Analyzing The Viability Of Exporting Honey To France And South Korea

Analyze the political, social economic, and the business environment of France and South Korea, including their demand for Australia’s QL Bee’s honey.

Market Potential

This report seeks to analyze the political, social economic, and the business environment of France and South Korea, including their demand for Australia’s QL Bee’s honey. Australia’s beekeeping industry has become greatly successful as a result of the country’s extensive vegetation that includes several varieties of eucalyptus as well as other endemic flora, which is a great source of pollen and nectar. Also, this has been facilitated by the country’s ideal climatic conditions. Australia is ranked among the top ten honey producing nations across the globe, with most of its honey being exported to other countries due to the high demand for local honey. This demand thus translates to the overseas expansion of the Australian honey firm QL Bee. By comparing France and South Korea’s market viability, the report seeks to identify the optimal choice for QL Bee and its products.

Economies’ Overview

The economy of South Korea is the fourth largest in Asia and the eleventh largest globally. By the middle of the 21st century, it is estimated that it will be among the eleven countries that will dominate the global economy (Connolly & Yi, 2015). Additionally, according to the 2018 nominal figures, France has got the world’s sixth largest economy. The country’s economy is also attributed to its tourism sector, which remains to be the most visited nation globally.

("France GDP per capita PPP - Forecast", 2018) ("South Korea GDP per capita PPP - Forecast", 2018)

The graphs indicate that both France and South Korea have an economy that is continuously growing and the projections indicate a continuous growth in the two country’s economy (Gond & Boxenbaum, 2013). However, it is clear that France’s economy is far much better than that of South Korea.

Strengths and Challenges

South Korea and France’s economies present both benefits and challenges to QL Bee firm in exporting honey. The tables below expresses these factors by comparing the two countries’ economic indicators measured from 2013 to 2017.

("France Economy - GDP, Inflation, CPI and Interest Rate", 2018)

("Korea Economy - GDP, Inflation, CPI and Interest Rate", 2018)

Considering the above figures, there are benefits associated with the South Korean economy over the France economy. It is evident that France has a higher population compared to South Korea, and it maintains a higher GDP per capita. This shows that France’s average economic position in the year 2017 was £41,150 which is far much higher compared to South Korea’s which is £29,745. This shows that France’s consumers are more likely to have disposable income that they can spend to purchase honey (Cuaresma, Doppelhofer & Feldkircher, 2014). However, France is experiencing a higher rate of unemployment at 9.4% which fell from 10.1% from the previous year. However, South Korea has an unemployment rate of 3.7%. This shows that most of South Korea’s consumers are employed thus they have a higher rate of consumer spending. However, South Korea has got a higher inflation rate of 1.9% compared to 1.2% in France (Asongu, 2017). This higher inflation rate in South Korea causes depreciation in its currency value, hence making it expensive to import and export products. If QL Bee firm exports honey to South Korea, it would result in high risks with market stability.

Economic Position

Current Political Climate

France has got a relatively stable political climate thus it offers a relatively stable market for foreign investors. Additionally, the country’s FDI inflows are considerable but at times they are volatile during certain political situations. France is known to be a leading political force in the European Union and a crucial international player since it is a permanent member to the UN Security Council (Fritz & Prates, 2014). The country is a representative republic that has got a strong democratic tradition. A strong relationship exists between Australia and France in terms of investment, trade, and bilateral partnership.

Alternatively, being in a region that has been dominated by autocratic governments, South Korea has still held up as an example of a liberal Asian democracy. However, current reports by the Economic Intelligent Unit indicate that the country is no longer fully democratic (Donnelly, 2014). However, the country has got strong trade relations with Australia, and this relationship has grown very strong over the last few years.

Political Risk and Stability

Political risks that are experienced in these two countries have an impact on QL Bee exports regardless that the two countries have got a strong economy (Betts, Giri & Verma, 2017). Despite the good political climate in France, government policies are among the risks faced by businesses here (Bruno & Shin, 2014). It has got high taxation, political pressure groups, and regulated professions, the idea of unfair competition, governmental veto rights, and regular adverse regulations among others. 

However, according to the World Bank’s scale when measuring the effectiveness of doing business in different countries, South Korea has scored incredibly high due to its forward-thinking government restructuring (Cho & Egan, 2013). The country is regulatory efficient, market openness, and the fact that the government is willing to embrace foreign investment. South Korea has also abolished the post-registration procedures that were previously required when starting a business. The country has been described as “mostly free” and there is a little hindrance from government interference.

Conducting Business

Conducting a business operation in France and South Korea is relatively simple. For instance, France is home to over 200,000 foreign firms that run under different legal forms (?ak, 2017). The government has enhanced R&D through consolidation of innovation clusters as well as research tax credit, and supporting main projects using the National Investment Program (Casal, Rosas & Malavé, 2016). It has established a single touch point for tax issues and the new regulations on residence permits have enhanced the arrival of foreign firms. Given the dependence of South Korea on foreign trade, the country has effectively maintained a prominent position in the trade indices according to the World Bank’s statistics due to its open business environment.

