Learning about global marketing and specific global entry strategies these days in class have reminded me of one thing I saw this summer when I went back to Nanjing, my hometown in China. When I was shopping in the city center, I came across a familiar logo of Best Buy, beside the logo of a local electronic retailer called the Five Star Appliance.

Five Star was founded in 1998, now being the fourth-largest appliance and consumer electronics retailer in China with its headquarter in Nanjing, Jiangsu. Whereas, I only got to know about Best Buy after I came to Canada, that Best Buy is a leading American multinational consumer electronics corporation. I was quite curious about what is happening between these two companies, so I did some research.

Best Buy has actually been in the Chinese market for a while since it acquired a majority stake in Jiangsu Five Star Appliance Co. in 2006. Regarding the global entry strategy, Best Buy had established a joint venture with this local Chinese company which offers them with local network, already established brand name and good understanding of the market. And later, Best Buy bought out the whole company.

However, Best Buy seems to struggle with gaining market shares and competing with its rivals. According to Euromonitor International, in 2012, Best Buy only had 1.8 percent of the Chinese market, while local rivals Suning and Gome had 10.6 percent and 10.3 percent respectively. The two large local competitors have almost formed an oligopoly situation in many cities in China, they have well-developed brands and strong bargaining power over suppliers. This absolutely restricts the growth potential of Best Buy in China.

Also, Best Buy has to adjust its strategy to fit into a different cultural and consumer behavior. Chinese consumers are mostly price-sensitive, they like to bargain for a better deal. They also favor a great amount of options to choose from and some strong local brands. It is essential for Best Buy to develop a better understanding of its target consumers in China so that it can seek opportunities to grow and compete with domestic firms.

One of the news I have noticed recently is the “iPhone trade in” program launched by Microsoft, right after Apple had released its new iPhone 5S and 5C. The deal says that customers can trade-in a gently used iPhone 4S or 5 to receive a minimum of $200 of in-store credit at a Microsoft Store. This is quite an eye-catching move made by Microsoft.(Link: http://content.microsoftstore.com/offers)

Microsoft has been running the Recycle for Rewards Program to encourage consumers to trade-in old computers, mobile phones, games etc. for store credit. I think it is a great program as it gives consumers the chance of getting rid of the old devices and even get some money value from them. From the company’s perspective, it creates a direct financial incentive for consumers to shop at Microsoft stores and make consumption with the credit they have. The iPhone trade-in offer is valid from September 27 to November 3, together with its existing iPad trade-in offer, target right on the consumers of Apple product. Under the offer, Microsoft has also suggested alternatives to the trade-in devices such as its new surface 2, surface pro and the windows phones. This is a smart promotion strategy of Microsoft to attract customers with out-dated devices from Apply to try out Microsoft products. They understand that customers do have some switching costs, and that is why they are offering you financial incentives. However, considering the value of trade-in for those customers, the minimum of $200 may seem lower than the expectations of some people. They may want to sell their old iPhones or iPads through online platforms which they can charge for a higher price and get some cash directly. Therefore, the effect of this offer still depends on consumer preferences, it might not have a huge impact on the market, but it is still a nice try of promoting Microsoft products.

With the EUR 5.44 billion acquisition of Nokia’s Devices & Services business, license Nokia’s patents, Microsoft is trying to build up its strength to compete with Apple for market shares in both mobile phone and tablet markets. As a potential customer to these two firms, I am looking forward to how Microsoft would develop on it products, especially the Windows Phones made by Nokia.