(TIỂU LUẬN) in a world of zero transportation costs, no trade barriers, and nontrivial differences between nations with regard to factor endowments, firms must expand internationally if they want to survive

ĐẠI HỌC UEH TRƯỜNG KINH DOANH KHOA KINH DOANH QUỐC TẾ - MARKETING TIỂU LUẬN Môn học: Kinh doanh quốc tế Giảng viên: Dương Ngọc Hồng Mã lớp học phần: 21C1BUS50306703 Sinh viên: Trần Mỹ Linh Khóa – Lớp: K46 – IBC03 MSSV: 31201027174 TP Hồ Chí Minh, ngày tháng 12 năm 2021 I In a world of zero transportation costs, no trade barriers, and nontrivial differences between nations with regard to factor endowments, firms must expand internationally if they want to survive Agree or disagree? Discuss about this sentence? I not agree that all firms must expand internationally if there are zero transportation costs, no trade barriers and non-trivial differences with regard to factor endowments in the world According to the hypothesis of comparative advantage, the activities of the company should occur in the nations which can perform them most proficiently, considering that various nations are invested with various variables of creation I agree that for companies that are under competitive pressure or not in countries with the most favorable factor endowments, the zero transportation costs, no trade barriers and non trivial differences between countries with regard to factor condition would be a perfect and great opportunity and circumstance for them to find a new way to more develop their business Consequently, it is necessary to extend their worldwide snare of significant worth creation activities to profit from the global extension due to the chances of the cost position as well as different and signature products that such extension can take However, unless there are competitors who have taken advantage of the economies offered by scattering their worthy creations globally targeting the local market , firms may be able to survive in that market instead of expanding internationally On the other hand, for the giant companies which already had a foothold in the markets/countries or previously situated in the nations with the most great component blessings for their industry, they are often less pressured to compete fiercely with other smaller companies in the same market Therefore, it is really not essential for the giant companies to expand further into the international markets as they also not have pressure about the international extension to get the survival chance 2 In conclusion, from the above explanation, it can be seen that whether theory or practice suggests that firms already located in the countries with the most favorable factor conditions for their industry can usually endure very well In contrast, firms that are in a competitive market have a lot of strain to remain locally, so they should extend globally if there are no transportation costs, no trade barriers and non trivial differences between various nations as to factor conditions II Read the case: “Anti-Dumping Case Of Vietnam Catfish In Us Market” Who gains most from the antidumping duties levied by the United States on imports of catfish from Vietnam? Who are the losers? Are these duties in the best national interests of the United States? Case introduction In previous years, when Vietnam’s catfish production industry developed strongly, the number of catfish exported to the United States, especially pangasius and basa, increased rapidly and captured a relatively huge market share in the USA catfish market at that time Specifically, in 2002, the number of imported catfish to the United States amounted 21,000 tons of fillets; At the same time, Vietnamese catfish exports also quickly accounted for 20% of the USA catfish market However, it was this development that caused a strong protest from the Catfish Farmers’ Association (CFA) Because Vietnamese products, when imported to the US, were sold at a lower price, but the quality was almost the same as that of the US ones and this led to the average monthly price of the USA farm-raised catfish having a quite significant drop from 1.6 USD/Kg in January 1997 to 1.2 USD/Kg in December 2002 This decrease was shown in the average monthly price of the USA farm-raised catfish chart below: Source: Monthly catfish producing report, National Therefore, on June 28, 2002, the Catfish Farmers’ Association (CFA) along with eight other seafood production companies filed an application with the US ITC to sue Vietnamese Association of Seafood Exporter and Processors (VASEP) for dumping catfish products in the US The final result was that the Import Administration of Department of Commerce (DOC) decided to increase tariffs on frozen pangasius and basa fillet products of Vietnam through the USA anti-dumping and countervailing duty laws under the status of Vietnam as a non-market economy country The DOC considered that Vietnam had offered appropriations to fish producers as well as the export price of Vietnamese products was lower than the production cost and this led to the market volatility Therefore, the tariffs on Vietnamese frozen catfish was raised from 37% to 53% Who gains most from the antidumping duties levied by the United States on imports of catfish from Vietnam? In the beginning, the catfish farmers’ association (CFA) will gains most from the antidumping duties levied by the United States on imports of catfish from Vietnam Before the deep entry of Vietnamese products, the catfish industry was the largest farmraised fishing sector in the United States In 1999, it represented 80 and 64 percent of hydroponics creation in volume and worth, producing 440 million U.S.dollars However, since the participation of Vietnamese catfish products with the same quality but cheaper prices, the catfish farmers’ association (CFA) has felt worried about the development of the Vietnamese products; even the average monthly price of the US catfish has dropped quite a bit Therefore, when the DOC improsed the very