Report: Sibagro's International Trade Opportunities with China

This report analyzes the international trade opportunities for Sibagro, a Russian food manufacturing company, focusing on its potential pork trade with China. It provides background information on the Russian economy and Sibagro, highlighting the company's goals of expanding its business inter...Read More

International
Trade
Opportunities

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Background information for the economy and company:...........................................................3
Analysis of Key Trade Issues......................................................................................................7
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................13

INTRODUCTION
International trade are the process for exchanging goods and services between various
countries. Trading in international level gives opportunities to the countries for expanding its
business. It gives employment opportunities for the countries as the business expand its activities
which leads for increase for opportunities. International trade helps business for expand its goods
and services for the international level which leads to increase in demand. As the business
expand its activities it gives chance to it for higher profitability. Trade opportunities are the
scope for the country for increase its trades (Angelsberger and et.al., 2017). This report are based
for Russian company, Agro industrial holding “ Sibagro”, this company wants to trade with
china. SIBAGRO, is the Russian company for the food wholesaler industry. This report includes
topics which are country and company's background, environmental issues which it has to face
by trade with china. Apart from this it also includes topics such as trade issues for the country,
opportunities for the economy.
MAIN BODY
Background information for the Russian economy and company:
Background for the Russian country:
The history for the Russia begins with the history of the East Slavs. The traditional start
date for the Russian history is the establishment of the Rus state which is situated in the north in
862 which are rules by Vikings. The Russian economy is the upper middle income mixed,
transition economy. Russia's geography is the important element for the economic activity with
the sources for Russia contains over 30% natural resources across the world. Russia has an
abundance for oil, natural gas , precious metals which makes major share for the Russian
exports. Russia has the largest natural gas reserves and largest exporter for the natural gas. The
country are second largest exporter for the petroleum. Now the country wants for trade with
china which gives its higher profitability (Brack, 2017). International trade helps business for
expand its goods and services for the international level which leads to increase in demand. As
the business expand its activities it gives chance to it for higher profitability. The country is
trading with china which gives opportunity for growth in economy.
Background for the SIBAGRO company: SIBAGRO is the company which is
situated in Russia for the food manufacturing industry. It has employees 21 which generates $

10.52 million for the sales. The company deals for agriculture industry for manufacturers for
food products. This company wants to deals with china for its food products which gives it
opportunity for expanding its business (Chacholiades, 2017). The company has competitors
which has same industry by expanding international trade relations with china it will give
opportunity for higher profitability which makes impacts for Russian economy. Expanding
business gives chance for more employment opportunities which gives Russian country for
growth in its income. As the country has various natural resources which provides it chance to
grow its businesses outside the country. The country has planning for exporting its food products
to china this will helps it for maintaining trade relations with the international level. Company
achieves various opportunities for attracting market for its products by expanding business
worldwide.
International business are the process for exchanging goods and services between various
countries. Trading in international level gives opportunities to the countries for expanding its
business (De Vries, Hobolt and Walter, 2020). The international business focuses for the
problems and opportunities which firms operating in more than one country. There are various
variables which uses in international business foreign exchange rates, markets, cultures, inflation
rates which are related to domestic business. Companies guiding principles defines in three
categories products, market serves, results. There are various difficulties which companies faces
in international business.
 Political and legal differences: The political and legal environment of foreign markets is
different from that of the domestic. Political and legal environment makes impacts for the
business which are dealing as international business. The difficulties increases when the
company increases its business. Every country has different government policies which
affects the business policies for example government policies affects pricing strategy for
the business (Gibson, 2016). In context to SIBAGRO, the company is looking for
expanding its business with china for this it has to faces various political and legal
challenges. As the company thinks for expanding business it has to follow legal
formalities which gives chance to it for trade relations. China and Russia has political and
legal structure different from each other. Which creates problems for the country for
maintain relations. The company SIBAGRO, faces different rules problems at the time of
setting policies.

