Team LOL Qi Zhong (Tiffany) Yuan Chi Yue Wang Felix Pang

Victoria's Secret
Founded by Leslie Wexner in 1963 in the US Named Victorias Secret in 1982 By late 1990s, 900 stores in the US 3 segments: -Victorias Secret Stores -Victorias Secret Direct -Victorias Secret Beauty

Trade barriers and agreement

Barriers
Licenses for importing and distributing Duties or tariffs on imported goods

Agreement: two duties

The import duty: 14% VAT (Value Added Tax): 17%

Trade costs to targeted market

Cultural effect: oriental cultural: more conservative. Challenge of competing firms: Focusing on middle-class lingerie

Political risk
Chinese government is formed only by one party, the Communist Party. Be careful of being accused of dominating market.

Exchange rate considerations

RMB appreciates every year since 2000s, RMB will have a potential appreciation of 15% Costs for other luxury brands are higher.

Assessing the country's comparative advantage

Cheap labor low-priced environment factor Advanced culture Advantage of backwardness

Marketing and Promotion

Market adapation Market segment Target group
*piricing strategy (not so important ) since this group are less sensitive to price rather than quality. high quality of design is what make this company succeeds.

Media channels

SOURCING
Current outsourcing strategy - all upstream productions from spinning fibers finished garment come from countries like India, South America, Australia and mainly, China.

Problems?

Current Problems and Solutions

Problems
Multiple layers of suppliers and producers raise in production cost lower competitiveness Strong $RMB costly to convert into for payment

Solutions
Internalization through FDI, avoid paying mark-up to suppliers, avoid exchange rate fluctuation
Branching or Subsidiary?
35% Business tax rate in China (TaxRates.CC, 2012) Subsidiary avoid double taxation branching strengthen brand image.

LOCATION CONSIDERATION

SHANGHAI CITY
1. Highest GDP per capita city in China(USC, 2011) 2. Largest city proper (an urban locality without its suburbs) in the world. (Geohive, 2011) 3. Abundance supply of highly-skilled labor forces
Larger pool to search for competent designers, tailors etc Wages expense will be lower

Financial Budgeting and Conclusion

Internalization is achievable with our continued strong growth rate China will become our largest market Rapid emerging in middle-class

Thanks

Team LOL