Entry Report to Chinese Wine Market

Executive Summary This report discusses all of the relevant aspects relating to the entry of Dorrien Estate wines into the Chinese market. In the course of due diligence, this report outlines all relevant information required for entry to a foreign market. The uncontrollable factors such as the Chinese economy, political climate, technological, socio-cultural and legal factors are first extrapolated showing that China is the second largest economy in the world and plays an influential role in the global economy.

The robust economy has given rise to high levels of disposable income, leading to increased demand for foreign products, and in particular, Australian wine. Politics and the economy are closely inter-related, with the Chinese socialist market economy being governed by the Communist party of China, which may pose certain political risks for a foreign organisation entering the market. Chinese business practices are also interwoven with socio-cultural elements highlighting that the Chinese seek to form close personal relationships with trading partners.

A hybrid legal system that is difficult to navigate, coupled with difficult distribution infrastructures may pose as barriers to entry for foreign organisations. The report also delivers a market audit, showing that there is a potential 250 million consumers spread across six distinct market segments. Cultural attitudes reflect that wine is seen as sophisticated and represents images of luxury and decadence, driving consumption. Three Chinese companies hold a 90% share of the market, with the remaining 10% held by foreign entities.

Distribution and transport of wine is predominately controlled by a small set of distributors who have access to on-trade and off-trade distribution channels. Foreign wine is commonly priced between AUD$14-66 per bottle, and all major competitors use a mix of advertising such as TV and print and promotional activities such as trade shows, wine competitions, in-store promotions, tastings and word-of-mouth to promote their products in the marketplace. Market entry strategies are discussed and the initial course of direct exporting is recommended for Dorrien Estate, due to low-cost and minimal risk.

Marketing tactics outline that the organisation should focus on the market segments of young royals, aspirationals and Generation-X, as these market segments will have the strongest growth potential over the next 5 years. A range of four products priced between AUD$40-60 should be introduced and promoted via TV and print advertising in luxury consumer lifestyle magazines, in-store promotions, trade and wine shows and wine competitions. The report concludes with a summary of all matters discussed and makes the following recommendations to management before market entry: 1.

Have a thorough understanding of macro-environmental factors that may hinder market entry. 2. Select an established and knowledgeable distributor with good access to extensive distribution channels. 3. Have a complete understanding of Chinese business practices that may adversely affect or give a great competitive advantage to the organisation. 4. Have an extensive knowledge of consumer behaviour which will lead to better execution of marketing strategies and tactics. 5. Direct export is the most cost-effective and lowest risk strategy.

A strategic alliance may be favourable in the future if the product shows good signs of market acceptance. Table of Contents Executive Summaryiii 1: Introduction6 2: Market Attractiveness7 2. 1:Relevant Political Factors7 2. 2: Relevant Economic Factors8 2. 3: China Current Account9 2. 4: Disposable Income per Capita10 2. 5: Economic Tariffs and Trade Agreements10 2. 6: Relevant Socio-Cultural Factors11 2. 7: Relevant Legal Factors11 2. 8: Relevant Environmental and Technological Factors12 3: Market Audit12 3. 1: Market Segments and Size12 3. 2: Consumer Behaviour14 3. : Distribution and Transport Channels14 3. 4: Common Promotional Mechanisms16 3. 5: Customary Pricing Arrangements16 3. 6: Major competing products & Marketing mixes17 4: Market Entry Strategy18 4. 1: Exporting19 4. 2: Contractual agreements19 4. 3: Strategic Alliances20 4. 4: Direct foreign investment20 5: Preliminary Marketing Plan Highlights21 6: Additional research required22 7: Conclusion22 8: Recommendations23 Reference:24 1: Introduction The purpose of this report is to discuss all of the relevant aspects relating to the entry of Dorrien Estate wines into the Chinese market.

The report first delivers a background of market attractiveness and uncontrollable macro-economic factors relevant to market entry such as the political and economic climate, socio-cultural, legal, environmental and technological factors that may effect and influence the international marketing practices of the organisation in entering the Chinese Wine Market. The report then delivers an audit of the Chinese market including size, consumer behaviour, distribution and transport channels, promotional mechanisms and pricing arrangements. Major competing firms are analysed and their marketing tactics are discussed.

