浙江电大商务英语项目设计

Executive Summary

The purpose of this report is looking for reasons and possibilities for setting up a Plug-wrap paper joint venture in China, whose business scope is to offer high-quality plug-wrap paper for cigarette companies in China and abroad. In this report, a study is made on market situation for plug-wrap paper in China and abroad, the potential customers, and the advantages and disadvantages, the benefits, profits, as well as the risks. In this report we also make careful plans over the measures to be taken to affect this project.

Plug-wrap Paper project

Introduction

Currently the plug-wrap paper in the domestic market is mainly medium and low-grade products mainly for the production of third to fifth categories of cigarettes. Such paper accounts for around 80%. The quantity of high grade plug-wrap paper is still very small. With the development of national economy and the increase of living standard of the people, the topic of smoking and health will increasingly call the attention of people. It has already formed an irreversible trend in China to smoke cigarettes of low contents of tar. The portion of high grade cigarette is continuously increasing and medium and low grade cigarettes will gradually decrease. However, the domestically produced high grade plug-warp cannot compete with foreign products. If high grade plug-wrap paper production line of international level cannot be established soon to manufacture products which reach the indices of their international counterparts, the majority of plug-wrap paper of such grade will have to rely on imports. It is estimated that by the year of 2010, the market gap for high grade plug-wrap paper will be over 35,000 tons.

This project will mainly produce and do the business of plug-wrap paper and products in the same series. Produce high quality plug-wrap paper suitable for medium and high grade cigarettes with medium to low contents of tar by introducing foreign advanced equipments and technology. The annual output shall reach 3,500 tons for the first stage.

The total investment of the project is USD10.375 million, equivalent to RMB 80.3058 million (at the exchange rate of 1:7.74 also applicable below). The registered capital

is USD 7.7 million (equivalent to RMB 59.598 million), which accounts for 74.216% of the total investment.

The contributed capital will be used to buy hardware and software, and the balance shall be financed by the loans from the local banks. After the project is established, the annual sales revenue will be RMB141.92 million, and the annual profit will be RMB 37.816 million. The payback period will be 3.24 years.

Finding

1. Opportunities

● At this moment, the domestically produced high grade plug-warp paper cannot

compete with foreign products

● It is estimated that by the year of 2010, the market gap for high grade plug-wrap

paper will be over 35,000 tons.

● With the development of national economy and the increase of living standard of

the people, the topic of smoking and health will increasingly call the attention of people, thus, high grade plug-warp paper will be prevail in China market.

2. Strengths

● The foreign party of Robert UK has a history of more than 80 years involve with

this business, it has abundance knowledge and experience with plug-wrap paper manufacturing. It can provide with all know-how technique and various training with potential employees.

● The Chinese party of Minfeng Group also has a history of special paper making,

it has various sales channel with many cigarette factories here in China market.

3. New premises

After investigation and comparison, we choose the site within the Industrial zone of

Xiucheng District, Jiaxing.

The Industrial Zone is located at the side of the East Wai Huan Road of Jiaxing and is connected to Shanghai-Hangzhou highway. The No.320 National Road passes the Zone. The exit of Jiaxing part of Zha Jia Shu Highway is near to the Zone. It is only 5 kilometers away from Shanghai-Hangzhou Railway double tracking, and only ,more than 20 kilometers away from the 50,000 tons level Zha Pu Port. And there’s 500-ton level inland navigation within the Zone. The supply of water, electricity and gas as well as wastewater concentration treatment facilities are complete.

4. Equipment and Technology

Advanced equipment and technology will be introduced from abroad in order to produce high quality and internationally first-class plug-wrap paper.

It is planned that printing machine will be imported from Cerutti, an Italian company.

It is planned that the cutting and packing equipment will be imported from Germany.

It is recognized that the production of high grade plug-wrap paper is a deep processing industry of base paper and professional technology and management will have an important influence in producing such high quality products and achieving good economic benefits.

The main parameters are as follows: the width of the printing machine is 900mm, the working speed is 450 meters per minute, the grammage is 30g/m2~40g/m2 and the annual output is 3,500 tons.

5. Environmental Protection

This project will be established within the Xiucheng Industrial Zone. It is s brand-new

modern enterprise. It uses base paper as raw material. Except for the discharge of very little waste gas, which completely con form to “ the Comprehensive Discharge Standard of Atmosphere Pollutants of PRC” and the environmental protection requirement of Jiaxing Industrail Zone, there is not any other pollution. Therefore, the good environment conditions around the factory will be maintained.

