In the post-epidemic era, as more and more countries resume work and production, the redeployment of medical consumables in various countries has begun to start. The greater emphasis on local manufacturing to ensure the demand of the domestic market in an emergency has brought more severe challenges to the export situation of Made in China than before the epidemic. C Foreign Trade Company began to export medical consumables in 2006, and Pakistan became its first stop in the international market.
1. Basic information of C foreign trade company
Company C was established in Chengdu, Sichuan Province in 1987 and is an earlier state-owned professional foreign trade company established in the province. Over the years, the company has long provided high-quality imported testing, testing instruments, medical treatment and complete sets of equipment for local departments, scientific research institutes, hospitals, colleges and universities, and production enterprises, and is the first batch of key foreign trade comprehensive service enterprises cultivated in Sichuan Province.
At the same time, Company C paid attention to the industrialization road of combining industry and trade at the beginning of its establishment. In 1989, it established a joint venture with Japanese enterprises to process Chinese medicinal materials, engaged in the planting, processing and sales of medicinal materials. The introduction of advanced testing equipment and crude drug management standards has provided the market with high standards of Chinese medicinal materials. In 1993, a plant extract production plant was established with a Japanese company.
By establishing a complete product quality management system, the joint venture plant is committed to the development and production of natural plant extracts, which are mainly used as raw materials for pharmaceuticals, cosmetics and dietary supplements. In 1993, it established a joint venture with Singapore enterprises to provide small packages of edible oil to the market.
Relying on the early national foreign trade policy dividend. Company C completed the capital accumulation in the early stage by exporting medicinal products and plant extracts, and gradually formed a comprehensive import and export trading company focusing on self-export business and combining import and export business.
The advantages that Company C has established in the past on the supply side and the demand side are gradually eroding. Considering the fit with the industry, the company's management encourages salesmen to actively develop medical products such as medical consumables as new product categories, and use domestic and foreign exhibitions, such as traditional Canton Fair and other trade platforms to find new breakthroughs for business development.
Company C has 95 employees, including office, financial department, storage and transportation document department comprehensive functional departments and 8 business departments. Each business unit is responsible for different categories of products to export, and the annual export value varies greatly between departments.
Although the department engaged in the export of medical consumables has been working since 2007, because the company's area is not a concentrated area of medical consumables, the early supply chain construction is slow, mainly due to the cautious recruitment of human resources, until 2015, the sales team for the export of medical consumables began to be built.
2. Business introduction of C foreign trade company
(1) Business structure
Company C's main export business consists of plant extracts and frozen fruits. In addition, medical consumables, Chinese medicinal materials, spicy seasonings, and household appliances accounted for part of the share. From 2017 to 2021, the company's average annual total export volume was 23.75 million US dollars, and the overall fluctuation was not large.
In 2020, most industries were severely affected by the pandemic. However, the epidemic prevention materials and medical consumables provided by Company C rose sharply driven by strong demand in the market, making up for the decline in other businesses, making the annual export peak of 28.06 million US dollars.
However, through comparison, although the export volume of medical consumables in the past five years has steadily increased, the overall proportion still has a lot of room for improvement. The market involved in consumables has gradually extended from South Asian countries such as Pakistan and Bangladesh to the Middle East and South American countries, and the scope of coverage has expanded.
However, the overall characteristics of orders show a fragmented state, which confirms the current characteristics of customer acquisition through cross-border e-commerce channels, and its composition ratio is more from small-scale dealers close to the terminal.
(2) Main financial indicators
Key financial indicators for Company C 2017-2021. In the past five years, the sales profit margin and return on net assets have been improving year by year, reflecting the company's sustained and stable profitability, and the asset-liability ratio has been maintained at a level of less than 30%, and the low-debt operation reflects the consistent and steady style of Company C in business selection.
Low debt risk, more than 200 million registered capital, and stable cash flow ensure that Company C provides timely payment to domestic suppliers. The credit from the bank further boosted the expansion of Company C's import business and won a good evaluation for Company C in the industry.
(3) Business development direction
Company C clearly put forward the direction of business development in the new five-year plan. On the basis of consolidating traditional business segments, focusing on the main business, we will make every effort to build the company into a comprehensive service trade platform.
On the one hand, we will continue to promote the market development of the traditional business of plant extracts, frozen fruits, and medical consumables. Since the outbreak of the new crown epidemic, vegetable extracts and frozen fruits have been greatly affected, and exports have declined to a large extent in 2020, for the above two types of products, Company C will focus on maintaining existing customers in the future.
Through a variety of ways and means to consolidate the foundation of cooperation between the two sides, overcome the communication difficulties caused by the epidemic, the impact of rising raw material prices and the inconvenience caused by transportation, and strive to maintain the company's basic plan. For the market expansion of medical consumables, Company C will devote more resources to adopt a more active approach in market development.
