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International Management

Executive Summary of Yumbah Aquaculture

Yumbah Aquaculture is the only abalone producer of Australia which controls every aspect of its operations, from feeding, breeding, producing to sale, marketing and adding value to the services. The company accounts for 70 per cent abalone supplier to the Asian countries. Moreover, the company is supported by the Australian government in enhancing its industrial importance in Australia. This report has discussed the expansion plan for Yumbah Acquaculture in China. PESTLE analysis of China has been discussed. It shows that Chinese are very attached to their culture and the government has strict rules for establishment of any foreign company in the Chinese market. However, the company is already a supplier of seafood to the Chinese market. So, this is an added advantage. Entry strategies licensing and joint ventures has been used to discuss the expansion of company in China. Having valid trading license will provide benefits to the company in local market. Furthermore, the organization plan and initial action plan has also been discussed which demonstrates the management of the HRM team to successfully establish the business in China.

Table of Contents

Background.

International expansion opportunity.

Country selection.

Description and analysis.

PESTLE analysis.

Political

Economic.

Social

Technological

Legal

Environment

Strategy selection.

Entry strategy and rationale.

Licensing.

Joint venture.

Target customers.

Value proposition.

Value delivery partnerships.

Organizational structure.

Risk management criteria.

HRM selection criteria.

Initial action plan.

Conclusion.

References.

Background of Yumbah Aquaculture

Yumbah Aquaculture is the largest seafood producer in Bicheno, Australia (Yumbah Aquaculture 2018). Yumbah means large shellfish according to indigenous language of Yaygirr. The company is fully owned and operated by Australians and has a turnover of about more than $30 million (Yumbah Aquaculture 2018). Yumbah Aquaculture is the only abalone producer of Australia which controls every aspect of its operations, from feeding, breeding, producing to sale, marketing and adding value to the services. Furthermore, the company exports more than 70 per cent of abalone produce to the Southeast Asia, Europe and America (Yumbah Aquaculture 2018). The company has also received the award for best export company of Australia in the year 2017 (Yumbah Aquaculture 2018). The company believes that accountable aquaculture refers to the caring of nature by minimizing the pressure on the harvesting of wild fish frameworks. To achieve this motive, the aqua company has adopted the method of breeding method for producing juvenile abalone (Gui 2018).

They are produced by using natural production structure in order to fulfil the market size.Yumbah employs seawater, which streams over the reservoirs and transports life supporting oxygen to the aquatic animals before recurring it to the marine, after eliminating maximum of the deferred biological matter. Furthermore, the company was also awarded for best National seafood company of Australia in the year 2019(Yumbah Aquaculture 2018). Aquaculture produces 240,000 tons of marine animals yearly(Rose, Bell, and Crook 2016). Moreover, the company is supported by the Australian government in enhancing its industrial importance in Australia. However, several diseases were evolved due to the fishery farming in Australia which outbroke the farms of Yumbah Aquaculture in 2005(Yumbah Aquaculture 2018).

Since, then Australia has maintained its health status in term of aquatic animals.In addition to these considerations, economic development is also among the influences of seafood business. There are several Asian nations that permit the seafood business because revenue produced from the distribution of aquaculture’s harvests can significantly can contribute to the economic development of that country. This report will discuss the management plan for the expansion of Yumbah Aquaculture in China. It will also explain the political, economic, social, technological, legal, and environmental issues affecting the company in China. An entry strategy for expansion of Yumbah Aquaculture will also be discussed.

International Expansion Opportunity

Country Selection

Aquaculture refers to the farming of aquatic animals in enclosures, like, tanks, lakes, ponds, etc. China produces 32.4 million tonnes of aquatic harvest annually (Gui 2018). Furthermore, the country accounts for two-third of the aquaculture production across the world. Therefore, it would a great opportunity for Yumbah Aquaculture to expand its business in China. Moreover, China has been always supporting Australia, politically and economically. Moreover, in China the seafood consumption rate of people is very high as compared to other parts of the world. This will help Yumbah Aquaculture in increasing their business efficiently in the Chinese market.

Description and Analysis of Yumbah Aquaculture

PESTLE Analysis

Political

The aquaculture business in China has been exclusively supported by the Chinese government over the years. The government in China has many policies to support aquaculture which guides and responds to the issues like production technology, seed, feeding and trading (Rose, Bell, and Crook 2016). The top-down approach of the Chinese aquaculture industry focuses less upon the production and safety issue. Moreover, the country has a one-party political system, in which the current ruling party paves the path for social and economic development of the aqua industry in a five-year plan (Gui 2018). Furthermore, the Bureau of Fisheries in China also supports the marine agriculture, gives a great advantage for the company to expand the business in China.