Market Entry strategies available to organisations are evaluated and recommendations made as to the best approaches Dorrien Estate should execute in order to gain entry to the Chinese market. The report also outlines some key marketing strategies and tactics that may be executed by Dorrien Estate to gain market share and raise product and brand awareness in the Chinese market. The report concludes with an insight to additional research that may be required and a summary of all points raised, as well as delivering recommendations based on the elements discussed within the body of the report. : Market Attractiveness Dorrien Estate has chosen to enter the foreign market of the People’s Republic of China, and in the course of due diligence, must have a thorough knowledge of the current uncontrollable, macro-environmental factors of the target market before undertaking international marketing opportunities. 2. 1:Relevant Political Factors Political, business and economic aspects of China are intertwined. The People’s Republic of China is a communist government from a political perspective, and the economy, commonly referred to as a socialist market economy, is an economy led by the Communist Party.

The government effectively exercises strong macro-control by setting and controlling economic policies and legislation, market regulation, planning guidance and necessary administration (Castellucci, 2011, p. 343). Political risk, which refers to government involvement and interference in the business dealings of foreign organisations, can be seen as an entry barrier to China (Yaprak, 2011). An example of political risk in China is the government’s ability to identify and modify the different sectors of the economy and infrastructure where foreign investment is allowed, restricted or prohibited.

As shown in figure 1, China has 34 provinces, each ruled by provincial and local governments, which report to the central government. This form of rule poses another form of political risk due to constant battles between the country’s central government and the provincial and local governments over applicable laws, and observance or non-observance of them. This makes it difficult for foreign organisations operating in China to know exactly what terms of trade are within each province (Zheng, 2012). It must also be noted that the practice of international trade in China is different from that in developed countries.

Export and import in China are conducted exclusively by international trade firms, which are granted trade rights by the government. Firms without licenses’ are not allowed to export and/or import goods and services (Lai, Li & Wang, 2010). Figure 1: Provinces of China (Society for Anglo-Chinese Understanding 2012) 2. 2: Relevant Economic Factors With a population of 1. 3 billion, China recently became the second largest economy behind the United States of America (The World Bank, 2013), and is increasingly playing an important and influential role in the global economy.

The Gross Domestic Product (GDP), which is the total value of goods produced and services provided in a country during one year, in China was worth 7298. 10 billion US dollars in 2011, as shown in figure 2. The GDP value of China represents 11. 77 percent of the world economy (World Bank, 2013), highlighting the fact the country has a very robust economy and strong trading power. Figure 2: China GDP (www. tradingeconomics. com 2012) 2. 3: China Current Account As shown in figure 2, China has a Current Account of USD$65. Billion. The current account is the sum of the balance of trade (exports less imports of goods and services), net factor income and net transfer payments (Griffin & Pastay, 2013) China’s current account shows that the country has a positive account surplus, highlighting the fact the country’s wealth generation exceeds its expenditure, allowing the country to invest and create better domestic infrastructure and employment opportunities, which in turn leads to an increased standard of living for the population.

This increase in living standards has led to a greater demand for foreign products by Chinese consumers, opening up new markets for products. Figure 3: China Current Account (www. tradingeconomics. com 2012) 2. 4: Disposable Income per Capita The rapid growth of the economy in recent years has led to a rise in the Disposable Income per Capita for a larger proportion of the Chinese population, as shown in figure 3.

Disposable Income is the amount of money that households or persons have available to spend and save after paying income taxes and pension contributions to the government (Griffin & Pustay, 2013). Higher levels of disposable income has seen increases in demand for foreign products, which in turn opens up new opportunities for Dorrien Estate to promote and sell wine in the Chinese Market. Figure 3: China Disposable Income Per Capita (www. tradingeconomics. com 2012) 2. 5: Economic Tariffs and Trade Agreements Currently, there is no Free Trade Agreement (FTA) between Australia and China.

An FTA is an international agreement between two or more countries to eliminate tariffs on all trade between them (Department of Foreign Affairs and Trade, 2013). Wine imported to China from Australia is subject to tariffs as well as a range of other taxes, duties and fees such as a liquor tax, an education tax, a value-added tax of 17. 5%(VAT) and a consumption tax (Department of Agriculture, Fisheries and Forestry, 2012). A tariff is defined as a tax imposed by a government on goods entering its country (Cateora et al, 2012).