On the other hand, after more than 30 years of precipitation in the foreign trade industry, Company C has accumulated a wealth of foreign high-quality suppliers, especially in the field of medicine and health products. Among the large customers with stable cooperation, there are industry leaders from Japanese Kampo Medicine, leaders in functional foods, and giants in the food and health products industry in Europe and the United States.
Environmental analysis of Pakistan
3.1 Economic Environment
As a developing country with a population of 220 million, Pakistan ranks fifth in the world in terms of population and 18th in the world with a land area of 796,000 square kilometers. The national economy is mainly agriculture, the degree of industrialization is low, the cotton textile industry is the largest sector of Pakistani industry, and other key industries are fertilizer, cement, leather and sugar. Over the past decade, Pakistan's economic structure has gradually changed from agriculture-based to service-based.
Pakistan's GDP in 2020 was US$263.6 billion, or US$1,193 per capita, making it a low-middle-income country. Pakistan's GDP reached US$314.5 billion in 2018, but it shrank significantly in 2019, and the new crown epidemic in 2020 put the Pakistani economy in trouble, and the supply and demand side of major domestic industries were hit hard, highlighting issues such as unemployment and inflation.
Local fiscal incentives and credit subsidies have curbed the further decline of some pillar industries. Pakistan's economy has maintained growth over the past decade. In order to improve the business environment, upgrade the backward infrastructure in China, and promote the construction of major projects in the field of economy and people's livelihood, Pakistan's public debt as a proportion of GDP has continued to rise in recent years, and it is highly dependent on international aid and loans.
In 2020, Pakistan's public debt rose further as Pakistan's public debt reached US$182.6 billion, or 69% of GDP, in response to the impact of the pandemic. In terms of trade, Pakistan's top five trading partners are China, Saudi Arabia, the United Arab Emirates, Kuwait and the United States. China has also been Pakistan's largest source of investment and largest trading partner for many consecutive years.
Pakistan's exports are small, mainly concentrated in textiles, rice, leather products and petroleum products, which account for more than 80% of Pakistan's total exports. Imported products mainly include machinery, means of transportation, chemical products, vegetable oils and fats.
3.2 Technical Environment
Pakistan's industry is underdeveloped, the medical industry is very undeveloped, and the overall medical care is also at a low level. Relative to its large population base, the overall number of hospitals is very lacking.
Pakistan's self-produced medical products are also extremely limited, concentrated in surgical medical devices. More than 90% of the world's surgical instruments are produced in Pakistan, with a total transaction value of more than $1.8 billion. Production enterprises are mainly located in the northeastern city of Sialkot.
Most of these enterprises are export-oriented export-oriented enterprises, the first major export market is the United States, followed by Germany, there are not many Brazilian surgical instrument companies entering the Chinese market, which is just in its infancy.
Poor infrastructure is the main reason for the uneven development of Pakistan's medical product production industry.
Serious power shortage affects the production schedule, and enterprises cannot deliver on time, making domestic medical devices in short supply. Forcing most importers to seek to import medical products from Chinese mainland, Taiwan and other places.
Pakistan has similar requirements for the management of imported medical devices as China: record-filing management for Class I medical devices and registration management for Class II and Class III medical devices. It stipulates that overseas manufacturers exporting Class II and Class III medical devices to Pakistan shall have their representative offices established in Pakistan or designated domestic enterprise legal persons as agents to submit relevant application materials required for registration to the Brazilian drug administration department (DRAP).
It is necessary to do a good job in the background investigation of the agent in the early stage, that is, whether the agent has the ability to complete the sales target of the production enterprise after completing the registration work, and ultimately bring substantial benefits to the enterprise. In order to enter the Pakistani market, Chinese enterprises blindly choose agents and miss agents with real sales capabilities.
summary
Risks that Company C needs to be aware of in developing Pakistan's medical consumables market: Economically, Pakistan's economy has been growing over the past two decades. However, in 2020, due to the new crown epidemic, the economy fell into trouble, the supply and demand side of major domestic industries were hit hard, and the proportion of public debt expanded. In economic dealings with Pakistani customers, it is necessary to be vigilant against the risk of potential default.
In terms of science and technology, Pakistan's science and technology are underdeveloped, and the overall medical care is at a low level. Limited by infrastructure, the medical products that Pakistan can produce are single, most of which rely on imports, and Company C is full of opportunities. Under the current situation of "can't go out, can't come in", the company's use of cross-border e-commerce platforms and social media for marketing should continue to strengthen, create more platforms for sales personnel, and at the same time play the purpose of training talents and reserve talents.