Economic

Australian Seafood Company exports most of the seafood to China, Japan and Hong Kong. Moreover, the Chinese market nearly buys 100 per cent of the Australian lobster from Australia’s seafood market (Kirkpatrick, Kriwoken, and Styger 2019). With the increasing population of China, consuming seafood has also been increased. This has increased the economy of the country as Chinese people believe that seafood is pride and status of their country. However, the Australian Yumbah Aquaculture faces tariff challenges while supplying food stuff to China. According to the Chinese government the companies should sign the free trade agreement (FTA) with the government in order to supply goods to the Chinese market (Kirkpatrick, Kriwoken, and Styger 2019). Thus, establishing Yumbah Aquaculture in China will reduce the tariff charges of the company.

Social

Most of the fisheries in China are family driven and the country’s population has been increasing annually as compared to the Australian population. Due this factor the Chinese government has a major concern for providing the quality life to the inhabitants. Chinese people believe on cultivation of morality and emphasis on hard work (Zamora 2018). As there are many other fisheries in the Chinese market and are working since ages, establishment of Yumbah Aquaculture can be very competitive. This will be due to the cultural beliefs of the inhabitants. Moreover, Chinese prefer working with the countries which they know properly and it takes time to build government bureaucracy. Also, they prefer that any company who wants to establish their business in China had to send the agenda two-three months earlier, so that they can verify it properly.

Technological

China has been utilizing the U.S. technology for the treatment of ponds and fisheries to reduce the nitrogen and harmful gases levels in the water. The technology involves usage of raceways in ponds and lakes, along with lifts and aerators; this improves the water flow and separates the fishes according to their size (Wang 2017). Subsequently, Yumbah Aquaculture uses the slab tanks for maintaining a healthy environment for the abalones. The company utilizes the solar energy to supply power in most of its farms. Whereas, the Chinese aquaculture company uses the IPA system which reduces the water required by the machines and improves the water quality. So, by expanding Yumbah Aquaculture in China, the company can learn and acquire these technologies in their Australian seafood farms to increase the yield.

Legal

There are many legal issues which affects the establishment of a business in China. Yumbah Aquaculture will require some form of representation in the Chinese market before it can sell its goods. However, the company is already a supplier of seafood to the Chinese market, so this will not be an issue. The Chinese authorities themselves verify the products by new company before reaching to the consumers (Wang 2017). There are proper requirements of registration, license and certification in China. So, the basic requirement for Yumbah Aquaculture will be an effective business plan which should be practical according to the Chinese administrators. Furthermore, China is very strict in terms of any sort of exchange of currency, trading, and supplying, a proper agreement is required to show the proof of contractual obligation with China.

Environment

Due to the rapidly growing economy of China, there are several impacts on the natural environment, such as deforestation, pollution, loss of biodiversity and changes in climate. However, the Chinese government mentioned that they have taken a number of initiatives to resolve these problems. The aquaculture industry in China contributes to the increasing level of waste and pollution in China (Zamora 2018). The Yumbah Aquaculture treats the organic waste produced by the aquatic animals farming and them discharges it into the water bodies. So, the company will not harm the environment of China, but the climate changes of China can affect the harvesting of abalones.

Strategy Selection

Yumbah Aquaculture should adopt a strategy of market penetration for its expansion in the Chinese market, as the population of China is more than Australia. Along with this, the number of seafood consumers is also more in China (Rose, Bell, and Crook 2016). By using this strategy Yumbah Aquaculture will be able to differentiate itself from the local market vendors. Marketing strategy is a global business expansion strategy which focuses on selling the goods in the existing local market of any country. This requires a strong execution in distribution, pricing and promotion.

Entry Strategy and Rationale

Licensing

Licensing is moderately cultured procedure where an organization handover the privileges to the usage of a merchandise or provision to another organization. It is principallyvaluablepolicy if the consumer of the certificate has a comparativelyhuge market portion in the marketplaceit wants to go in. Yumbah Aquaculture should attain a valid marketing license for their business establishment in China, as the settlement of harvest farms for aqua agriculture will require a huge area near the sea coast (Wang 2017). So, valid agreements should be prepared according to the rules and regulations of the Chinese government (Kirkpatrick, Kriwoken, and Styger 2019). Furthermore, the company should also maintain a high quality and safety in its products while delivering it in the market. Attaining a valid license would be easier for the company because the company is already supplying seafood items to the Chinese market. But there will be a need of understanding the cultural values, beliefs and traditions of China as people there are strongly attached to their culture.

