Description
The PPT is explaining Chinese Fireworks Industry.
The Chinese Fireworks Industry
Outline
? Jerry Yu, an MBA graduate was spending the Chinese New Year
holidays in Liuyang (China), the home of Firecrackers and Fireworks.
? Invited to invest in fireworks industry
? Before making decision he wanted to assess the Chinese
fireworks industry
Agenda
? History
? Fireworks and Crackers ? The Product ? Liuyang – Hometown of Firecrackers and Fireworks ? Safety Concerns ? Fireworks industry in China ? Domestic & International Market
? Future of Industry
? SWOT Analysis ? Recommendations
History
? Chinese were the first makers of fireworks ? Baozhu – Chinese word for firecrackers. (exploded bamboo)
? Emerged during Tang Dynasty (618 – 907 AD) in 6th century
? Gained popularity in Europe( especially Germany, Italy) ? Used by Americans to celebrate their First Independence Day ? Early fire crackers were limited to amber like shades. ? Today a large variety of colors are available. ? Early uses of fireworks
--- Frightening of evil spirits --- Celebrating good news
Fireworks and Firecrackers
? Fireworks – Devices designed to produce visual or audible
effects through combustion.
? Firecrackers – Special kind of fireworks in form of noise making
cylinders.
? Pyrotechnics – Art of making fireworks ? Ingredients – Black Powder( a mixture of potassium
nitrate(75%), sulfurs(10%) and charcoal(15%))
Product
? Two categories
--- Display Fireworks (Explosives 1.3) --- Consumer Fireworks (Explosives 1.4)
? Historically
--- Display Fireworks – 10 percent --- Consumer Fireworks – 90 percent ? Presently --- Display Fireworks – 80 percent --- Consumer Fireworks – 20 percent
? Ingredients & Process Technology remained almost the same.
Liuyang –Hometown of Firecrackers
? More than 500 fireworks manufacturers.
? Employed 4,00,000 people in peak season
? 13 different firework types with more than 3000 varieties ? Exported to Japan, Korea, India, Russia, England, USA etc.
? Top Fireworks exporter( 60 percent of total Chinese fireworks
export) ? Won several awards --- Award of Excellence --- First Prize in Monaco International Fireworks Competition ? “Red Lantern” became a trademark brand across the world
Safety Concerns
? Impure ingredients(major cause- 42%) ? Made with gunpowder
? Tragic human injuries
? Property Damages ? Dangerous during production process( powder mixing and powder
filling)
? Non-adherence to usage guidelines
Firecrackers and Fireworks Industry in China
? Seasonal industry
? Dominated by small family owned workshops ? Easy procurement of raw materials ? Highly labor intensive and labor cost was low ? Safety Measures adopted
--- Workshops separated at a distance from one another to avoid major explosion --- Located near water sources --- Located in scarcely populated areas
Domestic Market
? Integral part of any ceremony in China (grand openings,
weddings, funerals, festivals etc.)
? Rising demand due to economic development and higher
living standards.
? Fireworks banned in one-third Chinese cities due to
environmental concerns
International Market
? Rising exports
? Low priced (compared to Japan & Korea)
? Rich in variety (3000 variants) ? Contributed 80-90 % to the fireworks market in the world.
? Low in reputation in terms of quality control.
? Little overall coordination over export sales. ? Under pricing was another issue ? Importers enjoyed high mark up
Future of Fireworks Industry
? Pessimistic View
--- Believed as a sunset industry --- Highly regulated market --- Environmental Conscious society --- Laser beams and make-believe firecrackers emerged as substitutes --- Changes in mode of celebration
Future of Fireworks Industry
? Optimistic View
--- Ever increasing market due to people celebrating events with noisy happiness --- High potential export market --- No real substitutes available --- Technological advancements can resolve environmental issues (smokeless fireworks) --- Safety issues can be handled by educating masses.
SWOT Analysis
? Strengths
--- Low initial capital investment --- Low labor cost --- Easy procurement of raw materials --- Several accolades which created market goodwill --- More than 3000 varieties of fireworks --- No pure substitutes available --- High price flexibility of product due to low cost
SWOT Analysis
? Weaknesses
--- Lack of trained labor --- Low R & D investment --- Lack of technological and managerial input --- Decline in domestic market due to various regulations ( example: ban on usage on fireworks) --- Fierce domestic competition leading to under pricing which eventually led to declining profitability --- Distribution channels were fragmented and messy
SWOT Analysis
? Opportunities
--- High demand in international market --- Improve on Quality (environmental issues) --- Scope to increase the product type gamut --- Use of internet to increase market share --- Educating masses about the usage of fireworks to reduce accidents and hold on to the existing domestic market --- Canada can be a new market
SWOT Analysis
? Threats
--- Increasing concerns over environment --- Safety of human life & property --- Dilution of brand image due to cheap ingredients --- Substitutes in market --- Changing life styles of people --- Repackaging and selling the same goods at premium prices by other countries
Porter’s 5 Forces
? Potential entrants
--- Low entry and exit barriers ? Suppliers --- Supply of raw materials is stable ? Buyers --- High demand in international market ? Substitutes --- Though present but not pure substitutes ? Industry competitors --- It is a challenge but with technological advancements can be taken care of.
Recommendations
? Jerry Yu should invest money
--- Better export prospects --- Domestic market can be regained by providing quality and environment friendly fireworks --- New product types can be launched by R & D and innovation --- Can use internet to promote sales
Thank you
doc_304135677.ppt
The PPT is explaining Chinese Fireworks Industry.
