Introduction of the selected company
Honey Australia is an organisation that is located in Mudgee, NSW Australia in the year 1990. Honey Australia manufactures its own natural type of honey and distributes the Australian honey products and bee products. In addition to this, the company also distributes chosen honey sources from the overseas market like New Zealand that is well known for its high-quality honey and honey made skin care products (Honey Australia 2018).
The organisation has expanded their strength and power in the current years and thrives itself for the development of production, production and distribution. In this context, Honey Australia disseminated its products throughout the Australian boundary. In the current years, the company produces over 300 metric tons of honey yearly.
Products: Honey Australia has at present been accredited with certified organic honey and they are now producing 100% natural organic products that are GMO-free (Honey Australia 2018). For meeting the growing requirement of certified organic honey, the company has developed exclusive supply services in selection to honey producers to bring out the best products to the Australian community.
In order to understand the effective international market entry techniques, the company needs to understand the international market. In this regards, the country selected from the European Union is Australia and from the Asian region is China. Based on the market analysis it has been found that a huge amount of Austrian population prefers naturally produced organic honey products. Moreover, while distributing honey in Austria, the Honey Australia Company might not have to face any challenges in selling and producing their bulk products (Dür and Mateo 2014).
This is due to the fact that a majority of the population in Austria is engaged in commerce as well as trade. Apart from these, it has also been found from the evaluation of Austrian market that people in Austria, that it is the 31st largest export production in the global boundary (Caporale et al. 2015). These, aspects of export and import may provide benefit to the company.
On the contrary, China is the country in the Asian region to which honey can be exported by the company. Market research shows that there are almost 379 community members who consume more than 300 000 tonnes per year that is three times more than the volume that is being exported. Apart from these, it has been seen from the market that there is an annual honey consumption of 62.1% in the year 2016 (Lu et al. 2014). Therefore, China would be highly beneficial in increasing the production of the honey for the Honey Australia Company.
Austria’s economic score is 71.8 thereby making its economy the 32nd in the year 2018. However, the country ‘entire score of the country has declined by 0.5% along with a declining rate in property rights, government integrity and business freedom (Qu et al. 2015). Apart from this fact, the political stability and stringent legal scenario of the country have helped them to improve the investment of economy. Moreover, the independent judiciary offers the country with effective rights for the protection of the property. The Austrian government supports the foreign direct investment specifically those investments with assisting capital investment to improve their development practices.
Identification of the TWO countries
Figure 1: Austria’s economic score
(Source: Qu et al. 2015)
Furthermore, Austria has a well-established market with expertise labour force, with quality standards of living, with expensive social and health industry. In this aspect, the country is closely related to the other European country specifically Germany thereby making its political features large and sound for the industrial sectors with a highly developed agricultural market (Liddle 2015). The countries geopolitical location is situated between western European nationals and developed market in Central, Eastern and South Eastern Europe that has resulted to the high amount of economic, social and political integration with the European Union.
In this regards, governments current economic reform packages intend to slow down the non-wage employee costs that allows the country to write down 30% of the investment made by the organisation with more than 25 employees (Beverelli et al. 2017). Each of these impacts of geopolitical forces is making Austria more attractive for the foreign organisation thereby helping to promote further investment.
China has an incredible economic development with an average rate of 8% that has increased over the past decades. Along with this company has produced the high increase in the standard of living for millions of Chinese citizens. Apart from there is a drastic expansion in the demand for natural resources for all kind such as water, land and energy. However, Xie et al. (2016) stated that China’s establishment and environmental practices have made the country one of the major leading contributors towards local and international environmental issues.
From the macro environment research, it has been found that China has the highest population with a population rate of 1.38billion that has been expected to increase by 1432.26 million by the year 2022 (Gu et al. 2016). Apart from this, both the formal and informal rules of the China political force that the organisation has to follow influences in the country. However, it has been found that over the period of past years the China government has focused on the establishment of e-commerce. In this context, the regulatory framework for the e-commerce is still at the preliminary stage as China has lower knowledge for documenting e-commerce regulation for the issues such as intellectual property, tax and rights to protection.
