1. what are the differences between direct exporting and a joint venture? why do u think bayu gagah chose direct exporting when it first entered a new market but later shifted to a joint venture mode

1.0 Introduction "We are a small company, with a big dream" - Hisham Yusoff, CEO, Bayu Gagah. Mr Hisham always believed that his firm was like a tiny seed and that in order to grow stronger, it needed to be dropped in dirt, be covered in darkness and struggle to reach the light. Bayu Gagah is one of the most successful Small or Medium Enterprises (SME) in the northern part of Kedah. It started with a small farm located at Kodiang, Kedah and later on, he managed to establish a joint venture with a few fellow beekeepers nationwide. Soon after that, they started to commercialize their products internationally. As well as that, Mr Hisham had a long-standing dream to penetrate more foreign markets, especially in Western countries. He always thought that "if we don't act now, others will, and we will miss the opportunity to be among the best in the premium exotic stingless bee honey market in the world". He did a great deal of research on how to expand his businesses; he joined a programme with the Malaysia External Trade Development Corporation (MATRADE) for the purpose of international networking; and he went to entrepreneur seminars to gain more knowledge on foreign markets. All in all, he never gave up searching for the opportunity to introduce his products in more foreign countries, In October 2021. Mr Hisham proudly announced in his social media that their small firm had now penetrated the United States. He was very excited when he received this good news from MATRADE in New York. Their product now arrives safely in New Jersey, USA. He was this finding the MoA diligently promotes the benefits of consistently consuming stingless bee honey at the Food and Agriculture Organisation of the United Nations and other venues worldwide "We will ask for assistance from MARDI to conduct research and development studies so that we have scientific testimonials and clinical evidence of the nutritional value of this stingless bee honey." "Besides that, we also need a good system in matters such as standard grading, packaging and labeling in order to represent Malaysia." said the Agriculture and Agro-based Industry Minister, Datuk Seri Ahmad Shabery Cheek. After many meetings with the Malaysian Agriculture Research and Development Institute (MARDI) and other local government authorities, Mr Hisham decided to start the enterprise. After one month of operating with an initial capital of RM50,000, Bayu Kelulut successfully placed 110 hive boxes from two different species (Trigona Itama and Trigona Torasica), Bayu Kelulut was also awarded the title "guided farm (Ladang Bimbingan) from the Malaysian Agriculture Research and Development Institute (MARDI): The farm was set a target of 500 hive boxes in 2016, and it met the target. The farm started to diversify into skincare and personal care products once the production of trigona honey had sufficiently increased. Bayu Kelulut also intended to establish the farm as an agro-tourism site with a network control system and technology such as having a closed circuit TV (CCTV) camera system that can monitor and assess the areas surrounding the farm to check the movement of the stingless bees. Bayu Kelulut's goal is to establish Bayu Kelulut honey as a leading brand globally with the best quality honey, and in the meantime, to provide more job opportunities for locals and raise the living standards of the surrounding community. In November 2016, Bayu Kelulut managed to turn from an enterprise company into a Sdn Bhd. Mr Hisham always has in mind that if I want to move further. I cannot only own an enterprise company. I need to move to the next level.I want to go global". Later, Mr Hisham happened to meet one Kedahan man, Mr Nasir Zain, who settled down in Sarawak. Mt Nasir, the owner of Serapi Bayu Sdn Bhd owns a farm in Sarawak and had enough facilities to run another farm that he would set up with Mr Hisham. Later Mr Hisham and Mr Nasir decided to set up a honeybee farm in Kuching, Sarawak. Then they opened a company called Terapi Bayu Sdn Bhd and they actively started a local joint venture with Serapi Bayu Sdn Bhd which was based in Kuching, Sarawak in order to expand their business in the East of Malaysia 4.0 Internationalization: Bayu Gagah's Foreign Market Expansion After this, they expanded to Kuching, set up their first joint venture with the Serapi Group of companies and introduced the "Satellite Farms' concept to interested friends and partners throughout Malaysia. Now Bayu Gagah has more than 4,000 hives across Malaysia under the JV or Satellite Farm approach. Bayu Gagah is also successfully expanding its businesses overseas. Bayu Gagah has proved that by choosing the right mode of entry at the right time, they could expand their business internationally. According to Du et al. (2020), the internationalization of production and operation across national boundaries is one of the most significant developments in business. Each enterprise could choose an entry mode such as export, joint venture, strategic alliance, wos (wholly-owned subsidiary) or M&A (merger & acquisition) in order to conduct international activities. Primarily, export is one of the most important entry modes for companies to expand their business and market bases to another country in order to gain more opportunities and achieve better performance (Li et al., 2017). Bayu Gagah at first chose a direct exporting strategy via agents as their entry strategy to a few Asian countries. Their products have been successfully exported to other Asian countries such as China, Taiwan, Singapore, Brunei and Japan. This is because when companies first step into the international market, the lack of the resources and networking could limit a company's development. Thus, the simplest and cheapest method of market entry is to have their products sold overseas by domestic intermediaries or a foreign agent (Doole & Lowe, 2004) After finding the right business partner from China, Bayu Gagah decided to form an international joint venture with their Chinese partner. A joint venture is considered to be one of the best modes of entry to the Chinese market. In this situation, both partners