6. Cost breakdown

Initial costs:

Land: it is tentatively planned that 30,000 square meters will be purchased and it is approximately RMB150 per square meter. Thus, it will be:

RMB4,500,000

Factory building:

Workshop and warehouse RMB4,000,000

Office building RMB2,000,000

Subtotal: RMB6,000,000

Equipment: RMB46,485,800

Imported equipment: RMB43,885,800

Domestic supporting equipment: RMB2,200,000

Environment protection equipment: RMB400,000

Training:

Employee training budget RMB800,000

Promotion and opening ceremony budget: RMB500,000

Technology know-how transfer budget: RMB11,580,000

Recurrent Costs:

Employees wage& social benefits RMB2,940,000

Overhead & Organization expenses RMB6,000,000

Water & Electricity supply RMB1,500,000

Total Cost: RMB80,305,800

7. Benefits:

The sales revenue in the normal production year may reach RMB141.92 million( tax inclusive) and the sales profit may reach RMB51.38 million.

8. Schedule

The project will start one week after it is approved by BOD meeting and ICBC, the budget is made available. It will take approximately one year to finish this project.

9. Risk management

Before putting the plan into practice, the management finds that the following problems might affect the successful completion of the project. These problems, also called risks, generally fall into three categories.

● People –related

Minfeng’s salesman may not good at selling plug-warp paper, as it’s totally a new product for them.

Even some of our staff to be trained in UK headquarters, in such a short time, it’s difficult for them to familiar with technical problems

● Time-related

Our current project schedule is one year, during this period some other two foreign-owned investment will be set up in other part of China to involve this business. So, we are really running against time to penetrate local market as soon as possible.

● Product –related

The loan may not be obtained from local bank

Our plug-wrap paper may not competitive with imported products in early stage, the new products may not cater to the interests of local customer.

Since its impossible to eradicate all these risks, the management thinks following

measures are necessary.

● Set up own sales team, and employ qualified and experienced salesman from our

counterparts

Employing qualified and experienced technician from our counterparts; send specialist from Robert UK for on-site consultation.

● Expedite all procedures and shorten the project period, try all our best to laugh

new product in China market.

● Carry out market research among target customers to improve the popularity of

our new product.

After the risk analysis, management thinks three more items should be added to the total costs:

● Public relation RMB200,000/Year

● Market research & Products promotion RMB300,000/Year

● Contingency allowance 1% of the annual profit

Conclusion:

It can be seen from the foregoing analysis that all the indices of the project are relatively desirable, as long as no efforts are spared, the desired goals can certainly be achieved and surpassed.

Hence, I take the honour to call on both parties to discuss with detailed planning for this project as soon as possible here.

Appendix A：Process Reports

A.1. Analysis of the Business

Process Report 1

Name ： Tutor ： Title: Analysis of the Business Score (不计分)

Currently the plug-wrap paper in the domestic market is mainly medium and low-grade products mainly for the production of third to fifth categories of cigarettes. Such paper accounts for around 80%. The quantity of high grade plug-wrap paper is still very small. With the development of national economy and the increase of living standard of the people, the topic of smoking and health will increasingly call the attention of people. It has already formed an irreversible trend in China to smoke cigarettes of low contents of tar. The portion of high grade cigarette is continuously increasing and medium and low grade cigarettes will gradually decrease. However, the domestically produced high grade plug-warp cannot compete with foreign products. If high grade plug-wrap paper production line of international level cannot be established soon to manufacture products which reach the indices of their international counterparts, the majority of plug-wrap paper of such grade will have to rely on imports. It is estimated that by the year of 2010, the market gap for high grade plug-wrap paper will be over 35,000 tons.

This project will mainly produce and do the business of plug-wrap paper and products in the same series. Produce high quality plug-wrap paper suitable for medium and high grade cigarettes with medium to low contents of tar by introducing foreign advanced equipments and technology. The annual output shall reach 3,500 tons for the first stage.

After investigation and comparison, we choose the site within the Industrial zone of

Xiucheng District, Jiaxing.