Import tariffs provide an effective barrier to trade by raising the price of a commodity in the importing country, and as a result, demand for the imported good fails (Griffin & Pustay, 2013). In spite of the barriers of entry imposed, Australian wine exports to China have seen a significant rise and China has surpassed Japan, becoming the largest export market in Asia for the Australian wine industry since 2007, with Australia also ranking second largest overall supplier of bottled wine to China after France (Wine Australia, 2013). 2. 6: Relevant Socio-Cultural Factors

Upon entering a new foreign trade market, organisations must be ‘globally aware’, taking into consideration and being conscious of cultural and social influences, along with having a sound knowledge of economic and political trends (Williams, 2011). Socio-cultural factors such as thoughts, beliefs, rituals, cultural, social and historical values can affect consumer attitudes and shape buyer behaviour (Clow & Baack, 2012; Pickton & Broderick, 2005). Socio-cultural and business factors are closely linked when trading in the Chinese market.

Dorrien Estate must be aware of the practice of Guanxi and Xinyong, which refers to special types of personal relationships or social connections between trading partners that are based on mutual interests and benefits that bond the exchange partners through reciprocal obligations and exchanges of favours (Chen, Huang & Sternquist, 2010) 2. 7: Relevant Legal Factors The movement from a planned economy to a socialist market economy in recent decades has seen a great change in the Chinese legal system, and as a consequence of these reforms, the legal system has adopted many features from common law countries.

This massive adoption process in a relatively short time frame has created a unique hybrid legal culture in China which may be difficult for foreign firms to navigate (Ho, Lau & Young, 2012). All foreign entities need to be registered with the appropriate local and state authorities and foreign organisations also need to deal with tax, accountancy and employment law and China’s commercial legal system. It is imperative for organisations entering the market to be aware of relevant laws and regulations (Ho, Lau and Young, 2012; Li, 2009). 2. 8: Relevant Environmental and Technological Factors

China is known for its difficult distribution system and transport channels due to the vast geographical area of the country and the varying levels of economic development across its regions (Bruwer, 2012). The geographical environment and varying levels of economic development also affect a foreign organisation’s access to stable information technologies infrastructure in the market, which may hinder communication channels with distributors and partnering business operators (Beverland, 2009). Dorrien Estate must take into consideration all relevant macro-economic factors that may affect entry in to the Chinese market.

The organisation must also have a thorough understanding of market characteristics such as market size, consumer behaviour, distribution and transportation channels, pricing arrangements and competitor activity, all of which are discussed in the following sections. 3: Market Audit China has a population of 1. 3 billion people and due to rapid economic growth, rising standards of living and a rapid increase in consumer spending, China is fast becoming a consumer society and one of the largest markets in the world, with 700 million Chinese will join the “consumer class” by year 2020 (Li et al, 2011).

This increased wealth of consumers has seen a demand for foreign products, including wine, and as such, China is now the world’s fastest growing wine market (Camillo, 2012; Jenster & Chen, 208; Yu et al, 2009). 3. 1: Market Segments and Size Although China has a large population, much of the Chinese wine consumer market is situated in the economic growth regions of Beijing, Shanghai, Shenzhen and Guangzhou due to consumption of imported wine being closely related to consumer purchasing power and the proliferation of the Chinese middle class (Lui & Murphy, 2007).

Academic research (Lui & Murphy, 2007; Li et al, 2011; Thorpe, 2009; Yu et al, 2009) has shown that there are several distinct wine consumer segments within China, with the most significant segments among them include: Market Segments| Characteristics| Young Royals| Professional men and women in their thirties who have the highest disposable income. | Aspirationals| A mix of young male and female consumers who are highly brand-conscious but favour brand names that are affordably priced. Established money| Older men and women with above-average incomes who want the latest in high-end, exclusive products. | The Elite| Senior executives, successful business people, high-ranking officials and politicians with international exposure, who understand how to collect wine and consume high-end wines. | The “Nouveaux Riches”| Consumers that have become wealthy in the past decade. The have little wine knowledge but are eager to learn. | Generation-X| Consumers aged 25-40, young professionals open to western culture.

