Examine the competition within the dairy processing sector and the entrance of Bauhinia into another industry. Compare the competitive forces of these two industries and evaluate their attractiveness in Hong Kong.
The competitive forces in the dairy and food industry have key differences.
- Potential new entrants. Concerning capital requirements, the dairy industry does require relatively large amounts of capital, compared to specialty food industry, because of strict regulations for hygienic milk processing and packaging.
- Rivalry among existing firms. Compare to dairy industry, the market in specialty food industry is more fragmented and there are many rivals with no dominant firm, in contrast, there are only three dominate company in dairy industry.
- Bargaining power of buyers. Bargaining power of buyers is relatively low in specialty food industry compare to dairy industry, as the switching costs of specialty food is very high as the specialty food is scarcity and difficult to find substitute.
- Threat of substitute products. Threat of substitute products is low in specialty food industry, but in dairy industry is very high.
Comparative attractiveness in Hong Kong
- For food industry: Today Hong Kong consumers put more emphasis on health, and gourmet. The frozen meats, including antelope, ostrich and kangaroo, sourcing from countries such as Australia and South Africa, contain high nutrition value that can attract middle class consumer.
- For dairy industry: Lack of confident in foreign brand: New Zealand “Fonterra” raw milk contamination by Clostridium botulinum. Local people eager to development in the local historical brand: Vita soy and Apollo
