Opportunities And Challenges Of Marketing Environmentally Sustainable Products In China

Background

The term “emerging market” was created by Antoine Van Agtmael in 1981, an American investment banker. During its foundation, the term used to replace the terms “third world” or “developing world”, later referred to the economies which are transitioning from the “developing” phase to the “developed” phase. Scholars attempted to define the concept as “low-income, rapid-growth countries using liberalization as their primary engine of growth”, attracting investor preferences and thereby international capital inflows in the corresponding emerging economies (Igan, Kutan and Mirzaei, 2020). Twentieth-century onwards, Brazil, Russia, India, and China have shown rapid growth and have been referred to as BRIC, the four largest emerging markets (International Monetary Fund. 2021). In academia, political and business practices, there is a muddle in the definition, categorization, and characteristics of this market. On a quick note, emerging markets are those markets or economies that perform way ahead of developing countries and encounter substantial economic growth and progress over a certain period but do not attain all the characteristics of developed economies.

In this report, China has been chosen as the emerging market, keeping it at the centre the report discusses the opportunities and challenges of marketing environmentally sustainable products in the country. In the following sections, the report discusses the background, opportunities and challenges, marketing implications, and conclusion.

China has a diversified geographic and economic feature as well as the population variation over the different areas of the nation. The features of geography of China are mostly natural and partly man-made, reflecting the values of people who have been creating them and signify their place in the globe. The understanding of an inter-link between the natural or geographical environment and the patterns overwhelmed by people or culture is an essential factor of the geography of China. The geography of China includes the variables such as, environmental and physical features including the climate, soil, topography, location and so on; historic patterns and their reflections on natural environment; economic and political activities and resource distribution define the overall characteristics of the country today (Asia Society, 2022).  The population of China during fifty years of time span of 1965 to 2015 grew about 1.4 billion. To address the rapid rise in population growth, China took up the program of one-child policyin 1980 that had limited each Chinese family to one child. However, the policy was withdrawn in 2016. Arguably, rapid population growth may slow down the overall economic growth measured on the indicators such as, gross domestic product (GDP), per capita GDP, and growth rate in terms of growth in national income. Economic concept wise if population increases at a faster pace than rate of increase in GDP of China, then eventually per capita GDP growth rate will slow down. Hence, the population control was necessary.

Opportunities and Challenges

China has burgeoned nationwide growth miraculously over the past thirty years and has become the second-largest economy in the world after the US. This extraordinary economic boom in China is attributed to its market-oriented reforms that prioritize economic growth. However, growth in the gross domestic product via industrialization globalization has always caused a series of environmental issues (Song, et. al, 2018). According to the World Bank, China has experienced an environmental degradation that caused the nation an economic loss of about 11% on gross national income in the year 2008 (The World Bank, 2020). The World Bank suggests an extensive growth model that incorporates high resource inputs causing pollution is not always sustainable. The Chinese Government has been looking after the environmental factor and has proceeded to some major shifts in policies to soften the impact of environmental issues on economic growth. China went on to evaluate its existing sustainability strategies and policies and encouraged wide-ranging production and consumption of environmentally sustainable products aiming for sustainable economic growth and consumer satisfaction keeping the climate at the bottom line.

Environmentally sustainable products are those that provide environmental, economic, and social benefits through protecting the climate, public health by reforming the process of extraction of raw materials until the stages of disposal. Policymakers face certain obstacles while reforming the strategies of sustainable economic growth. There are instances of previous research on the link between purchase intention and attitude towards environmentally sustainable items. (Kumar, Manrai, and Manrai, 2017). The transition from basic to sustainable chains of supply furthermore shall encourage businesses to align their operations and practices that go parallel with environmental sustainability aspects (Acquaye, et. al. 2018). Moreover, the climate has been severely humbled by the ongoing pandemic of Covid-19, which has also accelerated the scope of recovery of plastic and recycling them to mitigate environmental pollution (Singh, Tang, and Ogunseitan, 2020). The upcoming sections discuss the opportunities and challenges faced by China while marketing environmentally sustainable items.

Lately, there have been growing concerns for climate change and environmental degradation all over the world, along with global economic issues such as poverty, income inequalities, sustainable economic development too have become the areas of concern. Therefore, academicians, researchers, and policymakers all over the world have put much attention on studying the concept of sustainability and the pros and cons surrounding this concept. The demand for betterment in quality of life simultaneously with the continuing economic growth, brings about several opportunities as well as challenges for China.