Joint venture

Joint venture refers to the partnership with other firms which create an independently operating company. This involves agreement between two firms to sell a product or form a new company to market the product (Sondak et al. 2017). In this strategy, risks and profits in the business are shared equally by both the firms. Apart from licensing, Yumbah Aquaculture can also adopt the strategy of joint venture. This can help the company to easily understand the local market scenario of the China and perform ground investigation to open more harvest farms in the future to increase their revenue globally (Gui 2018). Moreover, this will also create opportunities for both the firms to adapt new techniques and skills for aqua farming. It is a useful strategy of gaining access in a foreign country to over tariff challenges and barriers.

Target customers

The target customers for Yumbah Aquaculture in China will be the local markets, retailers, traditional shops, hotels and restaurants (Rose, Bell, and Crook 2016). Since, the company will be new in the market, it will be necessary to supply to market the high-quality products of the company.

Value proposition

Yumbah Aquaculture is known for its best quality and healthier seafood in the Australian market. This same strategy can be utilized in China as the fisheries in China don’t have proper waste management systems (Sondak et al. 2017). Over past few years, several animal diseases have been produced due to this mismanagement. So, providing healthy seafood directly from the harvest farm will be the value proposition to the consumers in China.

Value delivery partnerships

In order to provide value proposition to the consumers, Yumbah Aquaculture should partner with the local vendors in China. This will help the company to increase their strength in fulfilling the requirements of the target customers.

Organizational Structure

Over the past decades, aquaculture has developed the quickest developing industry of the food creation division of the world economy. The incredible development of aquaculture can be credited to various elements: the improvement of culture procedures in for all intents and purposes all the existence phases of industrially significant types of aquatic animals. Therefore, by utilizing this new organizational design, Yumbah Aquaculture will be able to successfully expand its business in China. Presently, the company is the largest seafood company in Australia, now its planning to expand in China (Sondak et al. 2017). Expansion of Yumbah Aquaculture in the Chinese market will have an advantage as the consumption rate of seafood by Chinese people is highest across the world. Moreover, the company is already exporting abalones to China.

The purpose behind this new organization deign is that the company has been paying 15 per cent tariffs for exporting seafood to China, so by establishing own harvest in China will eliminate these tariff charges (Rose, Bell, and Crook 2016). Also, this will give opportunities to the company to grow further. The design depicts the shared responsibilities of the support subsystem, production system and the marketing system. The budget allotted according to this design is approximately $350,00 0 million. It will comprise the breeding cost, abalones health cost, land cost, labour cost, management cost for aquatic environment and Chinese market cost (Sondak et al. 2017). The research and development stage will require the support from the Chinese government as the labourers of the company will require training about new technologies in China. The company will have marketing advantage as they will supply bulk storages to the hotels, retailers, restaurants and traditional stores. This will provide interest payments. Furthermore, the company will have to function according to the political, legal, economic and social laws of China.

Risk Management Criteria

Chinese market already has a number of fisheries, so, it might gelt difficult for the company to gain trust of the consumers. This is because Chinese people have a tradition of carrying the family business, so purchasing from a new company can affect the profits of company (Kirkpatrick, Kriwoken, and Styger 2019). Subsequently, the company should also target the lower markets and restaurants also, to make their brand value demographically. Proper risk management can be done by hiring a marketing strategist from the Chinese company, as he will be able to guide Yumbah Aquaculture about the business environment of the country.

HRM Selection Criteria

Production unit:

  • Adequate knowledge of production farms of abalones.
  • Breeding knowledge
  • Feeding
  • Aquaculture harvest management
  • Prior working experience in similar field

Management unit:

  • Marketing skills
  • Very good communication skills (Speaks Chinese)
  • Management skills
  • Risk management
  • Prior marketing experience
  • Supply chain management

Initial Action Plan

Goal: Establishment of Yumbah Aquaculture in China

Sector

Indicators

Means of verification

Employment

New jobs created

Official statistical data

Economic growth

Amount of revenue generated

Official statistical data

Sales of aquatic animals

Quantity of products sold

Sales record of company

Harvest land

Assigned by government

Agreement of land allocation

Water

Permitted by government

Certification of water permit

Power access

Achievement

Reception report

Raw material

Supply chain

Records

Profit margins

Bank details

Account records

Conclusion on Yumbah Aquaculture

The report discussed the expansion of Yumbah aquaculture in China. The company is a seafood company based in Australia, and supplies abalones to China, Japan, Hong Kong and several Asian countries. The PESTLE analysis of China has been discussed in the report which depicts that, the consumers of China have strong beliefs in Chinese culture and are very health conscious due to the emerging animal diseases. But the population of China is more than Australia and the Chinese government also supports the aquaculture production there, this is a great advantage for expansion. Contrarily, the government has strict rules for any foreign exchange of currency, so this will be a risk factor for Yumbah Aquaculture. A high-level organizational structure has also been developed in the report, which describes the responsibilities of every sector of the company. Furthermore, an initial action plan is drawn for the company for understanding the requirements for business establishment. 

