Introduction Of Foreign Product

Published Date: 02 Nov 2017

Executive Summary

This report was commissioned to examine the procedures that are applied to bring a product or a service from oversea to Canada and after sell it in the Canadian market. In that case, the product that will be imported from China is Potato Chopper. In order to perform the transaction, all the mechanisms that are involved in the international legislation trade will be fallowed strictly considering all the rules and regulations that are applied in the transaction.

Opportunity: The Canadian market offers a huge demand for fries potato and potato chip considering that potato is the vegetable that is most consumed between Canadians according to researches. Because of that, this appliance, which is the easier and more comfortable way to cut vegetables, will be sold to some retails that have huge market share in Canada.

Competitive Advantage: The main challenge of this project is to be able to bring the Potato Chopper, which does not have too much differentials in its features comparing with competitors to Canada and after selling it to retails. The idea is to get competitive advantage selling this product in a lower price. It will be possible because China has cheap work force and manufacturing costs and the price to buy the product from China was cheaper.

In the project will be addressed the important aspects that influence the business such as all the costs that are added in the product to bring it to Canada, the specifications of the supply, the price negotiated, the consumer market in Canada and the buyers that will buy Potato Chopper.

Introduction of foreign product, Manufacturer, + Pricing

History

Potato originated from Andes Mountain in South America. It was spread to Europe in 16th century, and brought to Taiwan by Hollander in 17th century, and then to mainland of China through Tianjin City and littoral of Fujian province. So far, it has a planting history of about 400 years. At present, China has the planting area of potatoes of 4 million hectares, accounting for 20% - 25% of total area in the world and ranking top in the world.

About the product

Potato chopper is a simple and easy way to cut vegetables in different styles according to the preference. The potato chopper is an appliance that is made from clear and white plastic and the prices vary. The handle has a rubber top that is gentle on the hand when people are plunging the handle to chop what you have put inside the clear collar of the potato chopper. People can either chop the potato over a cutting board or they can use it as a self contained chopper by replacing the white, plastic cap before you chop. Some people prefer to use a cutting board in order to be sure that the cap does not become stained or retain odors. The product cuts the potato and prepares it in a called "mashed potato", which is consumed in the North America countries.

Some potato choppers slice the potato in thin round slices for making home made potato chips, while others only have a grid that turns the potato into perfectly shaped French fries. Most of the potato chippers have a suction cup on the bottom that holds it in place while the potato is being sliced. The potato is fed through the chipper by hand in most cases, however there are a few brands that are electric.ost of the potato chippers have a suction cup on the bottom that holds it in place while the potato is being sliced. The potato is fed through the chipper by hand in most cases, however there are a few brands that are electric.

Potato chippers can range in price from $17,99 to $72.99 depending on what they do and how many attachments they may have. Most of the chippers will also cut carrots, onions and celery.

Manufacturer

The manufacturer that I chose to buy the Potato Chopper was Riwin Industrial Tools Co, Ltd, which is located in China. Established in 1998, Riwin Tools Co., Ltd. is a manufacturer and exporter of commodity hardware, daily use products, Kitchen, camping related accessories, It have gained a high reputation from all of its clients in Europe and North America.

Riwin provides to clients an ample sourcing, stable quality, competitive prices, prompt delivery and its service experience achieved from many years in the market. Riwin also accepts OEM order and small quantity order. Their stores are located in Jingting Village, Jiangshan Town,Yinzhou Dist., Ningbo and Zhejiang. The number of employees that works in the company is 500 people. Also the company has the management certification which is ISO 9001:2000 and Contract Manufacturing which is OEM Service Offered, which is really important to keep its reputation as a reliable company.

In order to close the deal with Riwin some requirements are necessary. The payment is 30% deposit; balance by copy of B/L and the delivery time 40 days upon confirm the order. That deadline was the shortest one and influence in the decision buyer. Some of the freight forward companies added in the quotation Packaging Certificate for Dangerous Goods, claiming that the product is dangerous. However, was found a freight forward company that took off that cost decreasing in that way the cost to bring the product to Canada.

Pricing

In order to determine the final price that will be offered to the buyers in Canada the application was sent to Riwin and was received the quotation few days later. The number of the product is PS100706, Potato Rotary Grater and the price is USD 2.10/ set, FOB NINGBO by full container load. The minimum order quantity is 2,400 sets and the measures are: 43*47*61 cm/36 sets, 19/18 kg. Considering that the price per unit is $2,10 offered by the manufacturer the Total Costs are calculated below:

Insurance cost – CAD 75, 00

Considering that the total cost to bring 2,400 sets of the product to Canada will be $ 10,106.00, the cost per product will be $4.21. Considering that the average price of Potato Shopper offered by buyers in Canada to final consumers is $15,00 and the product does not have too much differential I should offer the product in a competitive price. That price is going to be $7,00. Therefore, my profit for each product will be $2,79

Market Research in Canada

Canada's potato production and processing industries are currently valued at C$6.4 billion in both direct and in-direct contributions to the economy, and provide employment for 33,000 people, mainly in rural areas. The Canadian potato production and processing industries is located in many rural areas in the country. Potatoes were first grown by settlers in New Brunswick, on Canada's Atlantic coast, as early as the mid-1600s. Today, Canada ranks as the world's 13th largest potato grower, with 2007 output of almost five million tonnes. The potato accounts for almost one third of all vegetable farm cash receipts, or almost $900 million in 2007, making it Canada's most important horticultural crop.