 Cultural difference: Cultural differences are the most common problem for the
international trade. In every county there are different culture which affects businesses by
its activities. Businesses has to train its employees for the different culture. In context to
SIBAGRO, the company wants to set up its business with china. The culture for the china
and the Russia has various differences which affects business (Glavas, Mathews and
Bianchi, 2017).
 Economic differences: The economic policies different for every country. For entering
in the economy country has to fulfil various different economy requirements. In context
to SIBAGRO, the company wants to enter in china economy for trade relations it has to
follow its economy policies for it. Economy policies are which includes inflation,
employment, interest rates.
The Russia economy wants for expanding business with china as it gives opportunities
for expanding business activities. Russian economy as the famous for the natural products and
china has trade relations for various countries it can deal with it so that china can import goods
and services from it and uses as raw material which gives opportunities to it for making success
in business. In context to SIBAGRO, the company wants to increase its business with china as
the food manufacturer company it can export its product to china for expanding target market in
the china. The company wants to trade with china it has critics which shows for entering in the
Chinese economy organisation has to follow various rules, regulations, taxes etc. It is the typical
for Russia take legal permission for the trade with china. There are various factors which affects
business when its making trade relations with other countries (Glavas, Mathews and Bianchi,
2017). These factors includes political, economic, social, technological, environmental, legal etc.
These factors affects business for the making trade relations with other countries. For entering
for international market companies has to fulfil the needs for the other country. China is a
communist country and thus there are very strict rules and regulations. These things makes
critics for the business as it trade with china. Trade relation for the china makes profitable to the
country.
China has a very strong economy in the world. Therefore the economic environment of
the country is conductive for international trade. Economic environment for the Russia has differ
from the china which creates issue for the country by follow these things Sibragro can make
profitable to its business. For the trade in international countries organisations has to follow

economic policies. Economic policies helps companies for maintaining trade relations (He and
Karami, 2016). China's society accepts goods and services which have a good quality. Sibagro
has quality for its goods which helps it for managing business in china. This will helps company
for making higher profitability. China is a technology-driven economy which gives the required
importance to innovation and technology (Jensen, 2016). The company Sibagro looking for
maintaining relations with china by providing good quality products. Sibagro should makes
innovative products for the successful trade with china. China's environment has been degraded
by the air, water pollution. Sibagro has follow rules for the maintaining environmental issues
with China as it has pollution rules. Company should looks for environmental policies for
maintaining better trade relations with other country. There is a presence of a number of laws in
China. Chinese government has strict rules for the international rules. Companies should
maintain these relations with china as maintaining better trade relations which helps for higher
profitability.
Sibagro the company has various competitors for its business for competing these
competitors it has to increase trade relations with the countries which helps it for achieving
higher profitability. It gives opportunities for the business for success for it. The company has
expand its business relations as international trade which helps it for maintaining sales. Increase
in sales gives chance for business in order to compete its competitors for its higher profitability.
International trade helps countries for expanding their markets for access goods and services
which have available for domestic. The results for international trade the market is more
competitive. This will gives results for more competitive prices for taking cheaper products
homes for the consumers. International trade gives opportunities for countries for development
which leads for GDP growth. In context to Sibagro, the company trades with various countries,
trade relations for china will makes is more valuable which helps it for increases its profitability.
China has large economy for technology which provides opportunity to the company for
expanding its business which helps it for making its profitability. The company has competitors
which has same industry by expanding international trade relations with china it will give
opportunity for higher profitability which makes impacts for Russian economy. Trade relations
helps firms for making quality for their products, provides it to international market which gives
it opportunity for increases sales for the company. Every company wants to increase its sales
which will helps it for increase its profitability. Trade with china gives advantages which

