Rivalry and competition amongst established firms
China is predominantly a tea drinking country with their culture and traditions rooted around the tradition tea ceremonies. However with globalization taking place the younger generations in the country is more attracted to coffee. The Chinese market for coffee has four main coffee retailers Zhen Guo Coffee a Japanese coffee store chain, Yi Shi and Xian Long Lin form Taiwan as well as Jie Rong from Hong Kong. Following the footsteps of Starbucks, Seattle Coffee Company has also entered the Chinese beverage and coffee market. This has intensively increased competition in the market.
Threat of new entrants
The threat of new entrants in the Chinese beverage and coffee market is very high, as the initial capital and investment required to setup business is small with less operational costs for running the business. Additionally the market for coffee drinkers in China is gradually increasing and the growing market with low barriers to entry is an incentive for new entrants to the Chinese beverage and coffee market.
Bargaining power of suppliers
The suppliers for the coffee chains in China are few and far between. Most of the suppliers are international companies or importers, as the nature of the coffee crop and the climate in China makes it difficult to grow the beans here. As a result suppliers import quality coffee from Europe, Brazil and Africa and tend to demand premium price for their products.
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