Question

Koala Entertainment Limited (KEL) is a leading entertainment, artists and performance brokerage agency （演出經紀機構） in Australia. KEL founder Mr Wright realised that China is a world-class media and entertainment platform and wants to begin penetrating the firm’s popular musical, magic shows there, but KEL has little international experience. Mr Wright is unaware of the various types of investment and nontariff trade barriers that KEL might face in China.

Q. What can KEL management do to minimise the threat of government intervention? Explain the FOUR strategies with an example based on the above case. (~300 words)

Below are six strategies and only four is needed.

• Research to gather knowledge and intelligence. Understand trade and investment barriers abroad. Scan the business environment to identify the nature of government intervention.

• Choose the most appropriate entry strategies. Most firms choose exporting as their initial strategy, but if high tariffs are present, other strategies should be considered, such as licensing, or FDI and JVs that allow the firm to produce directly in the market.


• Take advantage of foreign trade zones. FTZs are areas where imports receive preferential tariff treatment, intended to stimulate local economic development. e.g., A successful experiment with FTZs has been the maquiladoras — export-assembly plants in northern Mexico.

• Seek favourable customs classifications for exported products. Reduce exposure to trade barriers by ensuring that products are classified properly.


• Take advantage of investment incentives and other government support programs.

• Lobby for freer trade and investment. Increasingly, nations are liberalizing markets in order to create jobs and increase tax revenues.

Answer 1

Question : Koala Entertainment Limited (KEL) is a leading entertainment, artists and performance brokerage agency （演出經紀機構） in Australia. KEL founder Mr Wright realised that China is a world-class media and entertainment platform and wants to begin penetrating the firm’s popular musical, magic shows there, but KEL has little international experience. Mr Wright is unaware of the various types of investment and nontariff trade barriers that KEL might face in China.

Q. What can KEL management do to minimise the threat of government intervention? Explain the FOUR strategies with an example based on the above case. (~300 words)

Below are six strategies and only four is needed.

• Research to gather knowledge and intelligence. Understand trade and investment barriers abroad. Scan the business environment to identify the nature of government intervention.

• Choose the most appropriate entry strategies. Most firms choose exporting as their initial strategy, but if high tariffs are present, other strategies should be considered, such as licensing, or FDI and JVs that allow the firm to produce directly in the market.


• Take advantage of foreign trade zones. FTZs are areas where imports receive preferential tariff treatment, intended to stimulate local economic development. e.g., A successful experiment with FTZs has been the maquiladoras — export-assembly plants in northern Mexico.

• Seek favourable customs classifications for exported products. Reduce exposure to trade barriers by ensuring that products are classified properly.


• Take advantage of investment incentives and other government support programs.

• Lobby for freer trade and investment. Increasingly, nations are liberalizing markets in order to create jobs and increase tax revenues.

Answer: from the above information Mr Wright founder of KEL don't have enough information regarding the investment and non tariff barrier that KEL will face if KEL face china. Below are some strategies that Mr Wright can function his firm's music, entertainment platform,magic show efficiently in China.

1-(Research to gather knowledge and intelligence. Understand trade and investment barriers abroad. Scan the business environment to identify the nature of government intervention.)

Answer: as before doing some research researcher do a pilot study to know whether the research will be successful or not here Mr Wright should do a pilot study before starting the whole venture. To know how Chinese government work, business environment , what kind of barrier that the Chinese government imposed on forign traders. What is the intensity of barrier imposed by them. After knowing the whole things starting new business will be beneficial for them.

2-Choose the most appropriate entry strategies. Most firms choose exporting as their initial strategy, but if high tariffs are present, other strategies should be considered, such as licensing, or FDI and JVs that allow the firm to produce directly in the market.

Answer: for entering in foreign market the most suitable one is licensing because compare to other strategies it is less costly and also take less time and can be implemented very efficiently. If we consider FDI ,firm need to buy land and also to hire skilled workers it is costly and also very time consuming . Although FDI compare to licensing is costly and need time. Joint venture is also risky although it is beneficial to share losses and profit . Business in case of partnership need cooperation of both the parties if one is cooperating and another one not they this will not beneficial to enter into join venture.

3-Seek favourable customs classifications for exported products. Reduce exposure to trade barriers by ensuring that products are classified properly.

Answer: before exporting something it is very essential to know the customer taste and preference. If there is lack of information in knowing customer demand for a particular good then that firm will not survive for long time in the forign market. The product which the firm wants to sell Also classified properly so that it gain the attention of buyers. HTS classification of good that is harmonized system code for good should be followed. The country which want to export commodity given some HTS number. The exporting country have to mention that code properly to reduce the restrictions.

4 - Take advantage of investment incentives and other government support programs.

Answer: after the Chinese economy reform they give advantage to foreign traders to supply goods and services properly. For investment in China they offer traders to register themselves so that they can take advantage government policies. As all knows China is a importing and exporting country. Huge amount of goods and services traded between China and other economy. So they provide their labour as well as you can use your own labour. Several banking facility also provided by them.

Hope answered your questions please hit the like button your feedback is precious for us. Thank you.