includes ownership advantage, location advantage, industrialisation advantage. This will helps
company for increasing its profitability across the country.
Analysis of Key Trade Issues
There are different types of trade issues which the companies have to face when they deal
internationally (Angelsberger and et.al., 2017). As Sibagro Holding Group is a company which
intends to deal in pork trade with China it has to consider the condition of the economy of the
country and make sure that the different types of trade issues there are also considered.
The opportunities and risks of trading pork with China are explained as follows-
Opportunities-
 Highly developed communication and infrastructure system- As China is a
developing country which has made quite a steady progress it has a highly developed
communication and infrastructure system for its trade. Thus for Sibagro Holding Group it
offers an opportunity of ensuring that it can deal in pork trade with China in the right
manner and earn higher-level of profits (Kohl, Brakman and Garretsen, 2016).
 Higher-level of income of middle class- The Chinese Economy has presence of different
middle-class people who have a higher-level of income. Thus they also have the appetite
for the purchase of imported goods which ensures that they are able to take suitable
actions effectively and efficiently. This offers a perfect opportunity for Sibagro Holding
Group for making sure that it is able to target expansion of its pork business in the
country.
Risks-
 Governmental challenges- The Chinese Government has a very conservative attitude
and thus this creates a lot of challenges for the companies who want to do business in the
country. This is a risk for Sibagro Holding Group for doing its business in the country as
it can affect its level of profits. Government policies are must for company for trade with
international country. As china has strict rules firms has to follow these rules for
maintaining trade relations with China.
 Competition- There is a higher-level of competition which is prevailing in the Chinese
Economy nowadays. There is a presence of a lot of competitors within the market which
offer tough challenge for the different new entrants (Mostafiz, Sambasivan and Goh,

2019). Thus for Sibagro Holding Group this is a risk which can affect its pork trade in the
country. Company has to face various challenges for the entering for international
market. In context to Sibagro, the company has various competitors for its business.
Entering in the international market helps it for competing other organisations. It will
helps company for achieving higher profitability (Nathoo, 2019).
Apart from this there are different types of trade issues which are faced by the companies
when they want to trade in China. These trade issues are explained as follows-
Trade Issues in China-
 Cultural Understanding- The companies face this particular trade issue in China
because of the reason of lack of proper understanding of the culture (Glavas, Mathews
and Bianchi, 2017). Thus for Sibagro Holding Group this is a trade issue which affects
the pork trade which it wants to carry out in China because it may not be able to
understand and analyse the culture of the country perfectly.
 Costs of doing business- The companies which are doing business in China can incur
higher-level of costs (Pauwelyn, Guzman and Hillman, 2016). In the context of Sibagro
Holding Group this is a trade issue because it can be a costly affair for the company to
conduct its business activities in the country which are relate with pork trade.
 Economic Stagnation- The Chinese Economy's Growth Rate has slowed down a lot
recently. On of the major reasons for the same has been the impact of the COVID-19
pandemic. Therefore for Sibagro Holding Group it can create a trade issue because the
slow economic growth rate of the country can create an impact on the pork trade which it
wants to carry out in the country.
 Government role in business- The Government of China creates a lot of trade barriers
for the companies who want to conduct international trade in the country (Pololikashvili,
2020). Thus Sibagro Holding Group can be affected by the trade barriers and restrictions
which the Government is creating which can thus impact them a lot in conducting the
pork trade in the country.
OLI framework- This is a framework which can be used by the different types of organizations
so that they are able to consider the attractiveness of making FDI in a particular country. Thus
the analysis of this model in the context of Sibagro Holding Group can be explained as follows-

