International Business: Exploring the Chinese Market for UHT Milk Services

This report discusses the Milky Way company's plan to enter the Chinese market for UHT milk services. It covers the background of the industry, business drivers, trade theories, trade barriers, ethical and social issues, cultural preferences, and expansion methods. The report also evaluates the Chinese economy and its impact on the company's performance.

Business

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
BACKGROUND OF INDUSTRY..............................................................................................3
BUSINESS DRIVERS................................................................................................................4
TRADE THEORIES....................................................................................................................5
TRADE BARRIERS...................................................................................................................6
ETHICAL AND SOCIAL ISSUES.............................................................................................8
CULTURAL PREFERENCES....................................................................................................9
EXPANSION METHODS........................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
International business consists of all those business operations and functions that are operated in
the global or international market. It includes the activities that target new audience of customers
and transfer various in the new market the products and services. All the operations of the
business organisation are managed as they impact the performance of organisation at
international level (Aguilera and Grøgaard, 2019). Business enterprises get many advantages by
operating at the global level. This presented report includes and explains the Milky way
company that is established in UK and is wanting to get more of new market that is want to enter
into a new market area and it is planning to concentrate on Chinese market for its UHT milk
services. UHT milk that is the main product of this company is discussed in this report in UK
market and Chinese market. There is impact and influence on the business drivers on business
organisation. In this report there is also the discussion about the PESTLE analysis along with the
different trade theories and trade barriers that business has to face and also the discussion about
the various issues that are related to ethical and social issues.
MAIN BODY
BACKGROUND OF INDUSTRY
UHT milk ‘s demand is increasing as the result of its benefits that it provides in the
international market as the ultra-high temperature that is used for the sterilizing this milk helps in
increasing the sales of this milk and that’s why its demand and preferences are increasing in the
international level market (Andresen and Bergdolt, 2021). The milk which is that is sterilized at
ultra-high temperature is UHT milk. The international profits that have been there of ultra-high
milk was expected to by US $ 137.7 billion by 2019 whereas nearly US $ 60.8 billion in 2012
were earned.
Demand of UHT milk in UK market
UHT milk consumption along with its demand have been shown by the research that it
has been increased in UK market. Different factors do support and help in growth and
development in Europe market of dairy products. For the purpose of storing raw milk,
refrigerators are being used as they need low space and this has led to the increase in the
demand.

UHT milk demand in market of China
The demand and preferences have increased because of the growth of population and also
their preferences have changed as they demand healthy milk and food products so it has led to
the increase in UHT milk’s demand in Chinese market (Dörrenbächer and Gammelgaard, 2019).
Even as the apartment culture and urbanisation is also increasing and growing, research has
shown that need and demand has also increased of ultra-high temperature milk. Behaviour and
attitude of the customers has also been changed towards healthy products.
Evaluation of Chinese economy. Percentage of money coming to them by milk that is
produced.
China is growing and developing into becoming strong economy in the global world.
Growth and development in economic rate has been seen in 2018 of China. As 65.3% of US
economy is the GDP of China as US dollars $ 13.4.
BUSINESS DRIVERS
Chinese PESTLE environment and its link and impact on UK SME
PESTLE analysis is used for analysis by considering different factors along with their
impact that is there on business performance as it results in the growth and development of the
Illustration 1: Economy contribution.
Sources: 8 things about economy of China. 2020.

entity (Guercini and Milanesi, 2020). Different factors that are there in PESTLE analysis are as
follows:
Political factor –SME company’s performance is also impacted by this factor. Political factor
consists of the various rules and regulations that are implemented and made for the
organisations. China has very strong political party as well as system that impacts and influence
various organisational functions and operations.
Economical factor – China’s economy is growing and developing and that has its complete
influence on SME company which are being run in the Chinese markets. This economical factor
influences the purchasing power of citizens and also in the greater sales of the company.
Social factor –Society culture and behaviour are the most important element of social factors.
Customers’ attitude and belief also influence and impact the sales and performance of the
business organisation. UHT Milk company is also impacted by the customers’ perception and
preferences.
Technological factor - There has been increase in the company’s profits and other benefits that
are being provided to SME company and its performance by the advanced and upgraded
technology. Company’s growth and development have also been impacted by this factor.
Environmental factor – the economical factor is to be considered and focused during the making
and developing of UHT milk and its products (Hannibal and Knight, 2018). Environmental
factor consists of various elements and these elements are weather, climatic changes, laws and
their regulations and others. This decreases the harming and degradation of the environment
during the operations of company.
Legal factor – The legal factors in the society are always made customers and employees safety
and security with the help of various laws and frameworks. organisational performance and
productivity is impacted by these legal factors for smooth operating.
TRADE THEORIES
Trade theories lead to the growth and development with the decision of effective planning and
implementation. Trade theories are made for entrance as they support and guide to be there in
new international market. Various trade theories are discussed as follows:

Factor of production
This theory was founded by Eli Heckscher and Bretil Ohlin. For producing and creating
products there is the support and help of effective and efficient factors of production. The various
factors of production are labour, land and capital and these help in gaining sources of funds as
they are very supportive and helpful (Kouznetsov, Kim and Wright, 2019). There are various
competitive advantage gaining and also in the development of the products. Factor of production
are used in equipment and plants and other operations.
Comparative advantage
Comparative advantages are gained with the help of this theory in market. low cost
commodities are being produces with the help of this theory. For more profits organisation needs
to develop products and services by selling them at low costs. This attracts more customers of
new market along with greater sales for the company.
Absolute advantage
This theory was founded in 1776 by Adam Smith to indicate the products and labour
division. company’s ability and manufacturing is known for absolute advantage of goods
differences. production of products and goods is helped by this absolute advantage theory in a
particular country.
Theory benefits in Chinese market
Chinese market and its most suitable theory will be factor of products for it. Product’s
supply and demand is helped in determination according to this theory by cost of resources.
Business task and operations in the China market are done in better manner as it has more
properties and labour that are always supporting. Milky way has been helped as to offer products
and services as factors and elements of production in effective and efficient manner as they will
support supply of UHT milk products on time to customers and clients (Luo, 2020). Increased
supply of labour and other resources in cost saving method will lead to conducting task.
TRADE BARRIERS
There are barriers that are being faced in the trading and also during business activities
and operations at the global level. its helps in identifying and analysing all the greater decisions
for business organisation.

UK and China’s trade relationships
China and the United Kingdom and their trade relationship is very strong, including rules
and regulations that are made for free trade in between countries. Opportunity for SMEs can be
seen as to expand into Chinese market (Mäkelä and Kinnunen, 2018). Companies are less likely
to face trade restrictions because of less restrictions. Cost and time of Milky Way company is
saved. Trade relations are beneficial between China and the United Kingdom as they lead and
also result to economic growth and development. The exchange or transfer of products and
services is called imports and exports and these are done in between different countries.
International trade activities are boosted and influenced as this is an effective method among UK
and China.
Trade barriers can have negative impact on business organisations. There are various
trade barriers faced by a company in Chinese market. These trade barriers consist of various
tariffs, rules and regulations, quotas and many other.
Tariffs and quotas – These tariffs and quotas are made up of taxes and price lists through
authorities that are imposed at the same time and also during uploading and exporting products
of business. Tariff quotas with the reason of safety and exchange of products and excessive
quantity charged through authorities always led to terrible effects and impact on enterprise sports
and profits.
Regulations – There are various laws and rules and regulations that are evolved with political
celebration and authorities in an economy. These rules and regulations and policies will result in
direct effect on enterprise activities and their performance (Prud’homme, 2019). SME
organization is to necessary to be completed with and also to fulfil policies as exporting products
at the same time.
Legal issues – It is critical to decide troubles during exporting merchandise and products to
global market. There is fundamental bad effect by the legal impacts on overall performance and
income in new market. failure of commercial enterprise can be a result of all the legal troubles
that can be faced by organisation in international market.
If these obstacles aren't accompanied in the international market as it can lead to much less
income, decrease earnings and also bad influence on business and its overall performance.

Demonstrating the business uncertainties
There are uncertainties that are there which are there while undertaking commercial
project at market. There are restrictions on the exchange and this have an effect on all exports
and imports and on the exchange among nations (Shenkar, et.al. 2020). Negative effect of
BREXT on China will have overall performance of business and it results in boom value of
commercial at global market.
There are numerous possibilities at UK marketplace for SME business enterprise during the
working of commercial. UK market is taken into consideration as land of first-rate in addition to
reliability.
ETHICAL AND SOCIAL ISSUES
Chinas’ expectations of foreign companies, looking at social and corporate responsibilities
Ethics and ethical are observed and these are important as growing merchandise and
services have its importance. These affects and impact respective corporation to decorate
enterprise sports in addition to overall performance of corporation. It is important for respective
employer through thinking to behaviour enterprise sports about moral in addition to social and
corporate troubles of China.
Importance of Corporate social responsibilities:
There are various benefits that are for corporation via way of means for undertaking social
duties in Chinese market. Corporate social duties result in creating excessive emblem photograph
in market for business to boom and its improvement. These sports result in resolving all troubles
and issues of society and also offer higher dwelling standers to Chinese citizens.
RELEVANT THEORY ON ETHICS
There are various theories that are evolved and made for imparting steering to business
organisation as then business organisations are able to carry out enterprise sports in moral and
ethical manner. Business ethics and morale help and support in increasing value or improvement
of enterprise. Different concepts on ethics are discussed below: Corruption labour issues – These are problems and issues that are majorly connected
with labour in business enterprise. Offering of proper and secure remedies and all to