Potatoes account for about 36 percent of all fresh and processed vegetables consumed in Canada. Despite the potato’s popularity, however, total consumption has declined from 76 kg per person in 1994 to 65 kg in 2007. The decrease in potato consumption resulted from various dietary trends and negative consumer perceptions about its nutritional value, even though potatoes remain a healthy food product. On a per capita basis, the Canadian diet in 2008 included more tea, yogurts, breakfast cereals, berries, processed fruits, asparagus, poultry meat and wine, according to the 2008 snapshot of food available for consumption. Estimates on food availability have been adjusted to account for losses in cooking, storage and waste that occur in homes, restaurants and institutions while preparing and processing food. Canadian population revisions back to 1971 have been incorporated in this release.

The decline in total potato consumption has occurred primarily because Canadians are cooking fewer fresh potatoes. Fresh potato consumption dropped by 27% between 1996 and 2005. On a fresh equivalent disappearance basis, fresh potato consumption represents 45% of total potato consumption, whereas 39% consume potato chips, 18% consume frozen potato, and only 2% consumed dried potato Frozen potato product consumption, mainly French fries, has been also decreasing since 2002. Potato chip consumption has been declining since 2000, but has been more stable in the last three years. Dehydrated potato product consumption has increased steadily in the last decade, but a light decline occurred in 2005.

Despite of the potato market in Canada has decreased in the last years including fresh fries and potato chips, which are prepared using potato chopper, that market is yet representative and have around 84% of all the potato consumption in Canada.

Buyers you have approached in Canada

In order to be competitive in the Canadian market 4 prospect buyers were chosen to sell the Potato Chopper. The buyers are: Canadian Tire, Zellers, Wal Mart, and Home Depot. Those buyers were chosen mainly because they have an expressive sales market in Canada and they offer a long term contract with their suppliers. Also, they are reliable in the terms of payment after closing the deal. Other factors such as their structure, scale bargain and the huge varieties of kitchen accessories were important in the decision making. However, considering that those giants in the Canadian retail market have scale power and select their supplies, probably will be difficult to negotiate and get advantage in the prices because a lot of supplies desire to sell their products to them in different segments.

Company Mission Statement

The company, which is a manufacturer and exporter of commodities hardware, daily use products, kitchen compiling related accessories, was established in 1998 and it has gained a high reputation from all its clients in Europe and North America. Riwin provides to your clients ample sourcing, stable quality, competitive prices, prompt delivery and service experience. Also, Riwin usually accepts OEM order and small quantity order.

The company strongly believes that it will get win-win results with its clients by choosing Riwin's honesty, flexibility, reliability and profession & innovation in this field.

Selling Strategy + Pre Selling Preparation in Canada

Selling consists of two main functions: tactics and strategy. Sales strategy is the planning of sales activities: methods of reaching clients, competitive differences and resources available. Tactics involves the day-to-day selling: prospecting, sales process, and follow-up. The tactics of selling are very important but equally vital is the strategy of sales.

After had chosen the retails that are going to buy the potato chopper some sales strategies are going to be elaborated in order to sell the products in huge amounts and get scale economy. First of all were sent emails to the 4 perspective prospects telling about the interest and the opportunity to make business together considering the quality and the product information. The main idea of that first contact is to create an interest from the buyer about the potato chopper. In that part of the approach were not provided information about the price of the product, just features and the place that the product comes from. The second step is to wait for the buyer’s answer and keep in contact to arrange a meeting which will address new important points such as the prospective market share in Canada, information about the supplier, other characteristics of the product and the logistics and transportation aspects. It is important to combine with the suppliers which are the conditions of the market area that the product will be sold and the transportation’s approach. In order to support the sale, an attractive display will be done with the purpose to show the prospects the features, characteristics, attributes, and benefits of the product. It is important to focus in the price as well because the product is considered a commodity and it does not have too much differentiation in its features. Also the product is going to be exposed in trade shows where kitchen accessories are the main products that will be there. Using that strategy, I can complete the cycle of pre selling and be able to choose which are the most reliable and appropriate buyer to the potato chopper.

Other prospects in Canada

In order to make contacts and possibly find out future buyers of potato Chopper in Canada, a research about the prospects that can buy potato chopper was done. One of the prospects is Sears which has a huge market share in Canada and act in more than 40 different sectors. The second one is Costco which has the strategy to sell different kind of products in a low price. Costco has the bargain power to negotiate with its suppliers because they usually buy in huge quantity of products.

What you have learned

That project addressed different topics and information about all the transactions that are relevant to effectuate an import from overseas. After conclude the project I had the opportunity to learn about the procedures to negotiate with the supplier such as the size of container, the price, if the product is dangerous or not, the port of export and other essential aspects before close the deal. After that approach, it is necessary to find out the freight forwards companies that will be responsible to carry the merchandize to Canada. In that point it is very important to make contact with as much companies as you can because their final price, including all the tariffs, insurance and costs that are added changed a lot. In Canada I could establish contacts with more than 6 freight forwards companies and all of them sent me different quotations. Before bring the product to Canada, it is important to analyze the Canadian market in order to figure out if the opportunity to growth inside the Canada has and if the population has the habit to consume the product. After that, I learned about the prospects that would buy my product and why those buyers are the best choice. I made research about their market, their strategies, their market share in Canada and their product lines. Also, the concern about the transportation costs is important to set up the selling price of the product. Considering that the communication with the supplier was important to establish the market area in Canada and the transportation’s methods that will be used in Canada. At sum up, I had I excellent opportunity to put in a practical way all the concepts and knowledge that were acquired during the course like I was doing a real international business. I hope that I can use that knowledge to get in an import and Export Company in Canada and after that is able to open my own business.