International Business: Expanding into the Chinese Market

This study explores the opportunities and challenges of Neal Yard's Dairy, a London-based SME, expanding into the Chinese market. It discusses trade barriers, cultural preferences, and ethical considerations that need to be taken into account. The study also includes a literature review and analysis of the industry using Porter's five forces model.

International Business

EXECUTIVE SUMMARY
International business provides companies with the opportunity to create a new market
with a new or existing product. In the past, about 70% of companies engaged in international
business had various factors that could influence its inclusion in international markets, including
product market and access to features, market expansion, strategy, architecture, and culture. The
Chinese market is full of resources and opportunities available in the food industry. Therefore,
Neal yard’s Dairy is developing a new business, and is going to look for a new opportunity to
enter the ultra-pasteurized milk market-and for large companies. Although facing some
difficulties in accessing the Chinese market and various obstacles such as market prices, imports,
exports, and policies, etc.).

Table of Contents
Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
Literature Review.............................................................................................................................1
Introduction.................................................................................................................................1
BUSINESS DRIVERS................................................................................................................2
Trade barrier................................................................................................................................4
Ethical and social issues to be considered by the UK SME........................................................5
Cultural preferences to be considered by the UK SME..............................................................7
Expansion Methods to be chosen by Company..........................................................................8
Suitable options available to the SME supported relevant strategic evaluation frameworks.....9
Finding and Analysis.....................................................................................................................11
Recommend for the Industry and for further research limiting of the research.............................12
CONCLUSION & RECOMMENDATION..................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
An international business is defined as cross-border transactions between companies and the
government. International business is the process of acquiring a foreign market based on a
reputation in the domestic market and expanding the company's activities. In particular, in the
Chinese market, this article describes which activities are trending in the market. This shows that
there are many products on the market that boost China's revenue. It also provides the Chinese
market, trade policy, and export companies from other countries (Fu and et. al., 2020). Following
report is on the Neal's Yard Dairy, Limited was founded in 1979 by and this is one of the
growing SME milk producer company in London. The report presents the prerequisites for the
development of the organization, as well as the driving forces for monitoring the development of
the company and, with the help of a Porter’s analysis. With the expansion of business, it may be
necessary to take into account trade barriers, moral and social problems will be great. In addition,
the report contains a preference of culture and various ways to improve the output of the Neal’s
Yard Dairy.
Literature Review
Introduction
Retention cost of training benefit in international business expansion
For organizations to thrive in today's economy, finding and retaining top employees is
essential. This is a challenge especially for small businesses and non-profit organizations that
have to compete with big business, with big budgets, to find top talent. Benefits play a major role
in retaining employees, and employees seek customized benefits. Having a strong and effective
training strategy helps to improve the quality of your employer and makes your company more
attractive to graduates and mid-career transitions. This training also makes the company more
attractive to new employees who want to improve their skills and opportunities associated with
those new skills. Training can be of any kind that is relevant to the job or responsibilities of the
individual, and can be delivered in any appropriate way
Neal's Yard Dairy Limited is recognized as one of the London SME dairy business. It
works well with dairy products, eggs, and the oil consumer. It has soft, heavy, dense and cheese
made with sheep's, goat's, sheep's and cow's milk. It also offers a wide selection of shops, bars
and restaurants in the United Kingdom. . Their goal is to reduce the impact of the Chinese
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market during 2020-21 for children made from premium quality milk., also known as Very High
Heat Treatment (UHT), Ultra-pasteurization, Ultra-thermal processing, is a food processing
technology that uses a sterilizing liquid of food products, especially milk, and using temperatures
up to 135 degrees Celsius for up to 275 degrees of adhesion kills the grains in milk,
approximately 2 to 5 seconds (Orra, 2020). This milk is of very high quality, which provides
protein, vitamins, minerals and fats, and is suitable for the baby's needs. Despite the fact that
China produces a lot of milk, this quality does not meet the standard. The project aims to expand
the company's presence in the UK and reputation in the Chinese market in terms of reliability,
transparency and integrity.
