China vs. Europe: Comparative Market Analysis

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While Australia is arguably not the boot capital in the world, it is home to one of the world’s most iconic brands. R.M. Williams has been known worldwide for over 80 years for its high-quality, handmade leather boots alongside other apparel and accessories that draw inspiration from the Australian outback. The story of R.M. Williams aligns well with that of the brand’s founder Reginald Murray Williams. Williams was born in 1980 in a locality in Australia. Williams grew up with his father, a settler and a horse trainer. Due to a search for education, his family relocated from the North to Adelaide, in the South. However, Williams did not love school and dropped out when he was 15 and returned to the countryside in the North (Williamson, 2022). While on his way trekking back North, Williams ran short of cash and decided to return to Adelaide to seek profitable work. In 1932, Williams decided to venture into producing leather products after learning leatherworking skills from a passing horseman. He realized his first success by selling saddles. As a result, Williams established a shop in his father’s shed in 1934.

Over the years, R.M. Williams grew in reputation and size throughout South Australia and beyond. During this time, the company’s major success emanated from its range of riding boots. R.M.’s leather aptitude set the boots aside from those from other brands. Further, a consortium of L Capital and IFM Investors acquired the residual stake of the company from Cowley in 2015. Following this development, this era also saw the company driving furiously toward creating a global brand that reflects its iconic status, as Williams envisioned. In 2020, Tattarang acquired an entire stake in E.M. Williams and brought the company back into Australian hands. There is still a growing international following of the brand, selling its range of products in over 15 countries, enjoying 74 stores, and being listed in more than 784 stock markets.

External Factors in Europe and China Markets

In Europe numerous political factors influence consumer purchasing behaviors of the footwear products. Government can set up high taxes for imported products to protect its local industries making imported goods expensive in the international market thereby lowering purchasing abilities of consumers. In addition, most European have good income, which increases purchasing power and as R.M Williams it requires to develop plans for availing its products in this region that has sufficient income for the populace. Since, Europe has high value for currencies its investment is advantageous to the company. European country have advanced technologies that increase efficiency of availing products to potential consumers and due to availability of websites it is easier for R.M Williams to penetrate those markets and achieve profit maximization. European nations also have strict trade laws protecting foreign products. Due to the weather condition of Europe, R.M Company has vast market for its product because most European prefer wearing shoes and clothes that keep them warm.

Furthermore, in China the political environment is conducive due to leaders striving to develop the country’s economy. The government has well developed road networks that facilitates supply of products across it. Chinese government has increased free trade policies that does not prohibit goods imported, which will make it easier for R.M Williams to trade. However, due to increased counterfeit products in the country it has impacted its economy with most people preferring imported goods. As a result, R.M Williams will gain from competitive market advantage of its products for Chinese consumers. China has large population, which provide large market for products. The country also has widespread technology that allows individuals to access the internet. The technology offers good opportunity for advertisement of products.

Comparison of European and Chinese International Markets: Economic and Financial Environments

Europe operates a free-market economy. Its survival is pegged on the capital movement. Consequently, European Union (E.U.) enjoys a gross domestic product (GDP) of about US$ 20 trillion, representing a sixth of the global economy. E.U. also boasts of having a population of about 700 million in 44 countries (Jiang & Ye, 2020). The countries within E.U. have various economic policies (Türkeli et al., 2018). However, they have found ways of assembling and strengthening their economy as a single bloc, consisting of 27 official members that work together to promote free trade among the members. Following the Maastricht Treaty, there is free movement of factors of production among the member states, allowing for the more efficient working of the markets. The E.U. also created a common currency, the Euro that eases the trade deals among the member states (Hamilton & Webster, 2018). This move was critical in eliminating exchange rate issues among trade partners.

China began efforts to reform and open up its economy in 1978. Since then, the country has experienced annual GDP average growth of 9% (Jiang & Ye, 2020). Over 800 million people have also managed to get out of the poverty bracket. These efforts have also significantly improved education, health access, and other social services. Following these efforts and reforms, China currently enjoys upper-middle-income status. The country focuses on directing poverty alleviation efforts toward addressing the vulnerabilities of the many people still considered poor as per the standards of middle-income countries (Kuo et al., 2019). China has experienced high growth as a result of exports, low-cot manufacturing, and investment in the recent past. According to Uggla (2020) this high growth has reached its limit resulting in environmental, social, and economic imbalances. Thu, there is a need to address these imbalances, which demand a shift in economic structure from manufacturing to high-value services, use of low carbon intensity, and more consumption than investment.

Political and Legal Environments

Europe and China have varying political views, which play a significant role in affecting their citizens. These differences can be drawn from time immemorial. Looking back, the history of China reveals that it was largely an integrated political society as opposed to Europe, which was severely fragmented (Türkeli et al., 2018). These political traces can still be said to be true even today. China is still largely an integrated political society. It operates its politics as a socialist consultative democracy, an authoritarian one-party state. According to Kuo et al. (2019) this political system is credited to economic reforms, mainly referred to as a socialist market economy within economic circles. In this market, a state establishes a dominant enterprise sector that operates parallel with private ownership and market capitalism. This system encouraged the emergence of private enterprise in 1978. Thus, it enabled China to kick-start the boom that saw long expansionary efforts still existing today. This system has led to the private sector contributing over 50% of China’s GDP.