labour is very important as it helps in reducing problems and issues. This helps in
carrying out venture in powerful way.
 Environmental issues – It is critical and important for business organisation to not forget
problems and issues of surroundings as manufacture in addition to turning at the same
time of products. This moral idea will help without harming surroundings factors
business enterprise to behaviour enterprise venture in correct way and manner.
CULTURAL PREFERENCES
It is crucial and important to pick Chinese methods and way of living even as acting
enterprise sports on this market. There should be identification of client options and way of life
that will guide in higher selection for increasing and improving and the growth of business
organisation (Srivastava, Singh and Dhir, 2020). Culture play an important role in growth and
development of business as it allows in assignment engagement in powerful manner. various
factors are included in culture as such language, attitude, belief and many more.
What is Chinese culture like?
Chinese way of life is growing rapidly towards towns and urbanization, resulting in
growth and demand of UHT milk as compared to uncooked milk. Now maximum of the parents
has also increased the demand of this milk at home resulting in the reduction of the refrigerators
demand and desire of UHT milk for their children.
Chinese market audience has wonderful mind-set towards overseas products. They don't forget
overseas merchandise result in their troubles in innovative and creative manner. UK is one of the
countries that provide maximum enhancement in this era in world.
Language can be primary barrier as it has its effect on the employer at the same time as acting
enterprise sports Chinese consumer have wonderful response toward UK merchandise and
services at Chinese market. Chinese language could be very extraordinary and different from
English language. UK SME employer has the important role of speaking and also has its
operations for its products in Chinese language. Products of UHT milk has to be labelled its
brand in Chinese and English language resulting and assisting the human market to apprehend
elementary and important substances and its utilization.
It is important for Milky way company’s employer to apply and imply innovative and catchy
strategies to persuade and influence clients. This employer of the company must consciousness
and focus on growing and increasing robust logo photo and proper belief that is approximately

UHT milk products in market. Changes in customers’ belief towards uncooked milk and UHT
milk that will help and guide in the increased income of the company.
EXPANSION METHODS
There are various types of enlargement approach that need to be followed with the various ways
means of business by increasing products and services in new international marketing area.
Methods of enlargement helps and will also assist the various commercial enterprises to increase
income and also increasing sales via way of means and methods used for increasing and
imparting to distinct international area (van Tulder, Verbeke and Piscitello, 2018). Different
techniques of enlargement are that are used are explained below:
 Acquisition – This is called as enlargement of enterprise with various methods of means
that are used for shopping stocks of enterprise. In the acquisition approach enterprise can
use to impart and inculcate its products and services to new market regions in global
market with various means to acquire various belongings of business organisations.
 Joint Venture - This joint venture approach is important for increasing commercial
enterprise functions and operations in new economy. In this approach, extra businesses
organisations are operated collectively and are to decorate commercial enterprise
functions and activities.
 Licensing – This is approach in which the employer wishes and desires to fulfil prison
various formalities and methods as for attaining commercial at the same time of
enterprise sports in global market. In licensing approach, the business organisation looks
and takes the unique permission for carrying out various challenges and sports.
 Franchising - This can be described as the preparations that are undertaken for events
that are undertaken for paintings and also for increasing various commercial business
operations and functions in international market.
 Greenfield funding – This can be described as forms and various kinds of overseas direct
funding that are used for helping and aiding the business corporation to carry out
commercial enterprise sports in international market. Greenfield funding is a significant
manner that is used by employer for carrying out all the activities of commercial at new
international places of market.
For increasing business operations in Chinese market with the use of various theories. This is a
significant method that helps in behaviour challenges for business in correct ways or methods.

Joint mission is of greater use to employer to operate and carry out all challenges in international
market.

CONCLUSION
It can be concluded from above report that it is important for the agency to beautify and use
business enterprise in the international market to grow and develop. This helps in assisting in
growth and improvement of USA to increase and boom profits from market. There are various
theories that are used in international changes for facilitating corporation to pick out maximum
and most suited theories to market supply in USA. Trade limitations cause effect and impact on
overall performance of enterprise at international market. It is important for business to examine
and change limitations for expanding higher techniques that are used in commercial business.
Ethical and social problems and issues as being hurdles in the accomplishing of commercial
enterprise goals and objectives.
RECOMMENDATIONS
Recommendations in international market for growing are explained below:
 Organisation wishes to use techniques as they are consistent with requirement of
customers. It is essential in examining the market world for taking better and correct
choices for the growth of business enterprise.
 Company desires to observe and see guidelines with the help of government of China.
This helps overall enterprise’s performance to increaser without prison and political
issues.
 Corporate social duties are used and they play role in enterprise performance and its
position in market. It is vital as it assist in selling of products and services in new market.
 This corporation desires to label and brand in Chinese language the goods and products
at the same time during providing products in Chinese market. This will help and will
also assist corporation in offering accurate and correct data approximately merchandise
along with components this is utilized in production of merchandise.

REFERENCES
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