(Figure 1 Dairy market in China, 2021)
(Source: Dairy market in china, 2021)
BUSINESS DRIVERS
In order to expand its activities in the foreign market, it is very important that the company is
strong enough to do the right analysis and research to grow and develop. For the analysis of the
industry they are considering the porter’s five forces model of industry.
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Porter’s five forces model
Threat of new entry
In some cases, they reflect the situation in the country where the new company is expanding its
activities.. At the same time, the UK SME enterprises should know how to easily enter the
market. An existing organization creates barriers for new entrants with a low level of
competition (Zhou and Charoensukmongkol, 2020). In China, the threat of new market entrants
is very low, in terms of capitalization, existing companies will have any trademarks, patents,
etc. , etc., are not regulated by the government, the customer's operating costs are low, customer
loyalty is low, etc
Bargaining power of supplier
Suppliers are very important for a company to produce a product or deliver it to a country or
organization. They can increase the price of the product is higher, but they provide a low quality
product. The market has had a lot of good things for consumers, but less for the consumers who
make it. UK SME wanted ultra-pasteurized milk intended for children between the ages of three
and 11. These suppliers should ensure that raw materials are targeted at the Chinese market. The
supplier is very much in circulation in a market where there are a number of suppliers, and top
buyers, and the world's largest consolidation supplier, and some agents, and the cost of
equipment is very expensive, and so on.
Bargaining power of buyer
The consumer has power when they want it to be a top-quality product, but pay a certain
price. This is very dangerous for the organization because of its low cost. The product is high
quality, it is quite expensive, but for a lower price, it is not overcoming the price. In the Chinese
market, the international market was created from many countries, as a result of which the
consumer will not be able to claim power in this market. The ability to negotiate with the client
about the market when customers buy large amounts of data.
Threats of substitute
When consumers find a product that has a place on the market, there is a danger for the
organization. There are many types of products on the market where consumers are shifting their
preferences from other milk to formula milk, threatening business (Lewin, Massini and Peeters,
2020). Therefore, it should be treated as if it were growing on the international market.
Industry Rivalry
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The UK SME was completed and on the market, providing an exceptional product, service, price
sensitivity, as well as a quality product and offer, product, promotion and much, more. This is
one of the competitors in the market. There are a lot of competitors in the Chinese market, but
also in the UK milk business market compete with those who have to think about foreign
companies.
(Figure 2Porter's five forces model and analysis, 2019)
(Sources: Porter's five forces model and analysis, 2019)
Research Gap
However, the above presented analysis is based on the Porter’s five forces model which
is unable to provide the true understanding of the market macro environment factors which
drives the business expansion opportunity. Even so, Porter's five forces have several weaknesses.
The first is in its composition. As a standing model, it provides an overview of the broad sector
some time ago. This may be helpful in informing the short-term strategy, but the window of
useful information from Porter's five powers is also narrowed by the immediate emergence of
external factors.
Trade barrier
The Government has left trade barriers in place for international trade. In this regard, the
government has imposed customs duties and restrictions on the industry. There are various
factors which are as follows-
Tariffs:
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Tariff is one of the restrictions for entering an international business based on an
imported good or service. In the course of this process, the cost of a good or service was also
increased by the state. Use to protect domestic employment, reduce the import of foreign
workers (Chang and et, al., 2020). Foreign employment and production costs will be cheaper
than in their own country, and the organization will be contracted to a foreign company, resulting
in an increased unemployment rate in the country. It is for this reason that the government
restricts control over the situation.
Regulation
This regulation is a barrier to international business. The Government has established
certain rules and laws in order to expand its activities in international markets. Regulation is
carried out in order to eliminate barriers to trade, ensure non-discrimination, transparency,
corporate protection, and so on. To register as a racist, the regulations do not apply to other
countries. Licensing systems make that international trade is different, will not be able to import
Neal’s Yard Dairyproduct or service.
Ethical issue:
There are many ethical issues such as normal, hiring, firing, human rights, fairness and
integrity, in the political arena, and so on. A small company must comply with these types of
trade barriers in order to be able to do business on a consistent basis. If a company is forced to
ignore Neal’s Yard Dairy, it won't do business.