The Chinese Fireworks Industry
Outline
? Jerry Yu, an MBA graduate was spending the Chinese New Year
holidays in Liuyang (China), the home of Firecrackers and Fireworks.
? Invited to invest in fireworks industry
? Before making decision he wanted to assess the Chinese
fireworks industry
Agenda
? History
? Fireworks and Crackers ? The Product ? Liuyang – Hometown of Firecrackers and Fireworks ? Safety Concerns ? Fireworks industry in China ? Domestic & International Market
? Future of Industry
? SWOT Analysis ? Recommendations
History
? Chinese were the first makers of fireworks ? Baozhu – Chinese word for firecrackers. (exploded bamboo)
? Emerged during Tang Dynasty (618 – 907 AD) in 6th century
? Gained popularity in Europe( especially Germany, Italy) ? Used by Americans to celebrate their First Independence Day ? Early fire crackers were limited to amber like shades. ? Today a large variety of colors are available. ? Early uses of fireworks
--- Frightening of evil spirits --- Celebrating good news
Fireworks and Firecrackers
? Fireworks – Devices designed to produce visual or audible
effects through combustion.
? Firecrackers – Special kind of fireworks in form of noise making
cylinders.
? Pyrotechnics – Art of making fireworks ? Ingredients – Black Powder( a mixture of potassium
nitrate(75%), sulfurs(10%) and charcoal(15%))
Product
? Two categories
--- Display Fireworks (Explosives 1.3) --- Consumer Fireworks (Explosives 1.4)
? Historically
--- Display Fireworks – 10 percent --- Consumer Fireworks – 90 percent ? Presently --- Display Fireworks – 80 percent --- Consumer Fireworks – 20 percent
? Ingredients & Process Technology remained almost the same.
Liuyang –Hometown of Firecrackers
? More than 500 fireworks manufacturers.
? Employed 4,00,000 people in peak season
? 13 different firework types with more than 3000 varieties ? Exported to Japan, Korea, India, Russia, England, USA etc.
? Top Fireworks exporter( 60 percent of total Chinese fireworks
export) ? Won several awards --- Award of Excellence --- First Prize in Monaco International Fireworks Competition ? “Red Lantern” became a trademark brand across the world
Safety Concerns
? Impure ingredients(major cause- 42%) ? Made with gunpowder
? Tragic human injuries
? Property Damages ? Dangerous during production process( powder mixing and powder
filling)
? Non-adherence to usage guidelines
Firecrackers and Fireworks Industry in China
? Seasonal industry
? Dominated by small family owned workshops ? Easy procurement of raw materials ? Highly labor intensive and labor cost was low ? Safety Measures adopted
--- Workshops separated at a distance from one another to avoid major explosion --- Located near water sources --- Located in scarcely populated areas
Domestic Market
? Integral part of any ceremony in China (grand openings,
weddings, funerals, festivals etc.)
? Rising demand due to economic development and higher
living standards.
? Fireworks banned in one-third Chinese cities due to
environmental concerns
International Market
? Rising exports
? Low priced (compared to Japan & Korea)
? Rich in variety (3000 variants) ? Contributed 80-90 % to the fireworks market in the world.
? Low in reputation in terms of quality control.
? Little overall coordination over export sales. ? Under pricing was another issue ? Importers enjoyed high mark up
Future of Fireworks Industry
? Pessimistic View
--- Believed as a sunset industry --- Highly regulated market --- Environmental Conscious society --- Laser beams and make-believe firecrackers emerged as substitutes --- Changes in mode of celebration
Future of Fireworks Industry
? Optimistic View
--- Ever increasing market due to people celebrating events with noisy happiness --- High potential export market --- No real substitutes available --- Technological advancements can resolve environmental issues (smokeless fireworks) --- Safety issues can be handled by educating masses.
SWOT Analysis
? Strengths
--- Low initial capital investment --- Low labor cost --- Easy procurement of raw materials --- Several accolades which created market goodwill --- More than 3000 varieties of fireworks --- No pure substitutes available --- High price flexibility of product due to low cost
SWOT Analysis
? Weaknesses
--- Lack of trained labor --- Low R & D investment --- Lack of technological and managerial input --- Decline in domestic market due to various regulations ( example: ban on usage on fireworks) --- Fierce domestic competition leading to under pricing which eventually led to declining profitability --- Distribution channels were fragmented and messy
SWOT Analysis
? Opportunities
--- High demand in international market --- Improve on Quality (environmental issues) --- Scope to increase the product type gamut --- Use of internet to increase market share --- Educating masses about the usage of fireworks to reduce accidents and hold on to the existing domestic market --- Canada can be a new market
SWOT Analysis
? Threats
--- Increasing concerns over environment --- Safety of human life & property --- Dilution of brand image due to cheap ingredients --- Substitutes in market --- Changing life styles of people --- Repackaging and selling the same goods at premium prices by other countries
Porter’s 5 Forces
? Potential entrants
--- Low entry and exit barriers ? Suppliers --- Supply of raw materials is stable ? Buyers --- High demand in international market ? Substitutes --- Though present but not pure substitutes ? Industry competitors --- It is a challenge but with technological advancements can be taken care of.
Recommendations
? Jerry Yu should invest money
--- Better export prospects --- Domestic market can be regained by providing quality and environment friendly fireworks --- New product types can be launched by R & D and innovation --- Can use internet to promote sales
Thank you
doc_304135677.ppt