version is up already, and a qualified team takes care of it in addition to HSY's personal
blog on facebook. Its outlets are in various countries including UK, UAE, Saudi Arabia and Pakistan.

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How to take HSY in Chinese Market:

Establishing any business in China and running it successfully is one of the most challenging things
for a foreigner to achieve in terms of business. The regulatory barriers are extensive, and the risks
involved are great. The studying of Chinese market is very important and knowing about the
customers and their preferences in mandatory. That will likely be a more secure and easy to work with
client base than attempting to open a Chinese business that entirely interfaces with Chinese clients.
HSY is one of the most successful designer outlets in Pakistan which is having international
recognition as well. The following steps will be involved:

1. Have Clear Contract Terms

Strategic Management:
• Strategic Position
• Strategic Choices
• Strategy in action

1. Strategic Position:

To determine the position of HSY in China, firstly the need is to do an environmental analysis. Then
is to determine the strategic capabilities and check the influence on the stakeholder.

− Environmental Analysis:

Economic Factors:

One of the factors enabling China's reforms to push the country forward toward modernization
and growth is privatisation. The privatization trials of entertainment and performance groups have
been going on since 2003, and have had positive social and economic results. Urbanization efforts
in China have been focused on altering 45 percent of China's rural population into permanent city
dwellers. The rate had reached 43 percent by 2005.

Consumer Demographics:

China is undoubtedly the largest consumer market in the world. A land that promises huge
potential and broad prospects, many companies have succumbed to the seduction of the Chinese
marketplace and have set foot in the country. It is noticed that managers see the continuing rise in

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 China's average income as an opportunity across an entire nation. Others divide China into two
worlds: the major cities such as Beijing, Guangzhou, and Shanghai.

Cultural:

The general public of China is not very open and particular about buying. Their buying patterns
are in alteration stage. They prefer their own local brands over foreign brands as almost
everything is produced by China. Still there exist a population who buy luxury products for the
sake of rewarding themselves. HSY is unique and innovation and can penetrate the Chinese
market if the appropriate policies are adapted.

Consumer buying behaviour:

Most people in china are not brand educated even when they belong to elite class. The women
belonging to above social classes are fine with buying local expensive stuff of their choice and
their brand loyalty is not strong as well.

− Resources, Competencies and Capabilities:

Resources:

HSY is sufficient in resources. The brand is recognised all over and the assets are sufficient. The
pricing is high because of the unique designs and brand name. However Hassan Shehryar is using
cheap labour and simple ways to get embroideries, appliqués and cutwork on good quality
material fabric.

Competencies:

Innovation:

The hype about HSY is due to its innovative designs that attract a huge market. The trendiness
and classiness of outfits is the prime reason of brand loyalty of its customers.

Quality:

Quality is never compromised when it comes to HSY. The fabric, designing, stitching and
measurements are all of exceptional quality.

Brand name:

HSY has set an image in Pakistan and abroad so the brand name is strong.

Variety:

HSY is targeting both men and women and the design produced by HSY for one person is not to
be produced for another person again. The latest trends are followed and many times HSY is a
trend setter for new fashions like culottes and puffed sleeves. Hassan Shehryar Yasin recently
launched his new Jewellery line in Lahore, which is gaining much popularity these days.

Strategic Options:

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 − Increase the range:

HSY is targeting only elite class in Pakistan. The designer clothes are very expensive though
some of the designs are not worth the price they have set up for that. HSY is popular enough
that many people want to buy their clothes so if they will increase the price range within
which such designs can be bought, the will be acquiring a bigger share in market. Instead of
Rs 4000 they should start their range from 2000 like crossroads or other designer outlets.

− Expanding the business:

HSY has already gained popularity in India and some other countries including UK, UAE and
Saudi Arabia. They can further expand their business in China as the China Fashion Week
Spring/Summer 2009 was held in Beijing, from November 09th to 13th last year where the
HSY designs were highly appreciated.

− Manufacturing:

HSY is locally manufactured; they have cheap labour but produce very high quality. The
designs are innovative and come from Hassan Shehryar’s mind but the stitching, cutwork,
appliqués and embroideries are comparatively cheap like other brands of Pakistan. They can
further train their employees to understand the market and penetrate deeper by keeping
customer’s needs in mind.

− Merger or combined production:

HSY can come up with new innovative varieties by working together with some other
Pakistani brand like Karachi My off-street or Khaadi. This will help them come up with
different new ideas.

− Teen Stuff/Kids line:

None of the Pakistani known brands have come up with something like teen stuff or kids’
variety. They can produce a new trend of local designer kids’ line.

2. Strategic Choices:

Strategic choices define what choice the organization should look forward to make at business
unit and corporate levels and the options for developing strategy in terms of both the
directions in which strategy might go about as well as the ways for an organization to
progress.
HSY should implement the following strategies to enter the Chinese market successfully.