 Ownership advantage- This refers to the different types of ownership advantages which
can be considered within an organization like Copyright, Trademark or Patent Rights
(Pinho and de Lurdes Martins, 2020). In Sibagro Holding Group this can be an advantage
because China has strict ownership laws which can help it a lot. This will helps company
for making its image as any company cant copy its products. It will sales its products by
its brand name which helps it for creating brand image.
 Location advantage- This refers to the specific advantage which can be there when the
companies conduct business within a particular nation. Sibagro Holding Group has an
advantage in China while conducting its trade there because of the business opportunities
which are present within it. The company has location advantages as the china are the
larger economy which has innovation, technology which gives benefits for company for
creating its brand image which helps it for higher profitability.
 Internationalization advantage- This refers to the advantage which is present for an
organization to produce the products in-house as compared to contracting with a third-
party (Royles, 2017). In China, this type of advantage is present for Sibagro Holding
Group because it will be able to produce its products in-house and then provide it
according to the needs and requirements of the m China is a technology-driven economy
which gives the required importance to innovation and technology market in the country.
This helps company for increasing its market as china has larger market which helps it
for increasing sales. It will helps company for achieving higher profitability.
PESTEL analysis of China
Factors Details
Political factors These factors includes government stability /
instability, trade policy etc. These factors
makes impact for the organisation for trade in
international country. China is a communist
country and thus there are very strict rules and
regulations. Thus the political environment in
the country is not very conductive for new
companies (Pololikashvili, 2020). Thus this
factor is not in favour of Sibagro Holding

Group.
Economic factors These factors includes inflation rate, tax rates,
employment etc. These factors makes impact
for the organisations who are planning for
international trade. China has a very strong
economy in the world. Therefore the economic
environment of the country is conductive for
international trade. This factor is in the favour
of Sibagro Holding Group.
Social factors These factors includes culture, gender,
lifestyles for the people for the countries. These
factors makes impacts organisations sales as
per the country. China's society accepts goods
and services which have a good quality
(Royles, 2017). This factor is in the favour of
Sibagro Holding Group.
Technological factors These factors includes automation, technical
changes. These factors makes impact for the
country for the international trade. China is a
technology-driven economy which gives the
required importance to innovation and
technology. Thus this factor can act in the
favour of Sibagro Holding Group.
Environmental factors These factors includes climate changes. These
factors makes impacts for the organisation for
the trade for international countries. China's
environment has been degraded by the air,
water pollution. Also the environmental laws
are quite strict in the country (Spaniel and
Malone, 2019). Thus this factor is not in the

favour of Sibagro Holding Group.
Legal factors These factors includes law, regulations etc.
These factors makes impact for the
organisations for adopting regulations for the
other countries. There is a presence of a
number of laws in China. Thus the government
also sets out strict laws for the companies to
follow. This factor is therefore in the favour of
the company.
4 out of 6 factors are in the favour of Sibagro Holding Group and the remaining 2 factors
are not in the favour of the company. Thus it can be said that China will present very less trade
issues for the company if it decides to expand its pork business there (Viner, 2016). Thus in this
way it can be said that the company will be able to target higher-level of profitability. China has
large economy for technology which provides opportunity to the company for expanding its
business which helps it for making its profitability. Thus the overall conclusion is that China is a
suitable country for the purpose of investment and trade opportunities for Sibagro Holding
Group.
CONCLUSION
From the above report it has been concluded that international trade is the process for
creating business with other countries. It gives employment opportunities for the countries as the
business expand its activities which leads for increase for opportunities. International trade helps
business for expand its goods and services for the international level which leads to increase in
demand. Business in other countries has gives higher benefits to the company in order to
compete its competitors. For regulating business in international level there are various critics
which companies has to looks for these critics includes trade policies, laws, lifestyles etc.
Companies are looking for their higher profitability it gives opportunities to them for achieving
higher profitability. For maintaining business relations for international countries it has various
issues, opportunities. There are various factors which affects business performance when it trade
in international countries. These factors includes political, economic, social, technological,

environmental, legal factors. Opportunities which company meets for creating trade relations are
Highly developed communication and infrastructure system, Higher-level of income of middle
class etc. OLI framework is the framework which can be used by the different types of
organizations so that they are able to consider the attractiveness of making FDI in a particular
country.

REFERENCES
Books and journals:
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Small Business Strategy. 27(1). pp.19-36.
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public, political entrepreneurs and political opportunity structures. International
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Glavas, C., Mathews, S. and Bianchi, C., 2017. International opportunity recognition as a critical
component for leveraging Internet capabilities and international market performance.
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