In the international trade, export intermediary is a typical export mode, which is adopted by many companies. Sanitarium Health Food Company is a famous food company in Australia and New Zealand. One of the products named Weet-Bix is a top seller in Australia and New Zealand breakfast market. (Mellentin, 2003) Sanitarium Health Food Company exports the Weet-Bix by export intermediaries. The purpose of this report is to analysis the research on role of export intermediary in the international trade for Sanitarium Health Food Company. Initially, this report will describe the background of Sanitarium Health Food Company and its exporting product. Following it, this report will analyze the research methods. After that, it will discuss the trade intermediaries and its role. Then, it will explain the export intermediaries that Sanitarium Health Food Company uses and its functions. Finally, it will be a conclusion of the report.
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Introduction
Sanitarium Health Food Company was built in 1898 in Melbourne. The word “Sanitarium” means to link good diet with good health. Sanitarium, proudly 100% Australian owned, has developed a reputation for manufacturing quality health and vegetarian food products – a position that has been rewarded by the strong consumer trust we enjoy today. (Julian, 2003) At present, there are approximately 1700 employees across Australia and New Zealand in Sanitarium Health Food Company. The company can achieve annual turnover of around Au $300 million. Sanitarium has the largest manufacturing site in New South Wales. Sanitarium has almost 100 years experience in exporting to over 30 countries worldwide – including the United Kingdom, Asia, the United States and the South Pacific. (Parr, 2006) Weet-Bix is the most popular breakfast brand in the breakfast industry in Australia, which has remained for 30 years. Weet-Bix belongs to high-fiber breakfast biscuits, which has high nutrition. It could be applied to any age, especially for babies. Every year, many Weet-Bix is exported to different countries in the world.
Research Method
The focus of this report was primarily on a qualitative analysis and aimed at discussing the company’s export intermediaries. A quantitative questionnaire is used to analyze the export conditions in order to choose appropriate export intermediaries. Data collection is mainly through online survey or articles to support the analysis. Through Internet, it can be convenient to search the information of situation of Sanitarium Health Food Company very clearly. Some data is sourced from Sanitarium Health Food Company’s website, so it is realistic and effective. Questionnaire is completed by several employees in Sanitarium Health Food Company because it can understand much about the company. Through this way, it can gain more specific information and also feel the culture of Sanitarium Health Food Company.
3.0 Discussion of Export Intermediaries and Role in International Trade
3.1 Export Intermediaries
Export intermediaries belong to one of indirect exporting channels. Export intermediaries are the agency to deal with export business after accepting the consignment of exporting companies. Export intermediaries do not have title to the goods and they are not allowed to export goods to foreign buyers by using their own names. Meanwhile, export intermediaries do not afford the risks and they only help the exporting companies to sell the products. Exporting companies should afford the risks if having. Export intermediaries may work simultaneously for a number of exporters on the basis of commissions, salary, or retainer plus commission. (ATS, 2009) Usually export intermediaries achieve an agreement with exporters and both sides will fulfill the rights and obligations in the agreement.
Nowadays, the most common intermediaries are Export Management Company (EMC) and Export Trading Company (ETC). (Balabanis, 2005) Export Trading Company has talent, funds, wide range of channels to contact foreign distributors over the years. In addition, it is capable of sensitive information networks, such as certain advantages of preferential policies. Export Management Company is a specialized enterprise for the production company to engage in export trade. And they generally adopt the methods of direct agents. The advantage of Export Management Company is to have a foreign trade channels and information professionals. (Cooper, 2005) In Melbourne, there are hundreds of EMCs and ETCs. Potential exporters should develop a list of those ETCs and EMCs which specialize in exporting the types of products proposed to be sold overseas. (Terpstra and Sarathy, 2000)
3.2 Role of Export Intermediaries in International Trade
Export intermediaries play an important role in the international trade and it can be discussed from three aspects.
Firstly, export intermediaries have the abundant foreign market experience and foreign channel. It can help the companies to explore the foreign market rapidly. When exporting companies are not familiar with foreign market, they could consign the export intermediaries to sell the products to foreign buyers directly. Thus export intermediaries would be convenient for the exporters in the international trade and exporters could avoid complex procedure of international trade instead of paying commission to export intermediaries.