The Industrial Zone is located at the side of the East Wai Huan Road of Jiaxing and is connected to Shanghai-Hangzhou highway. The No.320 National Road passes the Zone. The exit of Jiaxing part of Zha Jia Shu Highway is near to the Zone. It is only 5 kilometers away from Shanghai-Hangzhou Railway double tracking, and only ,more than 20 kilometers away from the 50,000 tons level Zha Pu Port. And there’s 500-ton level inland navigation within the Zone. The supply of water, electricity and gas as well as wastewater concentration treatment facilities are complete.

The total investment of the project is USD10.375 million, equivalent to RMB 80.3058 million (at the exchange rate of 1:7.74 also applicable below). The registered capital is USD 7.7 million (equivalent to RMB 59.598 million), which accounts for 74.216% of the total investment.

The contributed capital will be used to buy hardware and software, and the balance shall be financed by the loans from the local banks. After the project is established, the annual sales revenue will be RMB141.92 million, and the annual profit will be RMB 37.816 million. The payback period will be 3.24 years.

A.2. Customer Profile

Process Report 2

Name ： Tutor ：Title: Customer Profile Score: _______________

The majority of the customers of this project should be all cigarette factories in China market, especially those 36 biggest ones under the Chinese State Tobacco Monopoly(STMA). Meanwhile, some oversea market, i.e. some South-east Asia countries and Middle-east countries will also be focused.

With some preliminary would-be customer contact and market evaluation, we believe Shanghai and Zhejiang Tobacco Group shall be our local market priority. This is not only because of its large consumption volume, but also relative big margin for us, plus its reputation in China market, it have to our first and best choice in early stage.

As for oversea market, initial market evaluation tell us, the Pakistan market will be our main concern in early stage, this is largely due to its market concentration and most favorable price level.

A.3. Focus Group Report

Process Report 3

Name ： Tutor ：Title: Focus Group Report Score: _______________

To get a clearer idea of the views and opinions of customer, three focus groups were organized, the focus groups were as follows: ● 3 potential customers from China market ● 4 potential customers from Oversea market ● 3 already contacted sales agents in this field

It was felt that each of there categories of customers might have different expectations, views and needs, so separate focus group would be desirable. A basic list of questions was prepared, but the discussions with each focus group were allowed to be free and open.

Questions

● How many tons of plug-wrap paper will be consumed annually?

● Where do you get those plug-wrap paper from at this moment? What about

the price level?

● Do you find those plug-wrap paper in line with your requirement? Any

problems in production running? What are they? ● What do you think of our current quotation?

● What about current lead time with your supplier?

The response to the questions were positive and constructive for our plug-wrap project Complaints

● In production peak season, always find plug-wrap paper supplying behind

schedule

● Due to long time sea-shipment, lead time always to be disappointing ● High cost itself plus import duty, made imported plug-wrap paper on high

price level

Suggestion:

● Local customers need suppliers who can provide plug-wrap paper with

relative low price

● Local customers need a short lead time

● Local customers need a reliable plug-wrap supplier who can ensure a smooth

supplying in its peak season.

A.4. SWOT Analysis

Process Report 4

Name ： Tutor ： Title: SWOT Analysis Score: _______________

SMART 原

语言结构及时完成

阶段报告 SWOT 分析 分值比例10%

则50%

40%

10%

成绩总计

Strengths

● The foreign party of Robert UK has a history of more than 80 years

involving with this business, it has abundance knowledge and experience with plug-wrap paper manufacturing. It can provide with all know-how technique and various training with potential employees.

● The Chinese party of Minfeng Group also has a history of special paper

making, it has various sales channels with many cigarette factories here in China market.

Weaknesses

● The project itself is a huge investment

● The construction of factory building and equipment installation and

commission will need at least one year. During this period, no inflow cash at all!

● For time and time, we need Robert UK send out its experts here to help us

with technical issues if needed, due to the high expense, it will cost us lots of limited capitals.

Opportunities

●

At this moment, the domestically produced high grade plug-warp paper cannot compete with foreign products

● It is estimated that by the year of 2010, the market gap for high grade

plug-wrap paper will be over 35,000 tons.

● With the development of national economy and the increase of living

standard of the people, the topic of smoking and health will increasingly call the attention of people, thus, high grade plug-warp paper will be prevail in China market.

Threats

● Foreign made plug-wrap paper has a high quality and will impose a big threat

to our market exploration here.

● Despite the fact that high grade plug-wrap paper consumption is increasing

year on year, overall percentage is not very high yet.