Consume wine in trendy bars as well as Western and Chinese themed restaurants. | Table 1: Market Segments and Characteristics These highlighted segments account for approximately 250 million prospective consumers within the market, highlighting the huge potential for market entry by Dorrien Estate (Li et al, 2011). As China is the world’s most populated country and one of the fastest growing international markets, having a clear understanding of the Chinese wine consumer is imperative (Camillo, 2012). 3. 2: Consumer Behaviour

In Chinese culture, foreign wine has always represented an image of both luxury and decadence (Camillo, 2012; Thorpe, 2009). Purchase of wine is perceived to be the role of the male, and the purchase and consumption of foreign wine in China is driven primarily by a number of extrinsic factors including (in order of priority) price, country of origin, packaging and labeling, image and quality, with intrinsic factors such as alcoholic content, colour, aroma and taste being secondary attributes to consumption and purchase (Lui and Murphy, 2007;Jenster & Chen, 2008; Somogyi et l, 2011). China’s culture of face value, mainzi (“Face” in Mandarin) is a factor that plays a critical role in Chinese culture and purchase behaviour (Camillo, 2012, p. 74). Around 80% of wine consumed in China is red and Chinese purchase expensive, foreign wine predominately in clubs, restaurants and high-end supermarkets and specialist retail outlets for public occasions, gifts and celebrations, yielding more “face”, or recognition and respect in the presence of others.

Consumers also purchase and consume wine for the perceived health benefits as well as symbolic reasons, such as good luck, as the colour red in China is seen as a symbol of good fortune and prosperity (Heathcote, 2007: Yu et al, 2009). 3. 3: Distribution and Transport Channels It has proven difficult for overseas wine producers to enter the market without the help of Chinese importers and distributors, who generally own established sales channels and distribution networks (Lui & Murphy, 2007; Yu et al, 2009).

Forging aggressive and reliable channels of distribution is seen as one of the most critical and challenging tasks facing organisations seeking entry to foreign markets (Cateora et al, 2012). Wines are commonly imported into China and distributed through local agents or distributors. The leading foreign and domestic wine distributors have good access to hotels, restaurants and bars (on-trade), supermarkets and specialty stores (off-trade) in major cities and offer the shortest distribution channel lengths from manufacturer to consumer (Beverland, 2007).

As shown in Figure 5, the main wine importers in the market are ASC, Aussino, Shaghai Torres, DT Asia, Mecuris Fine Wines and French Paradox (Webley et al, 2010), with these importers focusing distribution on the first tier capital cities such as Beijing, Shanghai, Shenzhen and Guangzhou and utilising intermediaries, or ‘merchant middlemen’ and wholesalers to transport and distribute wine to second and third-tier cities and regions in China (Bruwer, 2012: Goodman, 2009). Figure 5: Main importers and distribution channels (Zhongguo Wine 2010) 3. 4: Common Promotional Mechanisms

Due to the business practices of guanxi and xinyong, literature shows that social interaction and word-of-mouth recommendation, primarily through business associates, friends and co-workers are the most widely accepted channel of promotion and awareness among consumers (Lui & Murphy, 2007; Yu et al, 2009). Advertising in the form of television and print media along with in-store promotional mechanisms are greatly utilised by organisations seeking to promote their wine and brand within the first and second tier regions of the country (Chen, 2011).

It is also customary for large distributors and importers to provide wine training for staff in established sales networks such as cafes, restaurants, bars and nightclubs, all of which may be paid by the distributors to ‘promote the wine’ (Beverland, 2007). 3. 5: Customary Pricing Arrangements Chinese domestic wines are sold primarily at the lower end of the pricing spectrum, while imported wines are sold at the mid-to-higher end. The average retail price at the lower end is AUD $4-$6 per bottle.

Mid-range wines sell for AUD $6-$14 per bottle and are aimed at consumers with higher disposable incomes and more exposure to wine. Premium wines sell for AUD $14 and up per bottle. Imported wines typically range from AUD $14-$66 per bottle and are in direct competition with high-end domestic wines (Lui & Murphy, 2007; Yu et al, 2009). Due to the Chinese business practice of guanxi and xinyong, it must also be noted that many distributors pay ‘shelf’ or ‘stocking’ fees to on and off-trade premises ‘under the table’ in order to have their product sold and promoted (Somogyi et al, 2011).

These hidden fees must be taken into consideration by Dorrien Estate when deciding product price structures. 3. 6: Major competing products & Marketing mixes Figure 6: Major Competitors (Zhongguo Wine 2010) As shown in figure 6, Chinese producers lead 90% of wine in the Chinese market whereas only 10% of wine is imported. Domestic companies such as Changyu, Dynasty and Greatwall wines dominate the market. Of the remaining 10%, French wine holds close to 5% of the market share, followed by Australia with approximately 3% of market share, as shown in figure 7.

