You are on page 1of 6

Should Permobil enter Chinese market?

: The business plan for Permobil in Shanghai, China


Business Environment in Greater China Course code: 2602729 Group 6th
Mr. Kornprom Sattayut 5482851026 Miss Ratirod Poowipadawath 5482916126 Miss Puttiporn Khankhum 5482910326
Total Word count: 1497 words

Should Permobil enter Chinese market? : The business plan for Permobil in Shanghai, China After our study trip in China, it had changed our perspective of doing business in China. At first we thought that there would be so many barriers for international firms to enter the China market. Even though China is a communist country, China allows many international firms to go in and invest. For example in Shanghai we can see many foreigners around doing business and investing because of the opportunities that lies in China. Outsiders may think that Chinese have less freedom of thought since it is a communist country but in reality Chinese are not different to us in anyway. During our study trip in China we have visited many company but one company stood out to us the most, Permobil. Right now Permobil is doing their production is China but they have no market in China itself yet. Therefore we are interested in doing a business plan for Permobil in case they want to start a new market in China. Company Overview Permobil is a world leading Power-Wheelchair Company. It was establish by Dr.Per Udden in 1967 in Sweden. A Doctor who strongly believes that even the most severely disabled person had the right to live the fullest life possible. A Permobil can be equipped with a communication system to control TVs, radios and door openers; the seating system receives close attention. No matter how sophisticated the electronics and software are, the person using the chair has to sit comfortably and safely. Today Permobil is an international company, their products can be found in 30 countries on four continents with subsidiaries in 20 countries. Permobils products and services have become an important part of their day-to-day lives. Permobil always focus on people and their needs and keep close relations with customers, this is one of the reasons why Permobil is so successful. Permobils mission: Permobil will develop, manufacture and market powered wheelchairs and transport and communication systems for people with functional disabilities. Our products must lead where quality, performance, safety, and function are concerned in order to provide users with the best possible compensation for their disabilities.

Internal & External environment This report we will provide a business plan for Permobil if they would like to start to sell their products in China. We will analyst the possibility by using the figure below.

Organization Mission

Internal Environment

Competitive Situations

External Environment

Strategies

Strategy Implementation

Controlling and Evaluation

External Environment In term of macro economic now China is one of the BRIC that is an emerging country that their economic has been rapidly growing since Chinas economic reform in the early 1980. Their policies also welcome foreign investors to invest in their country. Since Permobil already run their manufacturer in Kunshan so we suggest that it is a very good opportunity for Permobil to sell their products directly to Chinese market, start from Shanghai that is not so far from Kunshan. When we had a business trip in Shanghai, we see the high potential for Permobil to expand their market here because of the price for Permobils products is very high and only wealthy people can afford it. In Shanghai, it is an urbanized city that has many expats and rich Chinese people. They are willing to pay for premium products so it is a right place for Permobil to penetrate into this market and the population in Shanghai is very high that means the big market size for Permobil as well. About the infrastructure in Shanghai, it is very modern. Most of area in Shanghai can support the application of Permobil wheel chair for example in the buildings there is a slope at the entrance that help 3

people who use wheel chair can pass into the building without barrier from infrastructure that is not support for the wheel chair. In term of policy in China, Chinese government also remove legal restrictions, encourage the free play of market systems and allow establishment and operations of private firms as well as the law of property right. We think that this point does not complicate for Permobil because they already run the business in China so it is not hard for them to negotiate with local government in Shanghai to give them a good incentive. Internal environment In term of internal environment in Permobil, we will present in the sense of VRIO framework to analyst the over all Permobil organization. Permobil has a strong brand awareness and good reputation. They have variety of product line with very high quality. Their wheel chair products are always innovated by engineering team that it is hard to imitate as well as rarity because of they invest on R&D to create technology innovation. Their organization is very strong due to they have subsidies in many parts of the world for example in Europe, Asia, America and South Africa that make their knowledge in term of technology transfers between subsidies all around the world. They do not stop learning and investing on R&D that help people who are hopefulness from sickness to get new life. This point makes their product is very valuable. Their innovation is the way to help Permobil growing sustainable in the future. Strategies Since Permobil (Kunshan) Co.,ltd. is a wholly owned subsidiary, we would suggest Permobil to have Joint Venture with local company and set up a showroom. For jointventure, we would suggest Permobil to have non-equity Joint Venture with China Viomed, a privated owned company that manufacture and export numbers of medical product worldwide. Viomed already has wheelchair in its product lines, however, there is no powered wheelchairs with such innovation like Permobils. Viomed has good connection with many Chinese medical agents and factories, which Permobil can benefits from having good Guanxi in China business network and Viomed can act as Permobils distibutor too. Setting up a showroom in Shanghai is another strategy suggested for Permobil. We would suggest that the showroom should be located in Nanjing Road area which is the main shopping street of Shanghai and consists of many luxury shops and dealers. The main reason we suggest Nanjing Road is because it consists of five star hotels and upscale shopping centers that attracts Permobils target customer, wealthy Chinese people.

4P For products, Permobil should focus on localization of their products to suit with Chinese users, such as the system used in wheelchair must have operation menu in Chinese as well as its operation user guide. For Price, as Permobil has manufacturing facility here in Kunshan, China, the price set for China market should be cheaper than those export to western country as the cost of logistic is not as high as export. However, the price set for Permobil wheelchair will be higher than other standard wheelchair from other brands since Permobil only focus on high-end segment. For Place, as mentioned earlier in strategy section, we suggest Permobil to set up a showroom in Nanjing Road area which is high-end shopping street that fits wealthy Chinese lifestyle. For promotion, Permobil should rely on both traditional and nontraditional media. While traditional media, such as televition advertising, radio spot and newspaper ad, can communicate to elders better, non-traditional, such as the use of social networking, can simply connect to the younger generation with much less cost. Permobil should also have discount promotion for some special Chinese holidays. In addition, after sale service is very important, Permobil has to set up call center to serve Chinese customers with their queries. Five-year plan

Year 1 2

Plan Searching for qualified partner, location Start to operate the first show room in Shanghai as well as cooperate with the selected partner. We estimate to get 20% market share in the end of this year. Evaluate the performance of the first show room and partner performance in term of sales, prepare for expanding the branch. Two conditions: 1. Growth rate 20% - continuing expanding branches 2. Growth rate < 20% - change company strategy (Reevaluate- customer target, marketing plan, more localization) Expanding branches in Shanghai or other OCCs cities ex. Tianjin Since Tianjin has dense population and its not far from Shanghai and the environment is not so different from Shanghai Expanding to the other zones of China-Beijing

Growth rate -

20%

30%

50%

In conclusion, we can see from the information provided in this report that Permobil has high potential to success in Chinese market as well as there are a lot of opportunities for Permobil to expand their market directly in China because today China is not only a good location for manufacturer base because of low cost of production but also a great market for the companies. China in this moment is not the same that we used to know in last 10 years. Today China has developed a lot in downtown of Shanghai remind us of New York city that there are plenty of modern skyscrapers that is ready and waiting for new players to invest and grab the great opportunities in China.