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Canada Entry Strategy Into a Chinese Foreign Market

Introduction

Entering into foreign markets has numerous challenges for new firms. In this case, the organization is based in Canada and plans on exporting Canola oil to China. There are several challenges ahead for this organization; questions like ‘what kind of market will be pursued?’, ‘what marketing infrastructure should be instated?’, ‘what revenues will be expected?’ must be answered. This paper will attempt to analyze these matters through the pursuance of an international strategy.

Technical innovation

Technical innovation strategies can be a plausible approach to entry into China as this involves making superior products that are not prevalent within the target country. Studies indicate that most consumers in China most purchase tea seed oil as well as olive oil. Most of them are not highly exposed to Canola oil yet it has been shown that this type of vegetable has the same benefits as the former two oils and can be used to cook without generation of any smell. The choice of product for this international market entry demonstrates technical innovation strategies because it will be perceived as a superior commodity and it is, therefore, likely to garner a lot of support. This is somewhat of a stretch compared to what Canada has been exporting to China. Presently, it focuses on canola seeds and even ranks first as the biggest market for Canola seeds from Canada. However, because of blackleg disease, Australian and Canadian Canola seed exports to China were restricted. There is therefore a gap that needs to be exploited by Canadian businessmen; Canola oil would be the right solution to such a dilemma.

Product adaptation

Product adaptation will be another component of this strategy where some modifications will be made on the product before and upon entry into the target market. As stated earlier, China was a primary recipient of Canola seeds from Canada. Now product modifications will be made by squeezing the seeds to get a refined or finished product. This will add value to the product thus justifying increments in asking price and subsequently increasing profit margins. In terms of product adaptation upon entry in China, there is little that can be done concerning the actual content of the Canola oil when in China but much can be done about the packaging and appearance of the products to the consumer. This will be targeted at meeting the tastes and preferences of the locals. One way of achieving this is by opening up a prepackaging center in the target country.

It should be noted that plenty of canola is grown domestically in Canada. There are several ways in which this can serve as an advantage to an exporter of the seeds themselves or to products that use Canola seeds as raw materials but this business will choose the most effective ones i.e. sourcing seeds from farmers directly. Pre-order purchases will be done here to eliminate all the extra costs that come as a result of dealing with intermediaries. Furthermore, equipment and facilities needed to do so will be put in place. A processing plant will be placed in Saskatchewan such that the products will be easily available for modification.

Transport and security

Any international strategy should always take into consideration perceived risks that come up as a result of shipping or transportation. In this business, ample research has been carried out on the various transportation arrangements available to Canadian transporters targeting Asian-based clientele. An examination of all the viable options found that using existence modes would be an economical, safe and secure way of getting the Canola oil to its recipient. Therefore, the products will be shipped in Cosco containers. The latter choice is quite appropriate because many containers that enter China from Canada are empty. Furthermore, they are available at relatively affordable prices i.e. they will cost the company approximately $3, 000 between Edmonton and China. This will enable the company to transport about 45, 900 liters of Canola oil per container. It implies that about $0.065 will be spent for every liter transported to China. Although there are several other costs and cost implications that must be accounted for, the business will have enough room to accommodate all these since the average price for Canola oil internationally is approximately $0.78 per liter. Average prices for Canola are available at the Canola Council website which updates them based on external factors. Most prices are quoted on a weight basis and not a volume basis. The latest figures indicate that consumers pay 5577.33 Yuan which translates to $858.05 per tone. Since 0.91 kilograms of canola oil are equivalent to one liter then the latter price becomes $0.78 per liter. This transportation and security strategy will therefore leave a lot of opportunity for inclusion of other expenses and still provide an ample profit margin.

Marketing strategy

As stated earlier, this international strategy will involve negligible adaptation of the product in China since Canola oil content can only be minimally altered. However, there are adverse opportunities for marketing. It should be noted that China as a target market was chosen because of several reasons. First of all, import versus export comparisons between China and Canada are imbalanced with a lot of items coming from China than Canada. Therefore, this strategy will be an attempt at restoring balance. Furthermore, the country’s economy is quite favorable and it has become a formidable force in the international arena. The country’s economic policies strongly favor foreign direct investments. However, many new exporters tend to shy away because the government requires a certain amount from them. This will not be an issue because Canola oil is classified as a food commodity and following China’s 2004 membership of WTO, there will be no limits placed on it. Chinese consumers are becoming increasingly aware of their health and are also looking for high-quality products. This is the background against which the marketing strategy will be set. The commodity will be marketed as a high-quality Canadian product with added benefits to buyers’ health. Three major elements will be emphasized during the marketing process and they include ‘made in Canada’, ‘healthy’, and ‘green’. The high end of the consumer market will be targeted for this product as many Chinese have a positive attitude towards the quality and uniqueness of western-based products. Although several mass media alternatives are available, television advertising will be the major platform. Most of the advertising will be focused on the tastes and preferences of the local market.

Conclusion

This entry strategy into the Chinese market from Canada centers on an international strategy. Most production and manufacture will be carried out at home. However, repackaging and marketing will be adapted to the consumer market. Furthermore, there will be minimal competition from local producers because most of them focus on tea seed oil. Utmost consideration has been given to local conditions before sending it there.

Works Cited

Lymbersky, Catherine. Market entry strategies. Hamburg: management lab press, 2008.

Carter, Stephen. Export procedures. Agriculture training in South and Eats Africa report, 1991(4), 35.

Canola Council. Canola prices. 2010. 

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