Subsidising is a barrier to trade in China
Subsidies aimed at stimulating Chinese producers-exporters continue to develop in the
market.
Research Gap
The above identified trade barrier are based on the secondary source of data collection where
there are is not much illogicality that these barrier will harm the market expansion practices of
the above concern business organisation. Moreover, there are not any conclusive evidence that
the UHT milk producing company can faces such those barrier in their market expansion in the
Chinese market.
Ethical and social issues to be considered by the UK SME
There are a number of ethical and social concerns, as required by small businesses in
London, before they can start the process of exporting ultra-pasteurized milk to China. In the
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context of the future of small and medium-sized businesses that seek to make the Chinese
market, they should focus on ethical and social issues.
Corporate Social Responsibility:
Corporate Social Responsibility is a continuous, ethical process by which an organization
operates in the marketplace and is effective. This is to protect human rights, the environment,
society, and the society where the company will operate in the global market.
Expanding the community's image:
Rather, it is important to be able to return the item or buy it. UK SME businesses, and
they want to make a profit in the Chinese market. Therefore, the organization requires product-
based improvements in social well-being. Milk is high in protein and good for the baby, and it
needs to be sold (Moon and Yin, 2020). They will be able to campaign at local markets, giving
them free dairy products to boost the company's productivity. Increase product awareness and
popularity: If a UK SME company distributes an amount equal to the product's ethical and social
values, the company will increase productivity
To raise public awareness of responsibility.
UK SMEs operate in an international business focused on the Chinese child market. If the
organization needs to use strong ones and have a small entrance, reduce production costs. It is
also important to consider using the global marketplace. UK dairy SMEs to reduce identification
costs and meet customer needs.
Social behaviour
Social behavior of employees should be used to ensure that they enjoy their work. By
involving them, they can influence the organization's decision-making process. Small and
medium-sized businesses in the UK consist of flagship adoption in their environment if they are
to be encouraged in the organization (Yang, Ma and Doty, 2020). The company operates on the
international market to determine the value of a public company.
Research Gap
One of the drawback of social responsibility of business is very important. The type of
assets is the responsibility of the organization's body. Even so, the above proposed literature
review is based on the assumption that these social and ethical implication can affect the market
expansion practices of the concern business organisation
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Cultural preferences to be considered by the UK SME
Culture is defined as the shared values, art, beliefs, attitudes, and so on of a particular
person or organization. The company has its own traditions for doing business. In China, the UK,
small businesses need to understand many different cultures which are as follows-
National culture, as a point of reference:
The concept of people has given way to culture because it is the cause and effect of
national borders and the place to which it refers, "we" versus "they". National identity includes
rituals signs and much more where the preservation of a national object, monument, document,
museum, etc. takes place (Chen and et. al., 2021). National culture can be considered as the main
function of a company as a result of a successful organization. The sending organization will
analyze the market, Chinese, culture, and people should understand what they want from this
market. It is a national, cultural activity, and it is being watched by Neal's Yard Dairy for the first
time, so that the people of the country can decide whether to buy this product.
The people factor:
Another important factor that a people's cultural background needs to reduce its influence on the
global market. People are also very important because they keep the company afloat. That is why
human behavior requires the company's attention. There is a wide variety of cultures in the
country, where it helps to acquire deep knowledge and experience. Cultural diversity gives a
Neal's Yard Dairy a competitive advantage, but it is very difficult to succeed if Neal’s Yard
Dairy cultivate diversity. If an organization is looking for something in a new culture, it creates
cultural conflicts that lead to inefficiency even after entering the market. The Chinese people
have their own rich cultural traditions (De Silva, Wang and Kuah, 2021) For some reason, UK
SME hire local workers to provide services so that people can communicate with them. For
example, UHT-milk containing good ingredients, of a different brand, but located in a person not
in the product mix and, therefore, of unknown value.
Formation of Cultural Consciousness:
Cultural differences, by the way, both in everyday routine and in legislation-in language,
behavior, motivational speech, social relations, code, and much, much more. For example, UK
SME i.e. Neal's Yard Dairy sector has grown a company in the Chinese market, and as a result,
the business community needs to find out which culture is one of the best for the consumer.