Trade Relations

Market Potential

In South Korea, honey is enjoying a sweet success as the Koreans are getting obsessed with it. It is evident that Korean stores had to suspend the sale of soft-serve ice creams that have large sticks of sticky honeycomb on top due to supply issues (Odoux, et al., 2014). However, the export of honey into Australia is faced with a challenge whereby there is no Free Trade Agreement between South Korea and Australia. According to the 2012 statistics, France consumes 40, 000 tons of honey annually but its production is 15,000 tons hence it imports most of its honey. This creates a good market for honey.

Both France and South Korea have their unique characteristics that impact on QL Bee’s export market. Aimed at determining the country with the most favorable environment for QL Bee’s exports, the weighted average method is used to reveal how France and South Korea compared under the variables discussed above.

All the variables were included based on their relevance to QL Bee. The most weighted variable was the market potential because the two countries had a high demand for honey. However, South Korea was the lowest ranked due to the high taxes placed on imported honey from Australia. Thus, selling honey in France would be more profitable compared to South Korea.

The second most ranked variable was the economic position, which was high in the two countries indicating the market stability and the level of consumption in France and South Korea. Regardless of the high economic growth in the two countries, the high inflation rate made South Korea a greater risk to QL Bee. The high unemployment rate in France could be attributed to the high population which is over ten million above that of South Korea.

Regarding the trade relations, both countries had strong bilateral ties with Australia. However, the lack of a Free Trade Agreement in honey products between Australia and South Korea made France be a better market for QL Bee thus the reason for France’s high ranking. Lastly, the political stability of these countries had the lowest ranking. In the end, South Korea had a stronger political stability and there was little government interference when investing in the country. Thus, South Korea appeared to be a better choice for QL Bee.

According to the report, it is clear that the two countries have strong economies and they are viable for export of honey by QL Bee. Nonetheless, there are specific differences that set the two countries apart, making France a better place to export honey compared to South Korea. Additionally, France has a strong honey market, with high consumption rates and low production rates. Despite that South Korea has got high consumption rates, it also has high production rates thus making it hard to export honey in this country due to lack of Free Trade Agreement. This makes France a better choice for QL Bee.

Political Stability

Conclusion

Considering the findings and analysis of the variables, it appears that France is a better market for QL Bee to export its products. However, South Korea also has a high demand for honey and a stable political climate but lack of Free Trade Agreement between it and Australia making France a better country for QL Bee to export honey. Hence, the QL Bee firm should identify marketing strategies to improve France’s market potential. Also, it is important for foresight and insight into France’s political situation and be prepared for political controversies. 

References

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Betts, C., Giri, R., & Verma, R. (2017). Trade, reform, and structural transformation in South Korea. IMF Economic Review, 65(4), 745-791.

Bruno, V., & Shin, H. S. (2014). Assessing macroprudential policies: case of South Korea. The Scandinavian Journal of Economics, 116(1), 128-157.

Cho, Y., & Egan, T. (2013). Organizational support for action learning in South Korean organizations. Human Resource Development Quarterly, 24(2), 185-213.

Connolly, M., & Yi, K. M. (2015). How much of South Korea's growth miracle can be explained by trade policy?. American Economic Journal: Macroeconomics, 7(4), 188-221.

Cuaresma, J. C., Doppelhofer, G., & Feldkircher, M. (2014). The determinants of economic growth in European regions. Regional Studies, 48(1), 44-67.

Donnelly, S. (2014). Power politics and the undersupply of financial stability in Europe. Review of International Political Economy, 21(4), 980-1005.

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Fritz, B., & Prates, D. (2014). The new IMF approach to capital account management and its blind spots: lessons from Brazil and South Korea. International Review of Applied Economics, 28(2), 210-239.

García?Casal, M. N., Peña?Rosas, J. P., & Malavé, H. G. (2016). Sauces, spices, and condiments: definitions, potential benefits, consumption patterns, and global markets. Annals of the New York Academy of Sciences, 1379(1), 3-16.

Gond, J. P., & Boxenbaum, E. (2013). The glocalization of responsible investment: Contextualization work in France and Quebec. Journal of business ethics, 115(4), 707-721.

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Odoux, J. F., Aupinel, P., Gateff, S., Requier, F., Henry, M., & Bretagnolle, V. (2014). ECOBEE: a tool for long-term honey bee colony monitoring at the landscape scale in West European intensive agroecosystems. Journal of Apicultural Research, 53(1), 57-66.

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?ak, N. (2017). Honey market in the opinion of young consumers. Handel wewn?trzny, (1 (366)), 424-438.