− Business level strategies:

HSY is already appreciated in India and some other countries but the Chinese market is
different. HSY is innovative and one of the most renowned brands of Pakistan. As HSY is
already taking some labour from here and some from China, the clothing line would be taken
their where the manufacturing would be totally done in China. The ideas would be Pakistani
but according to Chinese customer preferences, as Hassan Shehryar is behind HSY, after
thoroughly studying the Chinese fashion market.

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 − Corporate level and International strategies:

The corporate level strategy of HSY is to be that after completely studying the Chinese
consumer choices and buying behaviour, it will disperse in their market. HSY China would be
brand new product line there with a mix of Pakistan touch in designing, stitching, and
packaging but very Chinese in overall outlook so that people can buy it..

− Method:

 Study of Chinese Designers and Fashion:

The latest fashion trends in the Chinese market have to be studied and HSY can work
in partnership with Chinese known designers. This will attract a huge Chinese
market.

 Working in accordance with Chinese culture:

The Chinese culture should be kept in mind.

 Manufacturers from both Pakistan and China:

The designing would be Pakistani, but the manufacturing labour would be taken from
China so that the manufacturing process in easily practicable.

3. Strategies in Action:

The action plan should be in accordance with the strategy that has to be implemented. HSY is
being funded from different sources, has abundant capital and enough assets so they are
currently expanding their business. Formal, Bridal and jewellery outlets are opened all over in
Pakistan. The bridal, formal and jewellery designs would be made to suit the Chinese people.
It involves change and change management. HSY has brand new varieties for summers,
winters, spring and fall as well as evening and daytime clothes variety. The above strategic
choices would be implemented to help them take the lead in Chinese market.

Challenges:

− New in the Market:

HSY would be totally new in the Chinese market. HSY has been quite successful in India
because of similarities in culture. But China has a different culture, it is important to have
correct knowledge about consumer preferences and their culture. Otherwise there are huge
chances of failure.

− Partnership:

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 Partnering with the Chinese brands can be difficult as the Chinese people are not flexible and
do not welcome new brands easily.

− Brand Recognition:

Chinese people are not brand conscious, so HSY has to come up with campaigns to promote
their brands and create more awareness about the products.

− IPR Regulation:

Intellectual Property Rights is an issue for which the Chinese government has preserved a
regulatory body to establish effective and structured law system. According to the US
embassy surveys, 20% of the consumer goods in China are forged, which is believed to be the
highest across the world. Even domestic companies are troubled by piracy and according to
the Ministry of Information industry China, 37% local businesses have to cope up with
duplication of products and related problems. In 2005 only, 113 foreign luxury brands
reported cases of piracy which was disturbing for the legislation.

− Labour Problem:

The labour that HSY is using from China is not professional but has training. The Chinese
labour can work efficiently for Chinese market as they better understand it but half of the
labour which would be taken from Pakistan is not well trained for entering china.

Ways to cope with the Challenges:

There are some ways to cope with challenges HSY would be facing in the market. HSY is a brand that
is has recognition in India, SA and UK and UAE. It already has been appreciated in China fashion
week conducted in 2009. Entering the Chinese market will require thorough study of their needs and
culture, the strategies that their fashion industries are following and partnering through trust based
relationship. HSY is well-known and there is a market for it in China. The innovation and trendiness
and western touch has been highly appreciated abroad as well; the customization of their clothing line
according to Chinese market will help them make their place in China. The labour should be trained
according to the Chinese market. Campaigns and displays at fashion events would spread more
awareness about HSY and heavy promotional activities should be done.

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 Conclusion

Sunsilk is known worldwide for its quality and wide range yet P&G’s Pantene has a bigger market
share because of its heavy promotional activities. The strategic analysis describes how it can further
expand and aquire a greater share in the market.

HSY is an internationally recognised Pakistani brand. Taking HSY to China is not easy despite the
fact that brand is appreciated in Chinese fashion week. The Chinese market is not open and the people
are not much brand conscious. Proper campaigns, customer driven standards and training of
employees can help HSY enter the Chinese market effectively.

References

• www.wikipedia.com

• www.sunsilk.com

• www.unilever.com

• http://www.google.com.pk/search?
q=HSY&hl=en&cr=countryPK&client=opera&hs=x0S&rls=en&tbs=ctr:countryPK&
prmd=i&start=20&sa=N

• http://skoop.com.pk/Details.aspx?ID=804&TypeID=9

• http://www.designerzcentral.com/fashion-designers/80-hassan-sheheryar-yasin/

• http://www.termpaperwarehouse.com/essay-on/Sunsilk-Pakistan/21427

• http://www.chinalawblog.com/2009/12/how_to_start_a_business_in_chi_1.html

• Mike Morris: Globalization, China and clothing industry strategies

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