Risk Management of Korean Food & Beverage Enterprises Entering China

Abstract

Due to severe competition in the domestic market, many Korean Food and Beverage (F&B) firms have been notably going to China since 2010. But their business performance is quite different as some have been very successful with hundreds of stores in China, while a well-known business has gone bankrupt after three years of aggressive marketing. This study aims to identify significant risks to F&B enterprises going into the Chinese market and to analyze risk management strategies with respect to ERM (Enterprise Risk Management) framework. Findings reveal that relevant functions of every F&B business include production, distribution, labor management, financial accounting, R&D, operation management, design, interior, marketing among others. Successful risk management for every F&B business entering China is a real challenge and each firm needs to cover diverse risks in these relevant functions as a whole. If they fail to study the Chinese market beforehand and in the absence of a good marketing system, specific business target, business planning as well as poor financial, human resource and supply chain management in China, then they are bound to fail.