The UK SME enters the Chinese market

The UK SME enters the Chinese market
“Research Project”
Research in Business
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The UK SME enters the Chinese market
Table of Contents
Table of Contents.........................................................................................................................2
List of figures................................................................................................................................3
List of tables..................................................................................................................................3
1. Executive Summary.............................................................................................................4
2. Introduction:.............................................................................................................................4
UHT milk industry in China:.....................................................................................................4
UHT milk industry in UK..........................................................................................................5
3. Business drivers of the company's expansion into the Chinese market..............................6
Key drivers from PESTEL and five force analysis....................................................................6
Economic factor.........................................................................................................................6
Social Factors.............................................................................................................................7
Bargaining power of supplier.....................................................................................................7
Political Factors..........................................................................................................................7
4. Trade Barriers..........................................................................................................................8
5. Ethical and social issues to be considered by the UK SME..................................................9
Children abuse in marketing strategies ....................................................................................9
Ethical dilemma on UHT milk .................................................................................................9
Corporate bribery...................................................................................................................10
Renewable resources ..............................................................................................................10
Business sustainab ility...........................................................................................................10
6. Cultural preferences to be considered by UK SME............................................................10
Hofstede model........................................................................................................................11
7. Expansion Methods to be chosen by the business...............................................................12
8. Conclusion...............................................................................................................................14
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The UK SME enters the Chinese market
9. References..............................................................................................................................14
List of figures
Figure 1 China dairy product consumption....................................................................................5
Figure 2 UHT milk consumption in Britain...................................................................................6
Figure 3 UK China trade Data........................................................................................................8
Figure 4 Hofstede model for UK and China................................................................................11
List of tables
Table 1 Foreign Investment Vehicle: Advantages & Disadvantages with respect to china
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The UK SME enters the Chinese market
1. Executive Summary
The report aims to analyze the Chinese market of UHT milk for a new entry. The UK SME
intends to enter with organic and safe UHT milk in the Chinese market. Hence, the study has
been carried out to analyze the internal and external factors of the Chinese market which affect
the market entry of UK SME. The industry analysis includes the discussion about key business
drivers such as PESTEL analysis and Porter’s five force model analysis. Moreover, the trade
barriers between the UK and China have been discussed, which can be potential threats for the
UK based SME to succeed in the market. The demand for UHT milk is high in China and the
black market of UHT in 2008 has substantially created an opportunity for UK dairy products in
the market. After analyzing several market entry strategies, we can say that it is better to adopt
joint venture methodology to enter the market. The report also talks about several sustainability
measures and cultural aspects which are important for UK SME while entering in the Chinese
market.
2. Introduction:
UHT milk industry in China:
The demand for dairy products in China has been growing for since decades. The health and
safety issues reported for UHT milk that were exposed in 2008 provide a green signal for UK
SME to enter the market. The black market issue of UHT milk with melamine adulteration
increases the demand for quality dairy products from tenacious UK farmers. People are now
hesitating to trust local players for producing safe UHT milk for their kids.
The overall consumption for milk and related dairy products is expected to grow by 49% in the
year of 2025. People are exciting about the imported UHT milk and they have given an
overwhelming response. With increasing population and more disposable income, more than
60% of total population tends to use UHT milk in China. The graph depicts the overall demand
for UHT milk against yogurt and fresh milk. We can see that the demand is increasing
immensely (statista.com, 2018).
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