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Kotler defines direct exporting as a way companies handle their own exports (p. 590).

Moreover, the
company can do this type of exporting through foreign-based distributors (who would buy and own
the goods) or through foreign based agents (who would sell the goods on behalf of the company)
direct exporting is a more reasonable solution for the DE because:
 It gives the company full control over the marketing four P’s (product, price, promotion,
place)
 The products adapt faster to the target market
 Contributes to the concentration of the marketing efforts on the manufacturer’s product line
 Allows for better protection of trademarks, patents, goodwill and other types of intangible
property (Root, 1994)
 It could assure higher profits because the breakeven sales volume is higher if we take into
consideration the bigger amount of fixed costs required to set up an office and a storage unit
(Root)
 It gives the company a strong relation with the foreign customer and market
However, there are also some disadvantages in using this entry strategy:
 It is expensive and will take a lot of time and input from DE own staff
 The organization would need to be changed
 The staff would need to be educated in terms of culture, area of export, insurance
 High variable unit costs due to transportation costs
 Not able to secure long term competitiveness because of lack of strategic control and
flexibility (Agarwal & Ramaswam)
Weighing the advantages and disadvantages of using this type of export entry strategy, we came to
the conclusion that this is the best for the Douwe Egberts product. Therefore, we will need an office
in Australia, together with a storage unit. This would be possible by renting it online via agencies as
www.searchofficespace.com, which has a score of 9.7 on the Trust Pilot. This agency offers full
support in finding, choosing and setting up a place, all free of charge, therefore it would be easier
and cost-free (besides the monthly rent) to work with them.
The national storage in Australia offers services across world. That means that you can administer
your storage unit from across the globe. They offer full service 24/7, with full access to your unit,
CCTV cameras and, very important for DE, you can pay your bills online.
Moreover, an Australian website would be needed for the online orders and this would be possible
by assigning the task to the web designers of DE in The Netherlands. Important matters that need to
be taken into consideration are:
 Australia currency is Australian Dollar, therefore it is a big chance that Australian customers
would not want to pay for their purchase in euro. Easier for them is to convert the prices on
the website in their own currency and therefore increase the possibility of a check-out
purchase. Quad-Lock-Case is the perfect example because they expanded from the U.S. to
Europe and Australia and the outcome of conversion of currency brought them a massive
increase in purchases and in orders.
 The advertisement should be made directly to the customers, using google ads, social media
and possible Australian influencers. The social media pages should be made separate from
the Dutch one, because this way it is well controlled what should be posted to appeal the
Australian possible customers. The advertisement campaign could be set from The
Netherlands, but in order to demonstrate its efficiency, staff would be needed in Australia
(handing free samples, observing buyer-behavior, etc.)
Legal political

When importing to Australia, the following import documents required are:

 bill of lading / air waybill


 commercial invoice
 manufacturing declaration (if applicable)
 packing declaration form
 packing list permits and licenses for regulated products

Customs Value

The customs value of imported goods is the price paid or payable for the goods when they are
imported into the Australian customs territory. In Australia, this price is calculated based on
the FOB (freight on board) value. If the customs value can’t be determined based on the
transaction value of the imported goods, the following values are applied successively as a
basis for the calculation:
 the transaction value of identical imported goods
 the transaction value of similar imported goods
 the computed value
 the value deduced by way of an appropriate fall-back method.
 the deductive value

Labelling

Certain goods must be correctly labelled with a trade description before they can be imported
into Australia. Even so, not all imported goods require to be labelled. On the other hand, the
imported goods that require labelling and don’t meet labelling requirements, may be
confiscated.

The Commerce Act 1905 and the Trade Descriptions Regulation 2016 establish which goods or
classes of goods require labelling when being imported into Australia, what label is required
and where the label must be applied.

A trade description is referred as any description, indication, suggestion or statement that


indicates how or who made, packed or prepared the goods. The trade description has to:

 be written in English and in prominent and clear characters


 mention the name of the country of origin of the goods (where they were
made/produced)
 sometime required to include a true description of the goods (the term 'true
description' is not explicit defined in the law so is considered to be anything that is a
correct explanation of the goods)
 unless a prepacked article, be in the form of a principal label or brand (including a
mark, device, name, word, letter, numeral or symbol and a combination of 2 or more
of those things) attached in a prominent position, and as permanently as practicable,
to the goods – if attachment to the goods is impracticable, to the principal coverings
containing the goods for wholesale or retail.

What is more, particular labelling requirements for caffeinated beverages is required.


Therefore, information such as the average quantity of caffeine expressed in milligrams and
each listed substance that the product contains, per serving size and per 100 ml, has to be
provided. Furthermore, there have to be specified advisory statements to the effect that:

 the product contains caffeine


 the product is not recommended for children, pregnant or lactating women or
individuals sensitive to caffeine (as appropriate)
 no more than a one-day quantity per day, expressed as ml or as cans or bottles
should be consumed.

According to EU Market Access Database, when exporting from an EU member country which
is Netherlands in this case, there are no trade defense measures such as anti-dumping, anti-
subsidy and safeguard for coffee products in Australia. Furthermore, goods and services tax
(GST) is perceived at a rate of 10% of the duty paid value. Then, an import processing charge
for goods which are imported by air, sea or post of a value between 1000 AUD and 10000 AUD
is applied at a rate of 50 Australian Dollars per import or warehouse declaration. On the other
hand, goods that are imported by air, sea or post of a value more than 10000 Australian Dollars
are perceived at a rate of 152 Australian dollar per import or warehouse declaration.

Customs warehouses

The warehouse licensing system provides companies or individuals that import goods with the
ability to defer the payment of customs duty until they are ready to enter the goods in the
country. The application for this system must contain all the details about the business to be
licensed or the group asking for the license, such as:

 the types of goods that are stored


 proposed activities within the warehouse
 physical security of goods in the warehouse
 electronic systems used to account for goods while under Customs control.

Authorized economic operator

Australia has implemented a program called the Authorized Economic Operator (AEO) which
is the same to Australian Trusted Trader, according to the general provisions of the World
Customs Organization (WCO). In fact, economic operators that apply for AEO status will be
granted advantages of facilitated customs procedures. For example, trusted traders may have
differentiated inspections or receive priority service when requesting rulings on tariffs,
valuation and origin. They will also be allowed to use the Australian Trusted Trader logo and
defer duty payments periodically.
Works cited
1. Kotler, Philip. Armstrong, Gary. “Principles of marketing”, Pearson, 2018
2. Agarwal, S., & Ramaswami, S.N. “Choice of Foreign Market Entry Mode: Impact of
Ownership, Location and Internalization Factors”, Journal of International Business Studies,
vol. 23, no.1, 1-27.
3. Root, F.R, “Entry Strategies for International Markets”, San Francisco: Jossey-Bass, 1994
4. Digital Transformation Agency. “Doing Business with Australia.” Australia.gov.au,
Digital Transformation Agency, 26 July 2016, www.australia.gov.au/information-and-
services/business-and-industry/trade-import-and-export/doing-business-with-australia.
5. “Trade.” European Commission : Market Access Database : madb.europa.eu/.

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