References for Yumbah Aquaculture

Bastos Gomes, G., Jerry, D.R., Miller, T.L. and Hutson, K.S. 2017. Current status of parasitic ciliates Chilodonella spp.(Phyllopharyngea: Chilodonellidae) in freshwater fish aquaculture. Journal of fish diseases, 40(5), pp.703-715.

Blandford, M.I., Taylor‐Brown, A., Schlacher, T.A., Nowak, B. and Polkinghorne, A. 2018. Epitheliocystis in fish: an emerging aquaculture disease with a global impact. Transboundary and emerging diseases, 65(6), pp.1436-1446.

Feng, J., Zhu, X., Wu, H., Ning, C. and Lin, G. 2017. Distribution and ecological risk assessment of heavy metals in surface sediments of a typical restored mangrove–aquaculture wetland in Shenzhen, China. Marine pollution bulletin, 124(2), pp.1033-1039.

Gui, J.F., Tang, Q., Li, Z., Liu, J. and De Silva, S.S. eds. 2018. Aquaculture in China: Success stories and modern trends. Canada: John Wiley & Sons.

He, Z., Cheng, X., Kyzas, G.Z. and Fu, J. 2016. Pharmaceuticals pollution of aquaculture and its management in China. Journal of Molecular Liquids, 223, pp.781-789.

Kirkpatrick, J.B., Kriwoken, L.K. and Styger, J. 2019. The reverse precautionary principle: science, the environment and the salmon aquaculture industry in Macquarie Harbour, Tasmania, Australia. Pacific Conservation Biology, 25(1), pp.26-33.

Liu, X., Steele, J.C. and Meng, X.Z. 2017. Usage, residue, and human health risk of antibiotics in Chinese aquaculture: a review. Environmental Pollution, 223, pp.161-169.

Lucas, J.S., Southgate, P.C. and Tucker, C.S. eds. 2019. Aquaculture: farming aquatic animals and plants. England: John Wiley & Sons.

Malara, D., Mielke, C., Oelgemöller, M., Senge, M.O. and Heimann, K. 2017. Sustainable water treatment in aquaculture–photolysis and photodynamic therapy for the inactivation of Vibrio species. Aquaculture Research, 48(6), pp.2954-2962.

Morash, A.J. and Alter, K. 2016. Effects of environmental and farm stress on abalone physiology: perspectives for abalone aquaculture in the face of global climate change. Reviews in Aquaculture, 8(4), pp.342-368.

Rose, D., Bell, D. and Crook, D.A. 2016. Restoring habitat and cultural practice in Australia’s oldest and largest traditional aquaculture system. Reviews in fish biology and fisheries, 26(3), pp.589-600.

Sondak, C.F., Ang, P.O., Beardall, J., Bellgrove, A., Boo, S.M., Gerung, G.S., Hepburn, C.D., Hong, D.D., Hu, Z., Kawai, H. and Largo, D. 2017. Carbon dioxide mitigation potential of seaweed aquaculture beds (SABs). Journal of Applied Phycology, 29(5), pp.2363-2373.

Song, J., Sun, Y. and Jin, L. 2017. PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, pp.276-289.

Wang, W., Sun, J., Liu, C. and Xue, Z. 2017. Application of immunostimulants in aquaculture: current knowledge and future perspectives. Aquaculture Research, 48(1), pp.1-23.

White, C.A., Bannister, R.J., Dworjanyn, S.A., Husa, V., Nichols, P.D. and Dempster, T. 2018. Aquaculture-derived trophic subsidy boosts populations of an ecosystem engineer. Aquaculture Environment Interactions, 10, pp.279-289.

Yumbah Aquaculture. 2018. Yumbah Nyamat Abalone Farm Works Approval Application. [Online]. Available at: https://s3.ap-southeast-2.amazonaws.com/hdp.au.prod.app.vic-engage.files/8915/4087/3509/Yumbah_Nyamat_WAA_FINAL_EPA_281018_Main_Document.pdf [Accessed on: June 15, 2020].

Zamora, L.N., Yuan, X., Carton, A.G. and Slater, M.J. 2018. Role of deposit‐feeding sea cucumbers in integrated multitrophic aquaculture: progress, problems, potential and future challenges. Reviews in Aquaculture, 10(1), pp.57-74.

Zenger, K.R., Khatkar, M.S., Jerry, D.R. and Raadsma, H.W. 2017. The next wave in selective breeding: implementing genomic selection in aquaculture. In Proc. Assoc. Advmt. Anim. Breed. Genet, 22, pp. 105-112.

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