Development of each of the country’s trade and business policies
Over a long period of time, U.S and Austria have developed and rebuilt the trade relations between U.S and Austria. In this context, U.S is Austria’s third-biggest investor. In the case of U.S organisation, Austria represents a tempting and affluent market of trade and export. It has been found from the sources, that America organisation have invested over $20 billion in Austria and currently them employees over 30,000 Austrians (Wirtz et al. 2015).
Examination of potential threats challenged and opportunities in the existing market of each of the country. In the year 2013 Austria’s trade with the third countries accounted for 28.9% amongst all the Austrian import and 31.2% of the Austrian exports. However, Austria is a part of the harmonised system of trade of the European Union along with importing and exporting that are managed by EC regulations.
Analysis
In this context, the European Community has developed the Binding Tariff information process to get the accurate classification of trade for importing and exporting goods in Austria. Moreover, for limiting the impact of the environment, the EU has asked for legislation related to handling packaging and management of waste.
According to world trade organisation, China’s average population applied for most of the favoured nation with its trade tariff rate of 9.9% in the year 2015 that fell down drastically from the 15.3% in the year 2001. In this context, the tax rate for the agricultural resource is 15.6% whereas the average tariff rate for the non-agricultural products were 9.0% ( Mancheri 2015) VAT on the imported are applicable in China with a general percentage of 17% on the general resources at a limited rate of 13% for the food resources and other energy resources for domestic use. Apart from these, foreign-cost processing organisation are needed to pay VAT on the import raw resources and materials.
Figure 2: Australia and China trade relation
(Source: Mancheri 2015)
On the contrary to this, business tax rates are type of tax exemption that is given on the revenue generated from the tax activities. In this regards, China started to implement their business tax for the purpose of VAT conversion program with a rate of 3-17 % (Owen et al. 2017). However, factors that impacts on the cost of trade in China are the import and export obligations, bans, licenses on import and export, non-transparent tariff categorisation, complicated regulation as well as standards along with issues related to safeguarding intellectual rights of the property.
Analysis of potential challenges, threats and opportunities in the existing and short-term policies in China and Austria
From the above analysis on the trade and business policies, it has been found that China does not have much of the business freedom due to the imposition of regulation by the government where they completely restrict the export coming from other countries (Wang et al. 2016). However, currently, the Chinese government has opened their gateway for the outside countries to set up their business in China, while developing high opportunities for the external business.
Apart from these, there are high threats in the country that impacts the trade and business policies in China, such as export and import tax, regulatory standards, inconsistent and corruption-prone systems that add to the cost of trade. In contrast to this company has a high opportunity due to the emergence of technology that is the sole owner of China (Kolk 2016). Moreover, the country has easy to target bottleneck opportunities from the different industry of energy in Euro, retail and transportation. Along with China also has plans for investing in the financial infrastructure policies like increasing available resources and revenue.
Figure 3: Global export and trade agreements in China
(Source: Owen et al. 2017)
It has been found that in the year 2016, the Austrian government revenue was seen to be Euro 173.429 billion while the cost of expenditure was Euro 178.389 billion (Owen et al. 2017). These have led the Austrian government in the net lending at a negative at Euron4.96 billion in the year 2016 that shows that the country could not make limited financial resources available to the government for boosting economic expansion. On the contrary, the existing accounting balance for Austria was expected to bet at USD 9.283billions for the year 2016, and that has been estimated to increase at a CAGR of 4.36% by the year 2022. Therefore, the positive current account balance of Austria implies that it is the net lender in the entire world (Spence 2016).
Impact of Current macro environment and Geopolitical forces on the countries
On the other hand, investors and trustees may face a legal threat from fiduciary while taking in to account the acts of sustainability and long terms projects in decision making. Apart from these, the country may face potential threats due to lack of growth in the passive direct investment of business resources. Moreover, the export ration of the country is beyond the average rate of Austrians with no international specialisation of service sectors (Hallward-Driemeier and Pritchett 2015). However, there is a strong opportunity for Honey Austria to create new impulses for the Austrian economy.