Figure 7: Foreign Imports by Country of Origin (Department of Foreign Affairs and Trading 2013) The main international competitors and the country-of origin in the market are: * Lafitte (French) * Latour (French) * Wolf Blass (Australia) * Treasury Estate (Australia) * Torres (Spain) The main importers and distributors also serve as marketers for foreign brands entering the market. Advertising drives customer preferences heavily with top producers, in conjunction with leading distributors, running extensive mass-marketing campaigns to build brand awareness.

All major competitors use a mix of advertising such as TV and print and promotional activities such as trade shows, wine competitions, in-store promotions, tastings and word-of-mouth to promote their products in the marketplace. Direct channel marketing such as e-commerce is being slowly implemented, but is currently hampered by technological barriers such as heavy control and censorship of the Internet by the government. It is imperative for Dorrien Estate to have a complete understanding of the market and competitor analysis before committing to market entry.

The organisation must be equally aware of market entry strategies and to select the most appropriate approach. 4: Market Entry Strategy Before entering a foreign market, an organisation must choose the right market entry channel, as the chosen market entry strategy determines the manner in which a firm implements marketing programs, coordinates business activities, controls risk and limits the liabilities associated with foreign operations (Chen, Griffith & Hu, 2006; Ripolles, Blesa & Monferrer, 2012).

An organisation generally has four different modes of foreign market entry: * Exporting * Contractual agreements * Strategic alliances * Direct foreign investment Each form of market entry has significant advantages and disadvantages for an organisation seeking to internationalise its operations. 4. 1: Exporting Exporting products to international markets can be either direct or indirect. An organisation can sell directly to another entity in a foreign market, or can sell its product to a distributor who in turn exports the product to a foreign market, which is referred to as indirect exporting.

A firm may also choose to utilise direct sales or the Internet and sell its product directly to foreign markets, thus reducing channel lengths. Direct and indirect exporting has the advantage of minimizing financial risks for the organisation, but an organisation can lose control of their product and brand via this mode of market entry (Cateora et al, 2012). 4. 2: Contractual agreements When entering a foreign market, an organisation may choose to form non-equity associations with foreign entities over longer periods of time.

Common contractual agreements take the form of licensing or franchising. These agreements generally involve the transfer of technologies, processes, trademarks and human resources and are seen as a transfer of knowledge rather than equity (Cateora, 2012, p. 330). Contractual agreements have the advantage of allowing an organisation to quickly penetrate a foreign market with minimal investment and outlay of resources, but organisations may also be at a disadvantage due to poor entity selection, foreign quality and production problems and loss of marketing control (Cateora, 2012). . 3: Strategic Alliances International strategic alliances are voluntary agreements between organisations involving the exchange, sharing or co-development of products, technologies, or services across foreign markets (Chen, Griffith & Hu, 2009; Li, Qian & Qian, 2013). Strategic alliances can take various forms ranging from joint ventures to licensing and co-operative marketing arrangements, all of which are aimed at governing joint decision-making by partners in different foreign markets (Li, Qian & Qian, 2013).

Alliances give organisations the advantages of quick entry into established markets, risk diffusion and less resource allocation, but can also be disadvantageous for organisations due to lack of control and heightened risks of conflict between partners (Cateora et al, 2012: Gonzalez, 2001). 4. 4: Direct foreign investment Direct foreign investment is a direct investment into production or business in a foreign market by an organisation in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

Direct foreign investment (DFI) by an organisation into a foreign market is seen as the most costly form of market entry, but entities making direct investments typically have a significant degree of influence and control over company operations (Cateora et al, 2012) Dorrien Estate will initially seek to find direct export partners from the range of leading Chinese importers and distributors to take advantage of established distribution and transport channels and promotional mechanisms in order to minimize costs and limit initial market entry risks.

Once market entry has been established, Dorrien Estate seek to form a strategic alliance with a single distributor and invest further capital and human resources in order to expand on promotional activities and generate greater brand and product awareness amongst the target consumers. Having a thorough understanding of market characteristics and entry strategies allows Dorrien Estate to establish and outline a preliminary strategies and a marketing plan for successful entry into the foreign market. 5: Preliminary Marketing Plan Highlights

Dorrien Estate has chosen the long-term goal of gaining 2% of share in the Chinese market over the next 5 years. To achieve this goal, the organisation should focus the majority of its international marketing expenditure on targeted advertising and promotional elements to raise brand and product awareness, influencing consumer preferences and conviction of purchase in the previously discussed market segments of young royals, aspirationals and generation-X, as these market segments will have the strongest growth potential over the next 5 years.