The socialist-market model allows the Chinese government to play a direct role in economic management by setting targets, strategies, and goals every five years. While in the 1980 and 1990s, the five-year plans focused on the reforms targeting the market (Uggla, 2020). The immediate past two five-year plans have been on the promotion of balanced growth, improved protection of the environment, and equitable wealth distribution. Lastly, the current five-year plan emphasizes increasing China’s competitiveness through advanced and efficient manufacturing on the east coast, decreasing domestic demand, and attracting labor-intensive manufacturing.

On the contrary, the European political and legal environment is largely democratic. The 1993 Maastricht Treaty led to the formation of the European Union (E.U.). This treaty, alongside creating a single market with freedom of movement of people, services, goods, and money, also required that member states adhere to having stable government institutions that guarantee democracy and commit to ensuring this objective is met. The biggest shake-up of the E.U. happened in 2016 when the United Kingdom (U.K.) held a referendum to exit the E.U., and 52% of participants endorsed the move (Hamilton & Webster, 2018). The U.K. formally started a multi-year withdrawal in 2017. Another challenging moment for the E.U. has been the ongoing Russia-Ukraine wars, which have significantly affected the E.U (Türkeli et al., 2018). compared to any other part of the world. However, the E.U. has long enjoyed a stable political system that spurred economic advancement throughout the region.

Cultural Environments

Europe boasts a rich and diverse cultural heritage. It is a mosaic of cultural and creative expressions that signifies an inheritance spanning European generations and a legacy for the coming ones. Parts of the European cultural heritage include built and archeological sites, artworks, musical, literary, and audiovisual works, historical works, monuments, and knowledge (Kuo et al., 2019). Cultural heritage plays a significant role in enriching the individual lives of Europeans, forming a driving force for the cultural and creative sectors. Cultural heritage is also a critical economic resource of the E.U. member states, leading to employment, social cohesion, urban and rural revitalization, and the promotion of sustainable tourism.

Regarding China, since time immemorial, the country has prided itself on the values such as benevolence, courtesy, harmony, righteousness, loyalty, wisdom, filial piety, and honesty. These values are embodied in the country’s diplomacy through harmony, regarded as the most important traditional value (Jiang & Ye, 2020). Some key concepts in dealing with China include guanxi, Confucianism, face, collectivism, meetings, greetings, and giving gifts. These concepts play a key role in the interactions within China and among Chinese dealings.

Analysis and Strategic Recommendations Regarding Europe and China

Various factors affect what, where, when, and how to invest. Among these factors are production, business environment, and the availability of the market (Hamilton & Webster, 2018). Thus, any potential investor must conduct a thorough feasibility study to ascertain the practicality of their business idea in any given environment. Following the analysis given above, it is evident that the Chinese economy is still growing compared to E.U., which can be argued to have stagnated. There are still more areas in China to explore, including searching for space and status to stabilize its place as a truly middle-income country (Jiang & Ye, 2020). Thus, there is a high possibility of the need to associate with status symbols such as designer boots and clothing, which the R.M. Williams brand can fit very well.

China boasts about 1.4 billion population, about double the population of the E.U., which stands at around 700 million. China’s population is also largely considered poor per the standards of middle-income countries compared to that of the E.U (Kuo et al., 2019). Consequently, China is more likely to offer cheaper labor costs (Jiang & Ye, 2020). These labor costs, combined with a business-friendly Chines culture, form a perfect combination that can spur business to greater heights. Consequently, following these factors, it is safe to say that it would be wiser for R.M. Williams to consider venturing into the Chinese market more than the E.U. market.

References

Hamilton, L., & Webster, P. (2018). The international business environment. Oxford University Press.

Jiang, J., & Ye, B. (2020). A comparative analysis of Chinese regional climate regulation policy: ETS as an example. Environmental Geochemistry and Health, 42(3), 819-840.

Kuo, C. C., Shyu, J. Z., & Ding, K. (2019). Industrial revitalization via industry 4.0–A comparative policy analysis among China, Germany and the USA. Global transitions, 1, 3-14.

Türkeli, S., Kemp, R., Huang, B., Bleischwitz, R., & McDowall, W. (2018). Circular economy scientific knowledge in the European Union and China: A bibliometric, network and survey analysis (2006–2016). Journal of Cleaner Production, 197, 1244-1261.

Uggla, H. (2020). Research Challenges for Brand Authenticity. IUP Journal of Brand Management, 17(1).

Williamson, R. (2022). Costumes of Empathy: Dress in Australian newspaper depictions of prime ministerial responses to a natural disaster from 1967. Media History, 1-15.

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