According to The World Bank (2020), the Chinese government took up strategies aiming to tackle issues related to pollution following its 13th FYP that announced a cumulative investment of about 2.05 trillion pounds for green industries in the five-year span of 2016 to 2020, primarily focusing on fast-paced growth in the presence of clean-tech and environmental industries, which can be considered to be as opportunities as well as challenges for global markets that are looking forward to capitalizing on burgeoning demand for the environment or climate oriented technologies acquired by China. The opportunity factor comes from the fact that this five-year plan and investment in green industries will eventually boost the capacity of the already growing industry, experts say, the growth could be at a range of about 6.2 billion pounds in 2004 to approximately 197 billion pounds in 2018 (United Nations, 2020). Another aspect of opportunity is the “public-private partnerships” (PPP) model by China as government support in the nation comes from central as well as local levels, especially for the projects that are climate-related, such as water, soil, solid waste treatment, etc. In cases like this, most countries’ local government bodies would tend to opt for long-term contracts with private firms or project operators, while China would try to opt for funds from both public and private institutions, as specified in its own PPP model (Cantoni, 2017).

Certainly, there are wide opportunities for international firms including emerging start-ups globally to find success in the ongoing sustainable phase of China by providing operational expertise, investments, technological design, and engineering services. Nonetheless, these firms have bigger opportunities to flourish, however, success could also get hard for a few ones due to the presence of pre-existent market restrictions and biases towards domestic investors. These challenges could be overcome by creating a partnership with local firms. Another challenge is the search for the right capable partners given the specific criteria to be fulfilled for setting a benchmark.  

Now to address the crucial question of expected sustainable, rapid and stable growth in the long run, this paper points out that predictions cannot be easily made especially in a fast-changing world. Experts say that China will continue to grow and develop, however, there will be challenges existing in the system. Three aspects of challenges as explained by Xingqian, Wennersten, and Mulder (2019) are, constraints related to natural resources, inequality in terms of wealth among rural and urban areas, and development of education for civilization. These three challenges are important to be addressed efficiently as a pattern of growth, civilization among locality, exhaustion of natural resources, and overall environmental degradation will eventually contribute to the future growth and development of the nation. Therefore, aiming for an efficient pathway towards sustainability given all these above-mentioned factors is something the Chinese government should work on.

The products that are eco-labelled are considered to be environmentally suitable items as compared to the other same or similar categories of items. Experts believe that the marketing technique of labelling eco friendly or environmentally sustainable products in a certain way shall eventually attract consumers towards premium products, especially when it comes to consumption of food items, eco-labelling shows a much shift in the patterns of consumption of Chinese consumers and the consumers all over the world importing Chinese products. Furthermore, the conscious consumption of consumers towards environmentally friendly products eventually encourages the producers to prioritize the more sustainable agricultural production practices (Liu, Yan, and Zhou, 2017). Given this, there are factors that are needed to be addressed – (a) the reasons behind the use of eco-labelled items by the consumers, (b) the push behind paying a higher price for the eco-labelled items when there are similar sets of cheaper alternatives available in the market, (c) the shift in consumer decision making, (d) the prospects of going premium, (e) the category of eco-labelled items consumers are more inclined to pay high price for, (f) the concern of consumers towards public health and environmental aspects.  On this note, the pricing of the green-marked products matters much. There comes the concept of price sensitivity of the consumers that product markets and producers shall take into account while making the marketing strategies.

There is quite a lot of research on how green consumption has evolved in the past few years. However, there has not been much work done on the influence of environmental responsibilities portrayed by the consumers and how it has been mediated by the concept of “price sensitivity”. Addressing the above gap of study, Yue, et. al. (2020) finds that environmental responsibility causes a positive influence on environmental concern and has a positive implication on the consumption of green marked items. The concern for the environment positively relates to the intention of green consumption and plays as a partial mediator of the correlation between environmental responsibility and the intention of green consumption. On that note, an important finding is that there is a negative moderation role played by price sensitivity in producing the link among environmental concern, responsibility, and intake of eco-friendly items. According to, Chu, (2018) with the environmentally sustainable development aspect, the consumption of organic food has risen globally in the past few years. China has well coped with the fast-growing organic market all over the world with utmost potentiality. The Chinese market strategized on focusing and marketing through the influential factor of health awareness of consumers. The author finds that there is no significant effect of marketing price on consumers’ intention towards organic food items given their health consciousness.

Conclusion:

Consumption of green-labelled items is certainly a behavior of the consumers that is a reflection of responsibility regarding the concern of the environment, eco-system, and ecology. Daily consumption of green products can be considered as a fruitful way to restore environmental sustainability. This report considers one of the most important emerging markets China for putting forward a brief background of environmental sustainability and China’s strategies towards forming it widely in the nation and an explicit discussion on marketing the environmentally sustainable products and the opportunities and challenges experienced by the Chinese markets in the whole process. After that, the report also presents marketing implications by the Chinese markets while forming the wide-ranging markets of green-labelled products and encouraging the consumption of those products on a daily basis and finds that price sensitivity is one of the primary factors involving the consumer intention and satisfaction towards the regular or daily purchase of green products. Finally, the report concludes that by prioritizing the betterment of health, irrespective of the level of market price, the consumers in China mostly tend to opt for organic food items over any other green-labelled non-food items.

References

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