Study On The Development Strategy And The Cost Control Of Orange Juice Processing Industry In China

China is the No. 3 country in the world according to the production of citrus. But farmers of citrus orchard are difficult to sell their production and get good income. And in the same time, China imports a lot of orange juice for domestic market these days. Development of orange juice is the best way to solve the problem. It is beneficial to study on the development strategy and the cost control of orange juice processing industry for the health development of citrus industry in China.Based on the intensive analysis of the connotation of cost and cost management as well as the content of modern cost management, this thesis gave a case study on the industry of orange juice processing in China and its competitors to reveal the problems and contradictions in our orange juice processing industry at first. The thesis further analyzed the competitive environment of orange juice processing in China to establish the generic strategies. Finally, the cost composition of orange juice processing was analyzed and ways to reduce the cost and to improve the competition ability was proposed.Basic conclusions and suggested strategies were as follows:1. Basic conclusions(1) Implementing development strategy of an enterprise often goes with cost control. To obtain competitive advantages, a business could take one of three types of generic strategies: leading cost strategy, diverse strategy and concentration strategy. However, no matter what a business chooses, cost analysis and cost control are always key factors because competitive advantages of an enterprise lie on its relative cost advantages.(2) China has the advantages to develop orange juice processing, however, orange juice industry is closely related with citrus industry and its development is limited by citrus industry. The advantages are as follow: First, China has a wealth of citrus resources and sweet orange can be widely cultivated in China. Second, farmers are experienced at citrus cultivation and the labor cost is lower than that in orange juice processing countries as America. Third, the orange juice market in China and nearby countries are increasing very fast. Finally, institutes and universities in China have the abilities to support the orange juice industry. Yet citrus industry in China has such problems: A, citrus regions are not rational; B, the structure of varieties and their maturation is not rational; C, the chain of citrus industry, is not intact. All these problems hindered the healthy development of orange juice processing industry.(3) China orange juice is now high in cost and low in competition ability. The main reasons are as follows:①Different natural conditions,②The high cost for orange juice processing facilities,③Raw material,④Poor quality control,⑤less invest on research and marketing,⑥no healthy and robust citrus research, education and extending system,⑦supporting policies,⑧concentricity management and operation,⑨high cost on logistics and⑩poor information system.(4) Raw material is the bottle-neck of orange juice processing industry in China. First, the price is too high for: raw material. It is twice than that in America and trice than that in Brazil. Second, the structure of maturation is not rational. It leads to a short processing period and high processing cost. Third, the structure of varieties is not rational. There are too many mandarins and tangerines and less sweet orange, especially sweet orange varieties specialized for processing. Fourth, raw material is not steady.(5) The cost of raw material can not compete with that of Brazil, but it still has space to go down. The cost can be reduced by means as selection of suitable planting areas, planting of superior varieties, improvement of management level, offering more technique support and concentricity management and operation.(6) To survive and develop in the tough competition market, China orange juice processing industry must adopt diverse strategy according to the customers' requirement and reduce the cost of supply chains. The cost of raw material and factors as energy and water can not compete with that of Brazil, China can only survive and develop through providing unique and competitive orange juice product and service for markets of interior and nearby countries.2. Suggested strategies(1) Market orientation of China orange juice: domestic and nearby countries. The orange juice market is increasing rapidly in China. This market can not be satisfied by the domestic orange juice product yet and the gap of requirement and supply is expanding still. And in addition, nearby countries as Russia have an increasing orange juice market also and they cannot produce orange juice themselves. In the same time, aiming at these markets is helpful to reduce the transportation cost. So China has the advantages to occupy these markets. (2) Selection of orange processing forms: Not From Concentrated (NFC). Frozen concentrated orange juice is the dominant type of orange juice still. It is easy to keep and transport. But it has a higher processing cost and less nutrition and flavor. It is not convenient to use also. On the contrary, NFC has a lower processing cost and has good flavor and nutrition and is convenient to consume. Its disadvantage is big volume and difficult to store and transport. But this disadvantage is in favor of our orange juice product to substitute Brazil orange juice. Hence, development of NFC is beneficial to set up dominance of China orange juice.(3) Exploiture and utilization of by-products. In this way, it may increase the integrated use of raw material, reduce the environmental cost and producing cost and thereby enhance the adding value and economical benefit. The ways of exploiture and utilization of by-products including: extraction of effective factors as essential oils, pectin, pigments, edible fiber and flavonoid and producing of bio-products as feed, wine and vinegar et al.(4) Selection of suitable sweet orange cultivars and their cultivation technologies, optimizing cultivation programming and distribution. Sweet orange cultivars of high yield and high quality, especially suitable for NFC juice processing, can help to reduce raw material cost and improve juice quality. Adopting high efficiency and cost saving cultivation technologies, integrated pest and disease management, virus-free container seedling and developing of green food are ways to reduce cost and guarantee quality. Setting up large scale commercial producing base in suitable areas with rational maturation Varieties is an important step also.(5) Reducing the operating cost of processing plant. First, enforcing the management of cost driver, including selection of suitable orange processing forms, designing of effective logistics system, selection of suitable technology scheme and practice of total quality management. Second, creating breaking through culture. Finally, emphasizing innovation.(6) Adjusting industry policy. First, adjusting the structure of citrus industry and increasing sweet orange for processing and reducing mandarins and tangerines. Second, optimizing cultivation programming and distribution. Finally, promoting innovation of producing and management system.(7) Optimizing the operating environment of orange juice processing enterprises. First, boosting free trade agreement with nearby countries. Second, enforcing the surveillance of market. Finally, development of effective transportation system, reducing trading cost and increasing efficiency of resource configuring.