high taxes on frozen Vietnamese pangasius and basa fillets, many Vietnamese exporters were forced to increase their product price enormously in order to make a profit Because of the high price, the consumers have to change from Vietnamese catfish products to cheaper domestic products which come from the association of catfish farmers Besides, after being taxed, the amount of catfish exported to the US decreased significantly and this helped the CFA have less competition in the US catfish market Moreover, the price of catfish fillet in the US has increased again from 2003 onwards when anti-dumping laws started to be applied to Vietnam Here is the chart about the frozen catfish fillet price in the USA and in VN: Source: National Agricultural Statistics Service, USDA, VASEP News, http://www.vietlinh.com.vn However, in the long term, Vietnam gains most when having more opportunities to reach more markets In spite of having experienced a difficult time when the taxes were just imposed, Vietnamese manufacturers have since calmed down and found out the new way for Vietnamese catfish by applying a new pricing strategy as well as expanding its catfish industry to many new markets such as China, HongKong, Canada, Mexico, etc Among the new markets, the EU has become the most important partner for the Vietnamese catfish industry In fact, for the first eight months of 2005, the EU imports on Vietnamese pangasius fillets accounted for 37.6% (28,219 tons) Here is the pie chart about the export markets of the Vietnamese Pangasius for the first eight months of 2005 Source: VASEP News No.40 – 2005 Who are the losers? In the short term, Vietnam has been affected quite a lot by anti-dumping tariffs levied by the DOC on imports of catfish products Firstly, the US import volume of frozen catfish fillets has dropped sharply after being subject to anti-dumping taxes In fact, there was a decrease in the US imports of catfish products by 50% during 2003 This has had some serious influences on the local economy, on livelihoods of catfish farmers and on shareholders in production companies For instance, at that time, many farmers in Mekong Delta were interested and even borrowed money to invest in catfish farming infrastructure as they thought this industry would develop more in the future However, after Vietnamese catfish products were taxed too high in the US market, they went bankrupt or defaulted because they might not be able to recover the capital they had invested Nevertheless, in the long term, the catfish in the US may face fierce competition since the catfish industry is being developed more and more Are these duties in the best national interests of the United States? These duties have, in part, been unprofitable for the national interests of the United States It is true that anti-dumping laws have partly help protect catfish farmers in the US from much outside competition However, these proposals are also against the interest of the American consumers as well as adversely affect the trade relationship between the two countries Vietnamese producers believe that the judgement of the US Department of Commerce to Vietnam is absurd because Vietnamese catfish prices are cheaper than the US ones due to the low labor cost and favorable weather conditions which help Vietnam can have catfish all year round but not seasonally like in the US In addition, the decision of the Ministry of Industry and Trade about the tariff rate is unreasonably high From these absurd judgements from the US, the commerce relationship between the two can probably lead to bad effects Moreover, the tariffs on frozen Vietnamese catfish fillets increase the overall price of catfish in the US and this will lead to price fatigue and anxiety among consumers in America III International business involves managing in multiple countries with variation in socio-cultural and political-legal environments These differences in many cases create significant barriers to international business management Apart from case studies learned in class, please choose an article from the media discussing a case (in the last years) of a multinational company who has been plagued by socio-cultural or political-legal barriers; and it leads to failure or lower than expected revenue when operating in a different market Identify the reasons causing difficulities in the focal firm international business and propose recommendations to help them overcome those ostacles Article: https://financialpost.com/news/retail-marketing/marks-and-spencer-makes-swiftexit-from-chinese-market-after-population-collectively-asks-whats-a-marks-and-spencer Case introduction Marks & Spencer (sometimes also labeled M&S, Marks and Sparks, Marks, Marks's) founded in 1884 by Michael Marks and Thomas Spencer is a famous retail brand from the UK, with its headquarters located in London The store specializes in clothing, furniture and food products Almost all of its products are made exclusively by its own brand because to be able to meet the quality and style requirements set forth by M&S's obligation is Quality Value (Service), Innovation (Innovation) and Trust (Trust) Not only developing domestically in the UK, Marks & Spencer also wishes to expand its scale and develop in many international markets when it now has quite a few stores around the world Some of them were in China 8 Source: Statista Marks & Spencer officially entered the mainland Chinese market in 2008 when it officially opened its first store on Nanjing West Road - one of the most expensive streets in Shanghai However, its international expansion in China did not go smoothly after that, as stores were constantly closed and at a loss:  On March 9, 2015, Wanda store and Wuxi Jiangyin Wanda Store were closed  From March to August of the same year, Shanghai Jiading Jiangqiao Wanda Store, Wenzhou Longwan Wanda Store and Changzhou Wuyue Plaza Store were closed consecutively  In August 2016, Marks & Spencer announced its withdrawal from several