International Market Expansion Strategy of Byd Auto Co. in the Asian Region

International Market Expansion Strategy of Byd Auto Co. in the Asian region

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Table of Contents

Section A

Introduction. 3

Global Region Selected for Market Analysis. 3

A ‘Rough Market Screening. 4

A Market Ranking Process. 7

    Level of Attractiveness. 7

    Ability to Compete. 7

A ‘Fine Market Screening’ 9

    Market Segmentation. 9

Analysis of the Competitive Environment 10

Section B

Introduction. 11

SMART International Marketing Objectives. 11

    Specific. 11

    Measurable. 11

    Achievable. 11

    Relevant 11

    Time-bound. 12

Market Entry Modes. 12

    Joint Venture as Market Entry Mode. 12

Branding Decision. 15

    Sustainability and Green Image. 16

    Innovation and Technology. 16

    Safety and Reliability. 16

    Corporate Social Responsibility. 16

    Customer Experience. 16

Brand Positioning. 17

Marketing Mix Decisions. 17

    Product 17

    Price. 17

    Place. 18

    Promotion. 18

    People. 18

    Process. 18

    Physical Evidence. 18

Target Customer Segment 19

Recommendations. 20

International Market Expansion Strategy of Byd Auto Co. in the Asian region

Section A

Introduction

This section includes an analysis of the Asian market selected as the global region as part of the international market expansion strategy of the Chinese multinational automotive subsidiary, Byd Auto Co. The market analysis identifies and assesses potential markets and their suitability to enter and expand in the automobile industry. The market size, accessibility, and profitability of three major Asian markets have been evaluated, ranking them according to suitability. The comparative analysis of three countries from Asian regions shows the most suitable country for expansion. A fine market screening is then conducted for the selected country to identify the different segments of the market, the consumer behavior of the selected segment, and the analysis of the competition within the respective industry. This section mainly focuses on choosing the best market for Byd Auto Co. to enter as part of its expansion strategy based on the comparative analysis of different frameworks and cultural feasibility. This leads to devising an international market strategy in section B of the report.

Global Region Selected for Market Analysis

Asian region offers international businesses one of the most attractive and competitive markets. Asia is considered one of the largest markets for the automotive industry due to its considerable growth potential. The rising population, urbanization, growing income, manufacturing capabilities, technological advancements, cultural diversity, and shifting customer preferences attract foreign businesses to the Asian region. Infrastructure development in most Asian countries and development projects offer promising returns to automobile firms. However, culture and local market preferences are the most significant challenges for organizations seeking to enter the Asian market.

A ‘Rough Market Screening

Market screening helps corporations identify potential investment and resource allocation markets, resulting in informed and appropriate decisions. The economic growth and industry size in Asia have been evolving continuously. According to the Statista Research Department Report, in 2023, 60% of the global population will reside in it, making it one of the most lucrative markets for automobile companies. The increase in population led to a high demand for automobiles. The region also has high auto manufacturing and huge vehicle sales (Statista, 2023). The latest McKinsey Global Institute (MGI) research identifies a significant growth pattern in Asia due to an upward shift in consumer buying behavior. It is primarily due to the increase in purchasing power parity. Factors such as income, new forms of mobility, and technology adoption play crucial roles in the expansion of the automobile industry in the region (Devesa et al., 2023).

The three selected countries in the Asian region are Indonesia, India, and Vietnam, which offer considerable prospects for automobile companies to expand and grow in this region.

Automobile sales in India have increased tremendously since 2020 due to huge market size and growth. The country has some major manufacturing hubs in its major cities. Recent government interventions and favorable policies such as “Make in India" have attracted automobile giants worldwide to invest in India's automobile market. The technological advancements in India provide enormous opportunities for the industry to innovate and focus on automation (Shangliao, 2023). According to Live Mint, India has recently achieved third ranking after China and the U.S. to become the third-largest automobile market in the world (Jain, 2023). This is primarily due to the massive population of the country and rising income levels across the country.

Indonesia’s auto industry is experiencing rapid growth for various reasons, including a vast population, a growing middle class, steady economic development, and favorable government policies. The middle-income group recently grew from 7% to 30%, which is anticipated to rise to more than 50% soon, offering more significant potential to the automobile industry for prospective buyers (Negara & Hidayat, 2022). The government of Indonesia has mainly devised favorable policies, laws, and regulations to support the automobile industry and play the role of a primary facilitator. The demand for cars increased with the rise in purchasing power. The key initiatives include improved production capability, adopting new technologies for auto manufacturing, establishing R&D centers, developing domestic manufacturing abilities, providing fiscal incentives the government offers, and attracting foreign direct investment.

Vietnam has the third highest population in Southeast Asia. The company recently signed a free trade agreement with the European Union, which opened enormous prospects for foreign direct investment in the country. Barnes (2023) states that Vietnam is the fourth-largest automobile market among ASEAN members. The government offers tax incentives to investors and import tariffs for automobiles (Automative World, 2023). The country is recently recognized as one of the major production hubs for automobile manufacturing due to competitive labor costs, proximity to China, and increased demand for vehicles.

Criteria



Purpose



Accessibility



Indonesia’s population, urbanization, income level rise, middle-income group growth, infrastructure development, and particular government interest offer more excellent prospects to automobile firms.





In India, population explosion is crucial in increasing the demand and purchase of automobiles. The high demand for the car attracts international companies. Infrastructure development and government ease in regulations to attract Foreign Direct Investment plays a key role.







Profitability



Indonesia is the second largest manufacturer of automobiles among ASEAN member states (Statista Research Department, 2023).





International manufacturing and production companies dominate Vietnam’s market. The focus is on the electric vehicles market. There is also a significant rise in car imports.





Indian automobile market focuses on expanding its current market share globally. India is increasing its production capacity and attracting more investors (Shah, 2022). The focus is on electric and hybrid cars, which is an opportunity for Byd Auto to seize the market share.



Market Size



The automobile industry in Indonesia has a market value of $ 15.62 billion (Akshay & Sonia, 2021). The industry contributes 4% to Indonesia's GDP (Uchida, 2023).





Vietnam’s automobile industry is expanding with the auto part industry. FDI plays a crucial role in the country’s thriving automobile industry.





India’s automobile industry is valued at $222 billion and ranked the fourth largest globally (Saxena, 2022). The market size and share continuously increase due to shifts in income groups.



Figure: Lee & Carter Model 2012 (Lee & Carter, 2012).

A Market Ranking Process

The market ranking technique provides a clear picture of the three potential markets in Asian regions, which helps decide the most attractive market to enter based on its attractiveness and ability to compete.