Question

Imagine that your company is in agribusiness and is considering entering China with a self-cleaning feed bunk for cattle. There are no trade barriers to ship this item to China. The item has low value-to-weight. The technology is not proprietary. The firm would like to use profits from the Chinese market to expand into other markets. Management is risk adverse and know that it will be expensive to set up a local manufacturing plant in China. Select the most appropriate entry mode and fully justify your decision.

Answer 1

Select the most appropriate entry mode and fully justify your decision

• I would set up the local manufacturing plant in Bangladesh because labour cost is less and land cost is also less
• I would then export the finished product to China by road
• Distance from Bangladesh to China is less and can be conveniently covered by road
• Due to low value-to-weight the transportation cost would be less
• Lack of trade barriers will be an added advantage
• Since technology is not proprietary, so there would be less implication of rules and regulations on export