Marketing challenges will include changing the perceptions and beliefs that Australian wine is inferior to established French wines and that consumption and purchase of wine is purely seen as a symbol of status. Table 2 highlights the marketing tactics Dorrien Estate will execute upon entering the market. | Marketing Tactics|

Product| Dorrien Estate will initially enter the market with a range of four premium quality, aged red wines covering the major styles of Shiraz, Cabernet Sauvignon, Cabernet Merlot and Merlot to appeal to all spectrums of consumer taste preferences. Dorrien Estate will package the wines in distinct red-labelled bottles to take advantage of consumer preferences.

Bottles to be labelled in English and Chinese stating country of origin and region| Price| To take advantage of consumer beliefs and attitudes, Dorrien Estate will price their range of wines from AUD$40-$60 to capture the higher-end of the target market and may undertake a penetrative price structure and promote a line of ‘ultra-premium’ wine above $AUD100 | Place| Dorrien Estate will work closely with select distributors to distribute their product in high-end supermarkets, western-themed restaurants, bars, cafes and specialty wine stores aimed at capturing the market segments of young royals, aspirationals and generation-x. Promotion| Dorrien Estate will focus on TV and print advertising in luxury consumer lifestyle magazines, in-store promotions, trade and wine shows and wine competitions. Dorrien Estate will also implement a website to gain an on-line presence. | Table 2: Dorrien Estate Marketing Tactics 6: Additional research required Dorrien Estate must undertake further research in the areas of product emerging promotion channels such as the Internet and specialty wine stores. Further research into the selected target segments must be undertaken, as these consumers will drive demand in the long-term.

The Chinese business practices of guanxi and xinyong must be examined further, as these interweaved socio-cultural business practices may have a profound affect and influence on market entry. The organisation should also undertake additional research in relation to opportunities in the Chinese market for white wine. 7: Conclusion China is an emerging global power with a thriving economy. Increasing standards of living, rising levels of disposable income and expanding social classes has led to an increasing demand for imported foreign products, including wine.

Dorrien Estate is seeking to enter the Chinese market and take advantage of the growing trend of imported wine consumption. In entering the foreign market, the organisation must take into consideration certain uncontrollable political, legal economic, cultural, technological, environmental and competitive factors. In entering the Chinese market, Dorrien Estate also faces several disadvantages such as heavy tariffs imposed on wine imported from Australia, the unfamiliarity of distribution channels and heavy competitor activity due to the thriving Chinese market.

Although there are tariffs currently imposed on Australian wine imports and there is strong competition from other organisations due to free trade agreements, the report has shown that Chinese buyer behaviour and socio-cultural attitudes reflect that Australian wine is perceived to be of high quality and value and there is a great demand for Australian product due to the perception of wine consumption being associated to symbols of status, wealth, heath and well-being.

Careful selection of distribution channels, promotional mechanisms, competitive price-points and a thorough understanding of competitors will place the organisation in a good position to select the right channels of market entry, implement and execute the outlined marketing strategies and tactics in order to gain greater brand and product awareness which in turn will lead to gaining gain a good percentage of market share, and competitive advantage. 8: Recommendations

In light of all the analysis given in the report, it can be stated that the organisation has a good opportunity to internationalise its operations and enter the Chinese foreign wine market. In order to achieve successful market entry, the following recommendations must be adhered to: 6. Have a thorough understanding of macro-environmental factors that may hinder market entry. 7. Select an established and knowledgeable distributor with good access to extensive distribution channels. 8. Have a complete understanding of Chinese business practices that may dversely affect or give a great competitive advantage to the organisation. 9. Having extensive knowledge of consumer behaviour leads to better execution of marketing strategies and tactics. 10. Direct export is the most cost-effective and lowest risk strategy. A strategic alliance may be favourable in the future if the product shows good signs of market acceptance. Reference: Beverland, M 2009, “Boundary conditions to business relationships in China: the case of selling wine in China”, Journal of Business & Industrial Marketing, no. 24, vol. 1, pp. 27-34

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