Cultural awareness is one of the elements of an organization's activities in a particular area.
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Research Gap
National culture can be considered as the main function of a company as a result of a
successful organization. The sending organization will analyze the market, Chinese, culture, and
people should understand what they want from this market. People agree on the diversity of
cultures, but on the consequences. Neal's Yard Dairy must identify cultural differences and their
implications for the people.
Expansion Methods to be chosen by Company
For UK SMEs, the company decided to move to the global market, it happens differently,
it is divided into various method which are as follows-
Export bases process.
This is a very popular way to manage an international organization, because it can
produce a product both domestically and for export. It is the oldest international festival and
business. Neal's Yard Dairy wanted to understand the Chinese market in order to make money.
Licensing:
It is the form of a contract, the organization has a licensee's license the license holder and
operates in the CIS countries. At the same time, the licensee receives benefits if it can be used
with a business in the country. This type of contract is approved for use in areas such as research
and development and other industries where fixed costs are higher.
Franchising
Through franchising Neal's Yard Dairy buys the necessary products by using the name of the
series the trademarks. There are a lot of companies that are located in foreign countries and use
franchising. This allows the franchisor to control the quality of local cuisine located in a foreign
country, where the advantages of using the brand name, product quality, etc. are exceeded.
Joint Venture
The joint venture is a new identity for the organization, responsible for initiating partners
for decision-making and strategy formulation. Joint Venture allows Neal's Yard Dairy to be a
function of economic development at scale, because it is the unit exposed to risk in the process.
Joint venture will help Neal’s Yard Dairy enter the international market, because the operating
costs of the organization are borne by the partners themselves. Merger of companies: When an
organization can be linked to a third party through foreign direct investment.
Research Gap
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There is no proper discussion of the particular expansion method identified for the concern
business organisation. Moreover, every internationalisation method need deep analysis before
being elected and this analysis is not found in the above proposed method.
Suitable options available to the SME supported relevant strategic evaluation frameworks
Ansoff Matrix
In order to meet the challenge of competitors, Neal’s Yard Dairy-strengthens the success
of a new dairy farm by developing a marketing strategy. The goal of product diversification is to
create competitive profitability and increase the company's market share. The main advantage of
product differentiation is that it is a Neal’s Yard Dairy can attracts and retains loyal customers
in the market. For example, in addition to selling regular yogurt and milk, Neal’s Yard Dairy
focuses on providing shelf - based, ultra-pasteurized milk, cheese, fruit, beverages, ice cream,
and milk to its customers. The company spent about 7% of the total revenue from promoting
their products through advertising. Neal’s Yard Dairy offers a variety of advertising channels,
such as TV, magazines and newspapers, on posters, in the subway (Alsuwailem and Saudagar,
2020). The company is heavily dependent on in-store promotions that are created in department
stores and supermarkets for young women. The company is market development and market
penetration by expanding into new markets by promoting national milk supply and stimulating
milk consumption. In 2004, NEAL’S YARD DAIRY entered large urban markets as well thanks
to a customer with a high level of income and purchasing power. However, the company did not
enter China's domestic markets because people had less and less purchasing power parity.
However, despite its lack of access to new markets, the company has invested heavily in
advertising and developing a product that is convenient for customers. In the new approach, there
was also a period of time to take advantage of the company's services.
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(Figure 3understanding Ansoff matrix)
(Source::understanding Ansoff matrix)
Porter’s Generic Strategy
Differentiation strategy
Neal’s Yard Dairy for a premium price for customers to buy a car because it makes that buyers
are willing to pay a higher price for their product. Moreover, differentiation strategy is termed to
be as the armoury tool for Neal’s Yard Dairy to market its product effectively by creating a great
positioning strategy in the mind of customer.
Cost leadership strategy
Cost management is a strategy for providing products and services that are lower than those of
competitors. This is a strategy that is often used for the same product or product in the market,
and price competition in the market is characterized by price-sensitive consumers. Use
sophisticated, unique measures to reduce costs and ensure that these strategies can be used
effectively in the marketplace. For example, Neal's Yard Dairy products competitors claim that
this will help them bring their daily price research to ensure that their products can sell at a lower
price.