Conclusion
From the above study, it 8s evident that international business marketing is paramount to the organisational mission for generating profits. Therefore, in order for the Honey Australian Company to successfully take part in the organisational completion, they are required to use to their exerting capability for improving the sufficiency organisation export. It has been seen from the study that Austria and China and contrasting market. However, both the European and Asian market is suitable for them to expand their business in a stable way. However, in the event of exporting and trading of business resources the company needs to follow the following suggestions:
- At the beginning when the organisation is entering the international country that is required to ensure that organisational members aware of the national political and economic history in a best possible way to call for a healthy business.
- The company is required to accumulate all the information on the countries’ coin esteem and on the import-export timeliness. In this aspect, knowledge of the conveyance date, the rate of currencies before the time and other conceivable points are needed to be considered by the organisation.
- Apart from these issues, the organisation need to consult with a business expert related to the country’s laws regulation business that could help them explore the unpredictable impediments and clarification related to an agreement that governs the agreement of export and import processes,
- Moreover, Honey Australia Company needs conducts tests for examining and evaluating the perspective of international business. Observing each of the nation’s social and economic trends will help them to understand the implication of society thereby helping them to discover innovative approached to accomplish business productivity.
- There are various differences that are necessarily required to be explored while operating trade and business in foreign countries in relation to the host countries. In this political, social, cultural and economic challenges become strong barriers that Honey Australia needs to consider in order to increase the capital investment base.
Reference list
Beverelli, C., Fiorini, M. and Hoekman, B., 2017. Services trade policy and manufacturing productivity: The role of institutions. Journal of International Economics, 104, pp.166-182.
Caporale, G.M., De Santis, R. and Girardi, A., 2015. Trade intensity and output synchronisation: On the endogeneity properties of EMU. Journal of Financial Stability, 16, pp.154-163.
Dür, A. and Mateo, G., 2014. Public opinion and interest group influence: how citizen groups derailed the Anti-Counterfeiting Trade Agreement. Journal of European Public Policy, 21(8), pp.1199-1217.
Gu, J., Zhang, C., Vaz, A. and Mukwereza, L., 2016. Chinese state capitalism? Rethinking the role of the state and business in Chinese development cooperation in Africa. World Development, 81, pp.24-34.
Hallward-Driemeier, M. and Pritchett, L., 2015. How business is done in the developing world: Deals versus rules. Journal of Economic Perspectives, 29(3), pp.121-40.
Honey Australia 2018. Home: Australia, Available at https://www.honeyaustralia.net.au/ [Accessed on 27/08/18]
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Lu, J., Liu, X., Wright, M. and Filatotchev, I., 2014. International experience and FDI location choices of Chinese firms: The moderating effects of home country government support and host country institutions. Journal of International Business Studies, 45(4), pp.428-449.
Mancheri, N.A., 2015. World trade in rare earth, Chinese export restrictions, and implications. Resources Policy, 46, pp.262-271.
Owen, B.M., Sun, S. and Zheng, W., 2017. China’s competition policy reforms: the Anti-monopoly Law and beyond. In Law and the Market Economy in China (pp. 121-155). Routledge.
Qu, Y., Liu, Y., Nayak, R.R. and Li, M., 2015. Sustainable development of eco-industrial parks in China: effects of managers’ environmental awareness on the relationships between practice and performance. Journal of Cleaner Production, 87, pp.328-338.
Spence, L.J., 2016. Small business social responsibility: Expanding core CSR theory. Business & Society, 55(1), pp.23-55.
Wang, W.Y., Pauleen, D.J. and Zhang, T., 2016. How social media applications affect B2B communication and improve business performance in SMEs. Industrial Marketing Management, 54, pp.4-14.
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Xie, Y., Dai, H., Dong, H., Hanaoka, T. and Matsui, T., 2016. Economic impacts from PM2. 5 pollution-related health effects in China: a provincial-level analysis. Environmental science & technology, 50(9), pp.4836-4843.
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