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The closing case describes China’s rapid growth in recent years and the development of what will soon be the largest consumer market in the world. By 2020, China is expected to have some 190 million consumers in the middle- and upper-income categories, a significant increase over the 17 million people in the same categories in 2010. This incredible growth has attracted the attention of companies from around the world. U.S. companies for example, have increased their exports to China by 542 percent from 2000-2011. In comparison, U.S. exports to the rest of the world increased only 80 percent over the same time period. Discussion of the case can revolve around the following questions.
a) If China will go from 17 million to 190 million middle-income people by the year 2020, would the scenario presented Best Buy in 2006 not be applicable anymore? That is, the culture shock in 2006 was that the Chinese would not pay for Best Buy’s overly expensive products unless they are a brand like Apple. Would newly rich Chinese customer engage in this purchasing behavior by 2020?
b) With Alibaba’s ownership of the popular TaoBao online shopping system (similar to eBay and Amazon) and its spread across the world, will a Western-based online shopping culture ultimately infiltrate China?
c) What can other companies that are considering investing in China learn from the experiences of Best Buy and eBay?
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