Cost focused strategy
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A cost-based strategy is a strategy that focuses on smaller, lower-priced customer segments, and
will seek to reduce cost in a position of competitive advantage. For example, in a small roadside
store, in a city where you have to dress up, there are cheap devices, or made in China.
Market Segmentation
Geographical area- The targeted area of the UHT product mainly the centre part of the China
market where UHT product are not available.
Demographic- The targeted demographic segment for the targeted market is mainly the children
of age between the 3-11 years.
Research Gap
In Developing the marketing strategy for the business there is need of getting insight about
the Market gap analysis which is missing in the above due to limited resources and the time.
Moreover, change in the social trend can influence the above proposed trend.
Finding and Analysis
As per the UK statistics and market trends show that the small and medium-sized business
sector is growing every day. It is in the work of Neal's Yard Dairy that work with 40 cheeses
and visit them at regular intervals to learn the taste of cheese and how to choose the best sales
and increase their assets. Neal's Yard Dairy plans to expand its market UHT milk for the Chinese
market, and for children aged 3 to 11 years International Business environment, it is very
important to know about the environment because it helps Neal’s Yard Dairygrow within the
targeted Chinese market. The small and medium-sized business sector is in the UK, and it has
extensive interests in China, so the needs and ideas it brings are on the card. If an organization
wants to perform its functions in the world, globalization has always been an important area of
focus. This is a process that allows Neal's Yard Dairy to maintain a level of economic activity, as
both internal and external motivation factors work in the organization (Baber and Ojala, 2020).
Even so, Subsidies were an incentive given to local consumers and producers by the government
to protect them from the price of ultra-pasteurized milk. China's policies have been a drag
because it is difficult for each of the four global small and medium-sized enterprises to compete
in the same market with local manufacturers (Chen, Han and Zhang, 2020).
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Recommend for the Industry and for further research limiting of the
research.
The dairy industry in the developed world has undergone significant changes in recent
decades. In this paper, we present an overview of some of the most important changes in the
dairy industry that affect the health and well-being of dairy cows, as well as the science behind
these changes. In addition, information gaps are available where research is needed to guide the
dairy industry on current or anticipated changes. The number of farms has dropped dramatically,
and the size of the herd has increased. As a result, an increasing number of dairy farms are
dependent on employed (non-family) occupations. Regular professional communication and the
establishment of farm-specific protocols are essential to reduce human error and ensure
consistent consistency. The production of intermediate milk for each cow has increased, in part
due to improved nutrition and management but also due to genetic selection in milk production.
Adoption of new technologies
CONCLUSION & RECOMMENDATION
Thus from the above carried out study it has been summarised that the main objectives of the
activity are to raise money to sell the product within the member states. British industry, small
and medium-sized enterprises to operate in the foreign market, which also selects the market in
China. The company has identified ages of 3-11 years that offer ultra-pasteurized milk. This is
the most popular breast milk delivered by the company In order to understand the Chinese
market, the company is engaged in exporting products from business profits. Exchange of ideas
in your organization, or in services, as in other places. Successfully competes in the global
market. An organization's social responsibility can increase product level and product value in
the marketplace, and can also help in customer understanding and productivity. Given the market
and the UK a small business should use the 5to method of exporting to the Chinese market
Moreover, it has been recommended that prerequisites for the development of the
organization, as well as the driving forces for monitoring the development of the company and,
with the help of a Porter’s analysis. With the expansion of business, it may be necessary to take
into account trade barriers, moral and social problems will be great. China is the second largest
economy in the world, behind the USA, in terms of overall GDP. China's economy is growing
rapidly, introducing the largest and most unusual area of international business. as China is the
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largest trading center in the world. Because of its large size, population, large growing economy,
and high-quality ports, it freely lends itself to major international trade. Therefore the great
market expansion strategy is useful for penetrating the Chinese market for offering the UHT milk
which is of great opportunity in the Chinese market.
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