Comparative Reaearch On Overseas Milk Powder Procurement Strategy Of Chinese Dairy Enterprises Considering Import Tariffs And Government Subsidies

With the increasing standard of living of the Chinese people and the pursuit of consumer quality,imported milk powder began to become the choice of more and more people,the frequent occurrence of safety incidents in domestic dairy enterprises,but also accelerated the pace of imported milk powder into the Chinese market,the share of domestic dairy enterprises continue to be impacted.Therefore,facing the double pressure of declining demand and tightening regulation,domestic dairy companies have come out of the country and started to make efforts in the imported milk powder segment.New Zealand’s unique industrial advantages and friendly policies make it a preferred target for domestic dairy enterprises,while the choice of sourcing strategy is also important for domestic dairy enterprises.In summary,this paper explores the supply chain procurement strategy based on the perspective of Chinese dairy enterprises’ sourcing in overseas target countries.Firstly,the literature related to supply chain sourcing,import tariffs and government subsidies is analyzed and sorted out to determine the methodological dimensions and theoretical basis.Secondly,based on the premise of "zero-tax rate" policy of overseas target countries,the preferential import tariffs and incentive subsidies of overseas target countries are considered as parameters in the model function,and the overseas milk powder procurement strategy of domestic dairy enterprises is discussed in three parts.In the first part,the "milk powder raw material procurement" strategy of procurement of milk sources and finding dairy processors to process the products is discussed.Based on the Cournot model,a supply chain model is constructed to analyze and obtain the optimal decisions of each supply chain member under this procurement strategy based on the profit maximization objective of Chinese dairy enterprises,and the impact of changes in relevant factors on the supply chain is discussed,it is found that the decrease in import tariffs and the increase in subsidies both bring positive effects to the Chinese dairy enterprises.In the second part,we study the "direct sourcing of milk powder" strategy of purchasing finished milk powder directly from dairy processors,and construct a supply chain model based on the assumptions,and analyze the impact of changes in relevant factors on multinational supply chains by solving for the optimal decision of each member in the supply chain,we find that the decrease in import tariffs and the increase in subsidies will still bring positive effects to Chinese dairy enterprises.Based on the previous study on two different procurement strategies,in the third part,the two procurement strategies are compared and analyzed under the premise of profit maximization for Chinese dairy enterprises to explore the impact of changes in the Chinese market on the choice of procurement strategy when the overseas target markets are stable.The results show that when the relative market size in China is small or large,Chinese dairy companies will gain more profit by using the "direct sourcing of milk powder" strategy,while when the market size in China is approaching but not exceeding that of the overseas target country,the "milk powder raw material procurement" strategy is more effective,and the results are simulated numerically.The simulations show that Chinese dairy companies are more profitable under the "direct sourcing of milk powder" strategy when the relative market size in China is small and large,and that the "milk powder raw material procurement" strategy is more profitable for Chinese dairy companies when the market size in China is approaching but not exceeding that of the overseas target market,which validates the results of the comparison.