Optimizing Trade Logistics: A Case Study of Baby Products in China

This report analyzes international trade logistics for baby products entering the Chinese market, focusing on the advantages of a direct export strategy. It highlights the distrust in domestic Chinese brands, creating a demand for foreign products. The report evaluates various market entry strategies, ultimately recommending direct exportation due to its cost-effectiveness and greater control over transactions. Direct export allows businesses to offer quality products at competitive prices, test the market, and build direct customer relationships. The report concludes that direct exportation maximizes profit margins, improves customer feedback, and protects trademarks, making it the optimal choice for organizations expanding into the Chinese baby product market. Desklib provides access to similar solved assignments and resources for students.

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International Trade Logistics
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Introduction
The content of this paper discusses various components of international trade logistics as
outlined within the requirement. The product of choice is baby products which are being
distributed internationally by various organizations. The nation or the market is China which has
the over the past indicated a great demand for baby products. The Chinese market was therefore
the best market for the venture. Over the current past the Chinese market has showed lack of
trust on their own baby product brands. The lack of trusts by the Chinese market on their own
brand products in this category has created open market for various baby product dealers to enter
into the market. There is therefore a huge demand for foreign baby products in china compared
to other international markets. This is huge demand has been created by the Chinese parents to
utilize foreign baby products. This content with relation to various key international trade
logistics to identify the perfect strategy for entry in to the Chinese baby product market.
Market entry strategy
There are several ways in which an organization can utilize to enter the Chinese baby
product market (Sleuwaegen & Onkelinx, 2014). These strategies include direct exportation,
where the investor would export the baby products directly into the Chinese market without trade
roots, licensing, indirect export, franchise, partnerships joint ventures, company purchase,
piggybacking as well as greenfield ventures.
Direct export entry strategy
Even though there are various strategies which can be used to enter into the Chinese baby
product market. The most appropriate way to enter into the Chinese market is through direct
export entry strategy. However, no strategy is perfect in every market, direct export entry

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strategy seems to be the most perfect way in which one can enter into the Chinese market while
other strategies can be appropriate in various markets (Geroski, 2015). The choice of foreign
entry strategy depends on various factors whose consideration resulted into direct export market
entry as the best option. Before resolving to direct export as an entry strategy various factors
were considered as mentioned. The evaluated factors were not limited to, influence of the
Chinese tariff rates, the level of adaptation of baby products into the Chinese market, marketing
and transportation cost of the product as well as other conditions the Chinese government have
resolved in to manage the baby product market (Root, 2014). These factors were considered as
they have a greater influence on international trade.
Direct export foreign market entry strategy is one of the most effective method to enter in
to the Chinese baby product market. This strategy involves selling of the baby products directly
into the identified Chinese market. Direct expert is the most cost effective way to enter foreign
market as it will enable the company to conduct most of their operations on their own limiting
cost (Brouthers & Werner, 2006). The direct export market entry strategy is also the easiest
strategy that the company can use as it does not involve complicated procedure. This method is
therefore the most appropriate based on the fact that the organization of the recent years have not
been conducting training for active foreign investments. Getting into the Chinese market
through direct export strategy will allow the business with various opportunities. The
organization will have to perform most of their operations on their own to achieve their customer
goals (Coviello & Munro, 2007). However, for the organization to succeed in china it will have
to comply with the requirements of the Chinese government as well as have their agents within
the nations.
Why direct export entry strategy

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Direct exportation of baby products to the Chinese market means the organization will be
selling directly to their interest buyers without any third party involvement. Most of the
companies will use various third parties who in turn result into an increase in the cost of the
product lowering the demand. The most involved third party in foreign markets is a distributors
who always increase the cost of a product to get their profit. With direct exportation, the
organization will be able to offer to the Chinese parents’ quality baby products at a favorable
prices increasing sales (Ali, Krapfel & LaBahn, 2015). However, as the business grows in China
serving a larger market it will need to employ agent who will act directly on their behalf. Direct
exportation will also allow the organization to test the market through transportation of goods
only with order from the parents and advancing with time. By exporting baby products directly
into the Chinese market, the company will be able to focus on a specific part of the market
leading as they expand into the market.
The company should use direct exportation as this strategy will generally enable the
organization to avoid various risks as well as costs which come with middlemen. The
organization in this way will also have complete control of sales as they will have to manage on
its own, the distributions process, shipment logistics and all invoices (Goodnow & Hansz, 2012).
Utilization of direct export as the mechanism for foreign market entry eliminates the
intermediaries there by enabling the company to make potential profits from the sales. In a
situation where an origination utilizes a foreign entry method which involves an intermediary,
the organization will have to allocate costs for the management of such intermediaries leading to
high costs.
The cost which could have been utilized to sustain the middlemen with direct exportation
are therefore used for production leading to increased profit margin. This is based on the

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assumption that the higher the production the greater the profit margin (Leonidou, Katsikeas &
Samiee, 2012).
The direct exportation will also enable the organization with direct and a greater level of
control over each aspects of transaction. In situation where a company resolves on the use of
other means like partnering with Chinese firms of purchase of a firm in the country, the company
degree of control is minimized. The company with such strategies will lose control over all
transactions of the nosiness as the partner will have control over some transaction (Young,
Hamill, Wheeler & Davies, 2009). Since the Chinese parents only want baby products from
outside the country, other market entry strategies will reduce sales as the company brands will
have various factors from the domestic firms.
Direct exportation strategy will company to interact and have a clear understanding their
customers leading to increased customer relations and perfect business perception. The
relationship between the seller and the buyer is important as it gives a sense of security based on
direct transactions (Hill, 2008). Moreover, direct exportation of baby products to the Chinese
market will enable the business to get direct and faster feedback from the customers concerning
their products in the new market place. This happens as customers and the business will have
direct transaction and relation. Finally use of direct exportation strategy will enable the business
to protect its trademarks, the business patterns as well as copyrights.
Conclusion
An organization can decide on various options to enter into a new market. But according
to the discussion above, direct exportation as a method of entering a new market out weights
other options based on the identified market. The organization should therefore use direct export
as a market entry strategy as it is the cheapest and the easiest way on managing new markets. As

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revealed within the content above, the organization will be able to increase their profit margin by
entering the market via a direct export entry mechanism. Companies and organization with plans
of joining new foreign markets should therefore embrace direct exportation in order to enjoy
fruits of their decision to join new markets.

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References
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