Expanding Kirby & West's Dairy Business in China: Drivers, Barriers, and Opportunities

International Business

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Executive Summary
Dairy food industry is expanding at much rate. This report suggests that the way in which
SMEs like Kirby & West can expand into the market. In this process company illustrates the
drivers that are working in favour of firm’s expansion in China. Huge population, good socio
political health, high investment capacity, good economic environment are some of things
that are acting as a driver for expansion. Import tariffs, Documentation, Labeling/ Marking
and increasing trade restriction by US are the four trade barriers effecting business in China.
This report also shows that China-US trade war, more focus towards production in China and
VAT irregularities are some of the things that are producing uncertainties in the business. It
also suggests about the opportunities created by the policies of Chinese government. Ethical
and social problem that needs to be considered by Kirby & West is provided in this report.
Attachment to Chinese identity, prefers low cost products, low uncertainty avoidance and
love choices and benefits are some of the cultural preferences that has been defined by the
company. Joint Venture is the best strategy that can help the company to enter into China.

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Contents
Introduction................................................................................................................................1
Drivers behind firm’s expansion................................................................................................1
Trade barriers.............................................................................................................................2
Four trade barriers..................................................................................................................3
Uncertainties created in business due to government policies ..............................................3
Opportunities created due to trade policies by Chinese government.....................................3
Ethical and social issues to be considered by Kirby & West.....................................................4
Cultural Preferences to be considered by Kirby & West...........................................................5
Expansion methods that need to be chosen................................................................................6
Conclusion..................................................................................................................................7
REFERENCES...........................................................................................................................8

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Introduction
Companies that are indulged in the Dairy food product industry are expanding at much faster
rate especially in the European region. Many companies are crossing borders to expand their
business in different parts of the world. It is important for any company to understand the
business environment present in that part of the world. This will help the firm in building
strategies that will ensure success of their business in that particular region. It is also essential
for a company to find out the barriers in the expansion along with the impact of external and
industry environment. Kirby & West is one of the SME in the dairy milk industry of UK
(Kirby & West, 2019). They have been dealing in the business of UHT milk products as well
as bringing milk to each and every doorstep for almost 150 years.
In the dairy industry of UK there are around 1.8 million dairy cows present in around 14,550
dairy farms. The value of the whole industry is expected to be around £3.8 billion with milk
production of around 13.5 billion litres annually (Viva, 2019). In terms of value it accounts
for around 17% of the UK’s agricultural production. Chinese dairy industry is world’s second
largest company in terms of global dairy sales and is forecasted to become the first by
replacing USA by 2022. The liquid milk production in China is around 27.37 Million metric
tonnes (Statista, 2019).
This report will highlight the business drivers that support company’s expansion. Along with
this it also gives the idea about the trade barriers present in that target market as well as the
ethical and social issues that needs to be considered by UK SME. It also highlights the
marketing challenges and government regulations in China. At last the focus has been given
on the expansion method chosen by Kirby & West to expand in China.
Drivers behind firm’s expansion
In the internationalisation process there are various factors that act as drivers for expansion or
say these factors supports company to do expansion. Some of the drivers of expansion are:
 Political: The political environment is China is stable and it is supporting any kind of
investment in the country. This is the major reason why it is easier for the firms to
expand their business in the market. Government of China is also providing support in
terms of policies, infrastructure and removal of trade barriers. At the same time,
government is also focused towards creating a healthy food industry. Due to this,