lossmaking international markets, including China and it had to closed 10 stores in China including Shanghai Baoshan Wanda Plaza, Shanghai Admiralty Square, Suzhou Guanqian Street, Qingdao Lisong Wanda Plaza, Shanghai Nanjing West Road, Shanghai Xinzhuang Zhongsheng, Wuhan Han Street, Shanghai Wujiaochang Wanda, Shanghai Yuexing Global Harbor and Beijing World Trade Day  One year later, Shanghai Wujiaochang Wanda Store and Xinzhuang Zhongsheng Store, the World Trade Center in Beijing store, Masa Store, Shanghai Nanjing West Road store, Huaihai Middle Road store and Global Harbor Store were gradually closed On February 27, 2017, China Investment Advisory Network announced that Marks & Spencer closed all stores in mainland China which means it completely withdrew from and ended its journey to the Chinese market after years However, according to CNN Business, citing a report published by market research company eMarketer on January 24, it was forecast that retail sales in China in 2019 will reach $5.636 trillion, up 7.5% Meanwhile, in the US, it only reached $5.529 trillion (up about 3.3%), the above figure proved that China has 100 billion more revenue than the US Although China's economic growth is slowing at this stage, the world's most populous country is likely to overtake the US to become the world's largest retail market for the first time in 2019 This shows that Marks & Spencer's choice to enter the Chinese market was the right thing for this brand because it has seen the potential of developing the Chinese retail market from an earlier time However, the fact that the British fashion retail chain completed its exit from China in 2018 after closing its online store on the Tmall platform (Alibaba) and selling its franchise business in Hong Kong and Macau was one regretful thing So what are the real reasons that have forced Marks & Spencer to withdraw from the country that is slowly becoming the largest retailer in the world? Problems and solving First, the biggest barrier that Marks & Spencer faced in China was the lack of understanding of consumers here It was only based on the basic information that it thought it understood about China, not really analyzing more closely and giving 10 appropriate strategies for the target customers that the brand targets such as population data, income, economic level or local culture, "I don't think Marks and Spencer understood China very well, it doesn't have a clear idea of what kind of consumers it is targeting," said Yang Dazhong, a retail expert from the consulting firm in Beijing In addition, a commentary in Jiangsu Business News emphasized: "The problem is not only that they know little about China, but that they never bother to find out." Among the problems pointed out by the newspaper was that it copied the brand's business model in overseas markets into mainland China In China, its department store had very high sales thanks to the food business that was very popular and well received by consumers The food advertising strategies on the media of this brand attracted a lot of attention and praise from the audience because of its creativity as well as attractive and vivid sound images Instead of choosing food as its core business, it focused on expanding investments and finding breakthrough ways to reach target customers in the mainland with fashion However, the disagreement about the transmission language, different views on customs and habits is what makes high-end fashion brands in the West still unable to reach the majority of consumers in the densely populated country, still completely unsatisfied This is the biggest advantage of local brands in fighting against "foreign invasion" In terms of design, the retailer's high-end fashion products are not as luxurious and trendappropriate as the local brand Young people in China are gradually becoming active in seeking more diverse choices in career and life Because of that, personal fashion style is also invested and needs to be different, helping to better express personal identity Moreover, its clothes are not cheap compared to fast fashion brands present in this country The second is that Marks & Spencer had a serious lack of innovation They showed their mistake by directly adopting the style of the British market without adjusting the products to better suit the tastes of consumers here In addition to the differences in culture, interests, etc between China and the UK, there are long-term differences in diet and living 11 environment, and therefore, the body conditions of the two countries are also different For example, the physical condition of Asians and specifically Chinese people will be smaller than that of Europeans; therefore it causes many problems that make customers unhappy In fact, many experts have said that this brand has not localized and designed its fashion products according to the Asian body, specifically they used Eurocode labels 6,8,10,12 for pants and shirt instead of changing to S/M/L/XL - a familiar size label among Chinese customers and this has resulted in most of its clothing product sizes being oversized for the Chinese Secondly, its lack of innovation was also reflected in the lack of attention to language differences as well as the lack of understanding about the development of language education in countries when most of the categories in the stores all show in English or if there is a Chinese translation, it was pretty bad However, according to rankings from an educational organization in Switzerland, there are still many countries in Asia that are in the group of low English speakers, including mainland China Therefore, the failure to provide a translation of its corresponding Chinese category is seen as an omission and deserves negative reviews from consumers Therefore, it was considered as one of the retailers with many heavy losses in China In general, consumers cannot accept a brand that introduces standardized products abroad into their home country without