Icebreaker - Entry Into China

Introduction

China is home to 1.3 billion people and is the world’s largest consumer market. However, Icebreakers’ main motivation is not to find new market in China. Since Icebreaker establishment, it did not relying on its home market to enlarge its market or revenue based. Icebreaker enjoys burgeoning success from its worldwide sales in Europe and US. Its US market is still growing rapidly which add to a big proportion of company revenue. The three most important motivations for Icebreaker to sell in the Chinese market are to protect US market, to pre-empt competitors’ expansion into Chinese market, and to learn from the more competitive Chinese market.

The Reasons for Selling in Chinese Market

First of all, Icebreaker current business growth is highly depends on US market and it is crucial for Icebreaker to protect its US market. Icebreakers’ competitors start to feel threaten in their home market and will retaliate to stop Icebreaker from increasing US market share. Although Icebreaker could differentiate itself from the American competition, intense competition can negatively affect Icebreaker’s growth. For example, Timberland can easily initiate a merino clothing war with Icebreaker through its acquired company, SmartWool. Through selling in China, Icebreaker can divert its competitors’ attention on Icebreaker in the US market. This will ease competitors’ thought that Icebreaker is targeting hard to increase US market share. Besides, they will also be worrying about Icebreaker will gain competitive advantages in China market. As a result, they will revise their attack strategy to Icebreaker and this will reduce the intensiveness of head-to-head competition in US market.

Secondly, Icebreaker selling in China is to pre-empt competitor’s expansion into the Chinese market.

Icebreaker’s competitors have entered the Chinese market and are growing. Competitors will gain a foothold in the Chinese market through the establishment of distribution network...