Introduction and Background
Introduction
Switzerland is the home country of Nestlé, while China is the host country. The two nations have varying cultural and other differences. The diverse business environment between the two countries enabled Nestlé to adopt different marketing strategies. Nestlé depends on various resources for effective business activities. While some of the resources are readily available in China, the company has to import others from its home country. Moreover, the differing cultural, social, political, technological, and geographical differences between the two enable Nestlé to develop effective business strategies for survival. Therefore, Nestlé has remained competitive in Switzerland and China due to its effective international business management.
Background
China differs from Switzerland in terms of population and social systems. Unlike Switzerland, China is highly populated, providing human labor required in the company. The company has taken advantage of the increased Chinese population to expand its activities within the host country. Many Nestlé manufacturing units are fully operating in China at cheaper costs than in Switzerland. Moreover, the growing Chinese population provides a ready market for Nestlé products. China is the second biggest market for the firm’s products after the U.S. (Nestlé, 2021). Consequently, Nestlé registers a higher return on investment in China than in Switzerland. Unlike the Swiss people, the Chinese have developed a hard-working culture, requiring little management (Zhai, 2022). Therefore, Nestlé, the Chinese human resource is more proactive and productive than the Swiss. Nestlé enjoys cheaper and more productive labor in China than in Switzerland.
While the popular language in China is Mandarin Chinese, the Swiss speak German. Consequently, Nestlé has integrated diverse languages into their marketing activities. Although the country has difficulties in expatriating the Swiss management to China, it has taken advantage of the highly educated professionals in the country. Moreover, Nestlé products sold in the Chinese market bear the Mandarin Chinese language to attract the locals (Coulmas, 2022). Furthermore, the official languages adopted among the Nestlé business units in China are English and Mandarin Chinese. The adopted languages allow the management to communicate with the company’s stakeholders in the home and other host countries. Nestlé has developed an effective communication strategy to overcome language barriers between China and Switzerland.
Unlike Switzerland, China is undergoing rapid economic and social development. Although Switzerland is a developed country, it is recording a slower economic growth compared to China. The faster Chinese economic and social growth is contributed by an innovative and creative population (). Unlike the Swiss, the Chinese have significantly contributed to the advancement in modern technologies. Online shopping is one of the greatest technological inventions of Chinese origin. Therefore, manufacturing and marketing activities are more effective in China than in Switzerland. The innovative and creative Chinese personnel working in Nestlé made more contributions to the firm’s growth than the Swiss workers.
Nestlé International Business and Marketing Strategies in China
China exhibits a different business environment from other host countries and Switzerland. The country’s common language and high population require a business strategy that attracts the locals and maximizes the available broad-consumer base. Moreover, advanced technological development in China is crucial for marketing and supply chain approaches. Nestlé enjoys less business risk in China and has maximized the available opportunities to overcome potential threats such as stiff competition from local companies. Nestlé’s international business and marketing strategies in China involve a localization approach and clear resource and capital allocation.
Localization Approach
Localization of business activities is pivotal for multinational companies’ growth in host countries. The approach involves the adoption of global marketing elements to the target market to reflect their needs, interests, and context in a specific geographical location (Hewett et al., 2022). Nestlé has enhanced innovative approaches to meet the need of its global consumers. The corporation has developed different strategies depending on the host country. China is a diverse society with unique needs and interests that must be fulfilled by businesses operating within the country (Medeiros, 2019). The country’s popular language is Mandarin Chinese, and business communication can only be done in that language. Moreover, the country’s diverse culture needs unique product designs that are consistent with their beliefs and values.
Nestlé has localized its business activities in China for profitability. The company conducts promotional programs that are communicated in Mandarin Chinese. Moreover, Nestlé utilizes the local mainstream media in China to market its products in the country. Furthermore, the firm has employed Chinese locals in its top management in the country. Chinese supervisors play significant roles in identifying the needs of the employees in various sectors. Nestlé recorded tremendous growth in 2018 upon the launching of nutrient drinks that utilize locally-sourced herbs (Nestlé Global, n.d). Therefore, the localization of business activities in China contributes to Nestlé’s success in the country.
Clear Resource and Capital Allocation
The Chinese high and creative population presents various advantages to Nestlé. Consequently, the firm has adopted a strategy that allocates resources and capital. Nestlé has invested in research and innovative facilities in China (Peerally et al., 2022). The facilities promote new product development and improvement of the available ones. The country’s health and research facilities are endowed with highly qualified Chinese professionals who understand the needs of the local people. Meanwhile, the broad-consumer base in China has led to the allocation of Nestlé resources and capital to marketing activities. Clear resource and capital allocation create value for the target market and the company.
Lessons Learned and Conclusion
Lessons Learned
Culture is a significant determinant of business performance in a foreign country. The Chinese population and social system are favorable for international business activities. Countries with high populations are significant for affordable labor and a broad-consumer base. Moreover, multinational companies should adopt effective business strategies to remain afloat in the market. The localization approach is the most significant international marketing strategy since it promotes value among the consumers and an organization’s stakeholders.
Conclusion
Nestlé is one of the biggest food manufacturers in the world. The company has taken advantage of globalization to expand operations to various countries. China is one of the organization’s profitable host countries. The country is endowed with cultural features that are significant to Nestlé’s operations. The differences between Chana and Switzerland, Nestlé’s home country, have enhanced the adoption of effective international business strategies. The localization approach has enabled Nestlé to remain profitable in the Chinese market. Therefore, Nestlé’s international marketing strategies contribute to its success in China.
References
Coulmas, F. (2022). Language, Writing, and Mobility: A Sociological Perspective. Oxford University Press.
Hewett, K., Hult, G. T. M., Mantrala, M. K., Nim, N., & Pedada, K. (2022). Cross-border marketing ecosystem orchestration: A conceptualization of its determinants and boundary conditions. International Journal of Research in Marketing, 39(2), 619-638. Web.
Medeiros, E. S. (2019). The changing fundamentals of US-China relations. The Washington Quarterly, 42(3), 93-119. Web.
Nestlé Global. (n.d). Nestlé China launches first incubator product with herbal drinks and soups. Web.
Nestlé. (2021). Annual Review 2021. Nestlé S.A. Web.
Peerally, J. A., De Fuentes, C., Santiago, F., & Zhao S. (2022). The sustainability of multinational enterprises’ pandemic‐induced social innovation approaches. Thunderbird International Business Review, 64(2), 115-124. Web.
Zhai, X. (2022). In an Era that Lacks Values, What Kind of Values Do the Chinese Need. In The Logic of Chinese Behaviors (pp. 101-107). Springer, Singapore. Web.