● With China becomes a whole member of WTO, import duties with all kinds

of paper will be lower and lower.

A.5. Action Plan and Activity Chart

Process Report 5

Name ： Tutor ：Title: Action Plan and Activity Chart Score: _______________

Action Plan

It will take a year to implement the project when it has been approved. By the end of Month One

● Finish market investigation and draft feasibility study report to BOD. ● Organize first BOD meeting to discuss with project detail ● Set up organization team

● Preparation with all JV legal registration.

By the end of Month Two

● Design the new factory layout

● Factory layout be approved by BOD

● Factory layout be approved by local Fire Alarm and Protection Bureau ● Bidding for factory building contractor and sign the contract

By the end of Month Three

● Ground pillar driving and leveling ● Ground level building begin

● Underground solvent tank building ● Bidding for steel structure contractor

By the end of Month Four

● Factory building half finished, ● steel structure begin

● Bidding for equipment installation contractor and sign contract. ● Bidding for fire alarm system contractor

By the end of Month Five ● Factory building finished ● Steel structure finished

● Circling fence building, grass and trees planting ● Road lamp installation

● Equipment installation begin

● Heating and ventilation system begin ● Fire alarm system installation begin ● Building inner decoration begin

By the end of Month Six

● Equipment installation finished

● Heating and ventilation system finished

● ● Building inner decoration finished

By the end of Month Seven

● Interviewing with potential employees ● Training with employees

●

By the end of Month Eight

● Final acceptance with factory building

● Production approval with local Fire Alarm and Protection Bureau

● Environment protection acceptance with local Environment Protection

Bureau

By the end of Month Nine

● Equipment commissioning and production trial

● Final acceptance with relevant equipment installation

By the end of Month Ten

● On-site training with employees ● Production trial continues

● Locating and screening with all raw materials

By the end of Month Eleven ● Potential customer visiting

● Products promotion in local market ● Sample making for some customer

● Sales contract signing with some customer

By the end of Month Twelve

● Official opening ceremony of JV ● Production for customer

A.6. Costing

Process Report 6

Name ： Tutor ： Title: Costing Score: (不计分)

Cost breakdown

Initial costs:

Land: it is tentatively planned that 30,000 square meters will be purchased and it is approximately RMB150 per square meter. Thus, it will be: RMB4,500,000 Factory building:

Workshop and warehouse RMB4,000,000 Office building RMB2,000,000 Subtotal: RMB6,000,000 Equipment: RMB46,485,800

Imported equipment: RMB43,885,800 Domestic supporting equipment: RMB2,200,000 Environment protection equipment: RMB400,000

Training:

Employee training budget RMB800,000

Promotion and opening ceremony budget: RMB500,000 Technology know-how transfer budget: RMB11,580,000 Recurrent Costs:

Employees wage& social benefits RMB2,940,000 Overhead & Organization expenses RMB6,000,000 Water & Electricity supply RMB1,500,000 Total Cost: RMB80,305,800

A.7. Risk Analysis and Management

Process Report 7

Name ： Tutor ： Title: Risk Analysis and Management Score: _______________

Before putting the plan into practice, the management finds that the following problems might affect the successful completion of the project. These problems, also called risks, generally fall into three categories. ● People –related

Min feng’s salesman may not good at selling plug-warp paper, as it’s totally a new product for them.

Even some of our staff to be trained in UK headquarters, in such a short time, it’s difficult for them to familiar with technical problems ● Time-related

foreign-owned investment will be set up in other part of China to involve this business. So, we are really running against time to penetrate local market as soon as possible. ● Product –related

The loan may not be obtained from local bank

Our plug-wrap paper may not competitive with imported products in early stage, the new products may not cater to the interests of local customer.

Since it’s impossible to eradicate all these risks, the man agement thinks following measures are necessary.

● Set up own sales team, and employ qualified and experienced salesman from

our counterparts

Employing qualified and experienced technician from our counterparts; send specialist from Robert UK for on-site consultation.

● Expedite all procedures and shorten the project period, try all our best to

launch new product in China market.

● Carry out market research among target customers to improve the popularity

of our new product.

After the risk analysis, management thinks three more items should be added to the total costs:

● Public relation RMB200,000/Year ● Market research & Products promotion RMB300,000/Year ● Contingency allowance 1% of the annual profit

A.8. The Project Framework

Process Report 8

Name ： Tutor ：Title: The Project Framework Score: _______________