Kodak in China


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Case Details:

Case Code : BSTR146
Case Length : 14 Pages
Period : 1984-2004
Organization : Kodak
Pub Date : 2005
Teaching Note : Available
Countries : China
Industry : Imaging

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS

Growth Strategies

According to estimated figures, Kodak's sales of film products in China were worth around $500 million in 2000. This was more than 10% of Kodak's reported $4.7 billion overseas sales in 2000. Kodak's sales in China grew by 10% in 2000, after a 30% rise in 1999. Kodak became profitable on an operating basis in China in 2001, three years ahead of schedule. By 2001, China had become Kodak's No. 2 global market. In April 2001, figures released by China Central Television showed that Kodak had a market share of 63% in China's roll-film market while Fuji had 26% and Lucky had 8%. In 2001, Kodak was opening three shops a day on an average and the total number of retail outlets increased to 6,000. In September 2001, Kodak divided China into two sales regions...

Kodak - Fuji Rivalry

Fuji entered China with the opening of its Beijing office in 1984. In 1995, a subsidiary was created for camera production in Suzhou.

It was during this period that Kodak started building the Kodak brand and differentiating it from Fuji. Said John Tseng (Tseng), General Manager, Consumer Imaging, Kodak, "No one had invested in a brand. Film was film."Tseng introduced Kodak Express in China. Kodak covered tourist sites like the Great Wall with Kodak signs to make the brand visible.

It also concentrated on developing a retail network. Since owning its own retail outlets was expensive, Kodak went in for franchising, under which it supplied the signs and products, and made quality-control visits. In 2001, Kodak and Fuji tried to outsmart each other...

Future Outlook

China's GDP growth rate for 2003 was 9.1%. Goldman Sachs projected that China's economy with a GDP of $1.41 trillion in 2003 would overtake Japan's by 2015 and America's by 2039. In 2003, the consumption of film rolls was 3.6 per person per annum in the US and Japan, while it was one in China. The kind of growth predicted for the Chinese economy combined with the potential for Kodak's growth made Carp state, "In my career, it will be the biggest picture market in the world." In 2004, Kodak stopped selling traditional film cameras in the United States, Canada, and Western Europe but continued to sell film-based cameras and supplies in emerging markets like China, where demand was increasing...

Exhibits

Exhibit I: Ownership Structure of Kodak (China) and Kodak (Wuxi) in 1998
Exhibit II: Kodak in China
Exhibit III: Map of China
Exhibit IV: Market Situation for Color Films in Beijing as per Kodak in 2001-2002

 

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