International Trade Research Project - Export of Merlot Cabernet Wine in Hong Kong and Switzerland

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Social: - Any religious or ethical barriers on drinking alcohols in the countries

How often people drink? On what occasions? Regular drinkers?

- Quantitative

Political: - Taxes and duties on alcoholic beverages

Tax revenue of the countries earned from alcohol

Economic: - GDP and PPP of the countries

How much economy is spent on alcohol?

Exchange rates and its fluctuating trends

Social: - Demography of the countries (population)

Age limit for drinking alcohol & population above that age group

How many women and men drink alcohol?

- Contour scenario of the Red Wine in target countries

- Key information required

- Qualitative: - Priorities of alcohol in both the countries

Popularity of blended red wine (Merlot-Cabernet)

Shipping and transportation facilities in countries

Wine production setup in country.

- Quantitative: - Affordability of red wine by people in both the countries

Consumption of alcohol in both the countries

Statistics of import of wine in both the countries

Cold storage facilities

Environmental climatic considerations

- Competitor analysis

- Key information required

How many local competitors (i.e. local wine producers)?

How many import competitors for red wine?

Their market status? Pricing? Quality they provide?

Sources:- CIA Fact book, government websites, newspaper articles, periodical magazines, Review and research articles, Commercial trade websites.

Data accuracy and relevance

The main aim of this research is to get an idea about the current scenario of the target countries; so as to decide which country is suitable for the Red wine export business. Therefore most of the data gathered during the research are relevant and accurate. The data are mainly collected from secondary sources including government websites, World bank website, CIA fact book, research articles from reputed publications, news etc. Majority of the data are collected from the most updated sources, as much as possible.

Unit of measurement

Metric system was followed for the units used throughout the research. All the currencies used are mentioned in CAD and are converted into CAD using present forex rates.

Currency:

Currency used: CAD as per below conversion rate.

1 Swiss Franc = 1.175 CAD

1 USD = 1.13 CAD

1 Hong Kong Dollar = 0.145 CAD

Volume:

Unit used: Litre

Logic and Analysis

- External environment aspects

Qualitative: -

Political: - Hong Kong is going through its worst political crisis since China retook its control over it in 1997. On August 31, 2014 it was announced that the Chinese government will strongly control the nominations for the Chief executive’s election in 2017. The whole city was brought to standstill on Sept 29, 2014 after extremely harsh public riots. (1)Thus the overall political stability is highly threatened.

Switzerland has a federal government with a two chamber parliament administration and 26 cantons. The federal government comprising of a president and a vice president which are elected every year. (2) The overall political environment is stable.

Social: - The drinking culture in Hong Kong is not as prominent as in Switzerland. There are no religious or other ethical barriers in either of the countries. (3)

Quantitative: -

Political: The HKSAR (Hong Kong Special Administrative Region) has continuously tried to make Hong Kong- a fair and good platform for alcohol trading and attempt to cultivate a wine culture amongst the Hong Kong people. The duties on wine were reduced to 50% in 2007; which was further abolished completely in 2008 (on all types of alcoholic beverages except spirit). Hong Kong is the only country in the world where there is neither wine duty nor sales tax on all types of wines. (4)

Hong Kong's wine industries are supported by a number of finest wine merchants with a tremendous international wine trade experience. Apart from wine trading practice, other businesses concerned with wine are auction, retailing, warehousing, and transportation. (5)(6)

According to the custom regulations of Switzerland, a 1 Litre wine bottle would cost 2.115 CAD , whether or not it is travelled along with the consumer or is just imported. But, if the quantity of wine exceeds 200 Litres then one is supposed to pay the 7.5% Value added tax also.(7)

Economic: The economy of Hong Kong is highly dependent upon the International trades and finances. Its economy was badly affected by the global slowdown in 2008, but, then it was gradually recovered by increasing integrations with China. (8)Switzerland has a stable and prosperous economy with very low unemployment rates and one of the highest GDPs in the world. The economy owes to the service sector and manufacturing sector with high technology & knowledge based production. (9)

Hong Kong

Switzerland

GDP

430.87 Billion CAD

419.45 Billion CAD

World