Secondly, with the existence of export intermediaries, the whole international trade process will become simple. Export intermediaries serve for exporters and deals with the entire export procedure. The exporting companies only need to be responsible for manufacturing and sales. The participation of export intermediaries makes the job division of work become very clear. Each side involved in the international trade has clear responsibility and international trade will have a good order.
Thirdly, the involvement of export intermediaries in the international trade could assist the exporters to save the costs. If choosing the export intermediaries, the exporting companies do not need to build foreign branches and employees to research foreign market. Under this circumstance, it can help the exporters to save the direct channel costs. In the international trade, exporting companies could save capital burden, which promotes the exporting volumes.
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4.0 Discussion of the Export Intermediaries that the Company Uses and Its Functions
4.1 Export Intermediaries that the Company Uses
Sanitarium Health Food Company’s products have been exported to many countries, including USA, Canada, Singapore, Japan and so on. The following table shows the export volume of Sanitarium Health Food Company. Due to many exporting volumes, the company wants to simplify the process of exporting. In this situation, Sanitarium also chooses the export intermediaries. (See Appendices 2) Sanitarium is mainly for manufacturing the products, so they will use simple way in the international trade. Therefore, export intermediaries are proper exporting mode for exploring foreign market of Sanitarium. It means that Sanitarium Healthy Food Company entrusts the export intermediaries to sell the products in foreign market. Through export intermediaries, Sanitarium can improve the sales of products into foreign market fast through intermediaries’ experience.
Usually, Sanitarium Health Food Company selects Export Management Company to export its products. As the company has huge export volumes, it is impossible for Sanitarium to cooperate with only one Export Management Company. Sanitarium exports the products to different countries. According to different trade countries, Sanitarium will select different Export Management Companies. Different Export Management Companies have their own advantages in different countries. Sanitarium thinks the reputation of export intermediaries is very important because it may directly influence the sales impression of their products. As a result, Sanitarium chooses export management companies with good reputation to cooperate with. Export Solution and Cornel Exports Australia Pty Ltd are current cooperated export management companies with Sanitarium. Through them, Sanitarium Health Food Company could export their products to overseas smoothly.
Source: adopted from Wrenst A (2008), Products of Sanitarium Food Health Company, Journal of Food Industry, Vol.107
4.2 Functions of Export Intermediaries
The Export Management Companies which Sanitarium Health Food Company uses has effective functions in exporting products to overseas.
Before arranging exporting business, Sanitarium Health Food Company signs agreement with Export Management Companies. In the agreement, it clearly regulates the product, intermediary range, storage and transportation, payment, and other responsibilities. Export Solution and Cornel Exports Australia Pty Ltd serve as a liaison and consultant between Sanitarium and its foreign buyers seeking to purchase products from Australian manufacturers. Through its network of qualified and experienced international distributors, Export Solution and Cornel Exports Australia Pty Ltd interconnect world markets to optimize opportunity. Export Solution and Cornel Exports Australia Pty Ltd are the link between new ideas, products, and services with desirable export markets. With the participation of Export Solution and Cornel Exports Australia Pty Ltd in the international trade, Sanitarium can get benefit from their experience in exporting. At the same time, importers can also obtain benefit from a sales team dedicated solely to international sales and customer service. (Lord, 2000) The trade experience of Export Solution and Cornel Exports Australia Pty Ltd could help both Sanitarium and its foreign buyers for the best possible business outcomes. Sanitarium Health Food Company could have an access to build an overseas network in potential target market. In meanwhile, Sanitarium Health Food Company could reduce selling, general and administration expenses. As a consequence, Export Management Company can assist the Sanitarium Health Food Company to involve in the international trade more effective. Export Solution and Cornel Exports Australia Pty Ltd are current cooperated companies. With their help, Sanitarium has good performance in exporting business to overseas market.
5.0 Conclusion
The cereal products of Sanitarium Health Food Company have been ever exported to many countries. In order to achieve goods sales in international trade, Sanitarium needs to select good market entry mode. For several years, Sanitarium always chooses export intermediaries for exporting process and it has outcomes in the international trade. Sanitarium Health Food Company usually cooperates with Export Management Companies for engaging in the export business.
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