making any adjustments to meet the needs of local customers Although they had been present and developed in China for many years, it was still difficult to expand their market share and satisfy their target customers It can be seen that its obstinacy has made most consumers in the mainland not have a deep impression of this brand name when it comes to it China is seen as a huge market for foreign brands looking to expand their business and invest because it is large enough to ensure sustainable growth and profitability for international businesses However, in fact, many companies have had to withdraw from here, Marks & Spencer is one of the retailers that have received a valuable lesson about the failure of entering China In particular, not understanding the market is a "fatal" mistake in any country, but when foreign companies enter China, this happens often Perhaps it is because of China's consumer culture - which is vastly different from the West 12 Therefore, before entering the Chinese market, a brand should estimate the size of penetration in a particular region and devise a strategy that suits the local cultural conditions instead of "using" original business model abroad and applied here without any modification other than changing employees In addition, its total food sales increased while retail sales declined in the fashion sector, indicating that the brand should focus on investing and expanding the food industry with diversified food services format to increase profits and attract more potential customers In addition, it should open small stores in parallel with promoting sales on e-commerce channels Because in recent years, Internet technology is developing strongly along with the increasing percentage of consumers online shopping in China The American Cotton Association funded an independent research unit to study the Chinese consumer market for the past eight years and it has been found that Chinese consumers' views on household economic conditions have declined since 2016 Despite the bleak economic situation, Chinese consumers increased their spending on clothing every year from 2016 to 2018 Even so, Marks & Spencer still failed to thrive in the Chinese market because while it was quite successful in the UK targeting middle-class people aged 35 and over, it has not been as successful in the Chinese market It made the mistake of not delving into social and other issues, namely demographics, consumer behavior and other factors affecting the Chinese people When entering the Chinese market, this retailer continues to target customers who are concentrated in the age group of 35 years and older, who belong to the middle class, but the proportion and behavior of the middle class in this class is completely different in two countries, so it has not received much attention and success from this target group compared to the UK market This brand thought that they are gradually recognizing and trusting international products However, it is not known that the middle classes of 35 years ago had historical experiences of particular wars Therefore, their concept of consumption will also be different, they tend to think about choosing local goods for the purpose of saving and long-term use for the family In contrast, the spending habits of young Chinese are almost completely opposite to those of their parents Millennials (1985-1994) in China are more 13 willing to spend on experiences and luxury goods than other generations (other than GenZ) The largest consumer age group in this country is 18-34 years old, they are able to absorb and accept new Western trends and are willing to pay to try new things to enjoy a high quality life Therefore, the mispositioning of target customers has made it impossible to attract the eyes of the young generation who had "existing consumer desires and income support" and perhaps this brand has lost a huge amount of revenue from a group of customers who are young but full of potential This is also one of the reasons for the decrease in revenue and capital loss, causing retailers to flee the Chinese market The solution to this third problem is that this retail chain should diversify its target customer groups more Besides, learning the shopping preferences of each object makes it easy to segment each product type for each consumer However, it should also come up with a suitable and attractive marketing-mix strategy to attract customers and increase sales in a large retail market like China IV Reference Trang web https://www.elle.vn/ - “https://www.elle.vn/the-gioi-thoi-trang/5-thach-thuc-lon- thi-truong-thoi-trang-trung-quoc-dang-gap-phai” Trang web https://financialpost.com/ “https://financialpost.com/news/retail-marketing/marks-and-spencer-makes-swift-exit- from-chinese-market-after-population-collectively-asks-whats-a-marks-and-spencer” Trang web http://fernfortuniversity.com/index.php “http://fernfortuniversity.com/hbr/case-solutions/12987-marks-and-spencer-enterschina.php” Trang web https://www.thecasesolutions.com/ “https://www.thecasesolutions.com/marks-and-spencer-enters-china-4-166304” 14 Trang web https://retailinasia.com/ “https://retailinasia.com/in-markets/greater-china/china/3-reasons-marks-spencer-failedin-china/” https://www.koreascience.or.kr/article/JAKO201816842429419.pdf https://medialibrary.uantwerpen.be/oldcontent/container2626/files/CAS%20en %20ASEAN/CAS50.pdf ... I In a world of zero transportation costs, no trade barriers, and nontrivial differences between nations with regard to factor endowments, firms must expand internationally if they want to survive. .. Shanghai Yuexing Global Harbor and Beijing World Trade Day  One year later, Shanghai Wujiaochang Wanda Store and Xinzhuang Zhongsheng Store, the World Trade Center in Beijing store, Masa Store,... In August 2016, Marks & Spencer announced its withdrawal from several lossmaking international markets, including China and it had to closed 10 stores in China including Shanghai Baoshan Wanda