Pamantasan ng Lungsod ng Maynila

(University of the City of Manila)

Graduate School of Business and Government Management

ASIA FOOD IMPORTERS

OF AMERICA

Presented to:
Dean Gamus

Presented by:
Alfonso, Kathrina Micah D.
Menia, Julia Flor Angelie G.
Olalia, Jhane S.

January 18, 2020

Synopsis:

Asian Food Importers of America was a Francisco firm specializing in the import,
distribution and wholesaling of foods from Asia Pacific countries. It employed about 50
people in its San Francisco Head Office, and branches were located in several Asian
cities, including Seoul, Hong Kong, Taipei, Bangkok and Jakarta. United States offices
were located in several cities including New York, Chicago and Los Angeles. There was
also a Canadian Office in Vancouver and plans were in place to open another office in
Toronto to serve the large Asian Market there. In early February 1988, David Chan who
operated the Canadian arm of the business out of Vancouver, British Columbia,
overheard that it would be prudent to balance the company’s risks and vulnerability by
being both an exporter and an importer. And with that he had become convinced that
exporting Canadian Honey to South Korea was a great opportunity.

Honey is a sweet, sticky substance made by honeybees from then nectar of flowers.
According to a recent market research survey, almost 80% of Americans claim to be user
of honey. The two forms of honey, liquid and solid, do not differ in content. The flavor of
the honey depends on the flowers from which the honeybees collect nectar. For instance,
honey from alfalfa and clover is golden-colored, with a light smell and taste; bucket wheat
honey is dark-chocolate colored and has a very strong smell. Honey from different flowers
can be mixed to get special characteristics. In addition, flavors such as strawberry or
cream can be added to honey. There were four grades of Canadian Honey,
unimaginatively labelled No.1, No.2, No.3, and No.4 with No.1 honey being the highest
quality. The grade depends on the honey’s color, smell, taste, water content, total sugar
content, amount of crystallization, stickiness, and so on.

When they first considered exporting honey to Korea, David Chan’s group outlined the
firm’s strengths and weaknesses. First, Asian Food was in a strong financial position.
Second, the company’s experience in dealing with Asian food concerns had given them
“connections” in most Asia countries. Finally, there was already an existing infrastructure
to ensure the efficient movement of food products. Particular importance were the
shipping, customs brokerage, and telecommunications networks. And these strengths
were balanced by two serious weaknesses. First, the company had no experience
exporting to Korea and second, Asian food was a trading house-the middleman-not the
producer.

Korean Culture traditionally regard honey, not as a food but as a medicinal substance. It
is thought to be both source of vigor and a “miracle medicine” that sustains good health.
For instance, honey is used after medical operations to speed recovery. Diluted with hot
water, it is said to cure a hangover. Although western medicine has not demonstrated
that it has any curative or preventive properties, Koreans maintain that honey is an
invaluable instrument of preventive medicine.

At the end of 1987, however a trade surplus, coupled with political pressure from the
outside (notably U.S), prompted the Korean government to relax certain import
restrictions. As a result, honey imports were allowed, but for hotel use only and imported
honey was required to have a sugar content of at least 78%, higher than the 76% required
for the domestic product. The consultant hired by David Chan reported that Korean
consumer groups were complaining that the price of the honey was too high. Indications
were that import restrictions on honey would be relaxed soon. The consultant also
expected that eventually the government would eliminate the protection of domestic
honey production, since honey was not the main source of income for honey farmers, and
they were relatively inefficient.

Michael Chan, Gerald Tang and Bonita Woo had all agreed that the Korean honey market
was worthy of further investigation. Consequently, David Chan developed a Marketing
Plan with four (4) phases. The first phase will deal with current situation, where they can
only import honey for use in hotels under current import regulations. They need to develop
a goodwill with the government and gain a foothold in the Korean market. The second
phase will go into action when the Korean government opens the honey market and
relaxes import restrictions. The main strategy is to build sales in the medicine market. The
third phase will come into effect when the consumers’ attitude towards honey change.
The main strategy is to hold and maintain the medicine market segment and to build the
food market segment. And the fourth phase will be reached when the abundance of honey
turns it into commodity. At this point, this strategy is to hold and maintain profits.

TIME CONTEXT: February 1988

SWOT ANALYSIS (Table Format
STRENGTHS
 Asian Food Importers of America is best known in importing Asian Foods in North
America.
 Asian Food Importers of America has an extensive network in Asia.
 The reputation of AFIA’s Canadian Honey is already established in the American
Market.
 AFIA’s Canadian Honey is very popular in Korea as a gift.
 There is already an existing infrastructure in place in Seoul, Korea to ensure the
efficient movement of Food Products.
 Variety of Canadian Honey
 In High quality specifications Canadian Honey is superior to Korean Honey
 Asian Food Importers was in a strong financial position, with a retained earnings
of several million dollars.
 Canadian Honey had a price advantage.
 Beestar**

WEAKNESSES
 Asian Food Importers of America had no experience in exporting goods in South
Korea.
 Honey was regard as a “medicine” in the Korean Culture instead of food.
 Asian Food Importers of America was a trading house – the middleman and not
the producer.
 The price of the Canadian Honey was too high or expensive.
 The Canadian Honey cannot be sold in a local supermarket.

OPPORTUNITIES
 Exportation of Canadian Honey to South Korea
 There was a current demand of Honey in South Korea
 The Korean Government has an intention to open up 40% of the market in several
countries including Canada within two (2) years.
 In Korea, Beekeeping was rarely a farmer’s primary occupation.
 Korean’s Expenditure for medical and health-related goods increased.

THREATS
 In Korea, Honey can only be imported for Hotel use.
 Other Foreign Competitors might see the same opportunity.
 The tariff rate is unknown and only to be determined once the Korean Government
is open for importation.
 Aside from the foreign competitors there are also several Local Companies that
may compete.