have to share ownership and profits. In addition, by undertaking a joint venture, firms have more direct participation in the local market, and thus gain a better understanding of how it works. Further advantages include enabling the companies to finance and profit from their activities as well as exerting greater control over the operation of the joint venture (Doole & Lowe, 2004). So, the key reasons why Bayu Gagah considered a joint venture as their next mode of entry were ownership control, length of agreement and pricing. Bayu Gagah Sdn Bhd decided to establish an international joint venture and shared ownership with Golden Ocean International Trade (Shandong) Co. Ltd (China). Golden Ocean International Trade (Shandong) is a local marketing company based in Weihai, Shandong Province, China. It is the sole distributor" for Bayu Gagah Marketing and is fully responsible for marketing management including researching the market segment, identifying target markets, applying an e-Commerce approach through social media platforms such as Baidu and Tmall, being responsible for overall strategic marketing management, and mediation (liaison) between Bayu Gagah Marketing Headquarters in Malaysia and the Chinese authorities and Malaysian agencies overseas such as the MATRADE offices in Beijing, Shanghai and Guangzhou. This effort is very important to ensure that Bayu Kelulut Superfood Malaysia gets the trust/honor or "xinren" to build cooperation or what is called "guanxi" in the business world of China Bayu Gagah sales started to increase as soon as they expanded their business overseas. Demand for stingless bee honey was increasing until recently when the Covid-19 pandemic hit the world, at which point their business is reported to have slowed down. 5.0 Challenges and Opportunities for the business operation The Chinese market: China is huge; for instance, Guangzhou City itself has a population of over 30 million. So, it was a mistake to think that one country applies the same rules and regulations as another, that is not the case with China. One day Mr Hisham's partner, Mr Vincent, said to him: "Hisham, I want to let you know that we cannot export our honey into Guangzhou, because they don't let imported honey into their province." "Oh, really?" Mr Hisham was shocked. But Mr Vincent still had some hape: "Well, let's de some research on their foreign business policy" After some time, Mr Vincent came back to Mr Hisham with new hope. "Hey. Hisham, you know what, in China, different regions have different policies. That particular policy only applies in Guangzhou, but not in Shandong! In Shandong, they are open to foreign honey from any other part of the world After that, they started to make sales in China. However, another challenge for them was to compete with Manuka honey from New Zealand. They needed to maintain the quality of their honey and their pricing. Bayu Gagah needs to prove that their honey has its own standard of medical grade honey Another interesting fact is that in China, people do not generally trust their own product. This is because there are a lot of counterfeiting activities in China. According to the World Customs Organization, China is responsible for more than 70% of counterfeiting in the world. That is why their own citizens prefer to purchase foreign brands, especially honey. Hence, there is an opportunity for Bayu Gagah to capture a significant part of the Chinese market. The Japanese market: In 2018, Mr Hisham met Mr Yehei Kambayashi at the Fairbanks event. Mr Yohei Kambayashi has a very deep interest in honey and he was interested in having a partnership with Bayu Gagah. When Bayu Gagah first started working with Mr Yohei Kambayashi, they gave him exclusive rights to distribute the honey for six months. Mr Hisham told him: "We have to be spot on here locally and if you can meet a target of at least 500kg 4 month, then you can maintain your exclusive rights . Unfortunately, Mr Yohei was unable to meet that 500kg target, so the agreement was revoked and they had the opportunity to appoint another local agent who could reach the Japanese market and could really bring their product into Japan. Mr Hisham was very confident about marketing his product in Japan because according to him "The Japanese are so concerned with health care and I helieve the quality and nutrition of our product is of a high standard. Moreover, this product was recognized by the Malaysia Book of Records in 2016 because it does not frecce even when it reaches the summit of Mount Everest in a temperature of -30 degrees Celsius In Japan, other challenges include the ethnocentric attitude and the language. Many Japanese customers have a strong sense of patriotism. They tend to only trust the quality of their own product, and not imports. They prefer a local brand name. Initially, Bayu Kelulut did not get a good response from the Japanese market, because they were not familiar with the brand. Bayu Kelulut therefore needed to change their brand name and packaging style in order to suit local preferences. The Taiwanese market: In Taiwan, Bayu Gagah built their networking by approaching one of the MATRADE officers located in Taiwan. Through the connection that was given by MATRADE, they found one Taiwanese lady who sold all kinds of organic product. After that. Mr Hisham decided to sign a contract and give her exclusive rights to distribute their products for one year. However, after a certain period of time, when the Covid-19 pandemic started to hit the world, their business activities also started to decrease. The Taiwanese counterpart did not manage to meet the requirement of exporting about 500kg a month, so they needed to revoke the agreement. Later, Mr Hisham found another local food distributor in Taiwan. This seemed to be a good strategy for them, because that existing company already has their customer base and marketing strategy. This time, they did not have to spend so much money in their marketing effort United States market: Mr Hisham happened to know Tuan Norizan Syarif via Facebook. He is asocial media influencer and business motivator. He has millions of followers on Facebook Tuan Norizan was senior manager of an agency in Malaysia but he settled down in the USA. He retired early and wanted to explore the market in the USA. Soon after that, Mr Hisham approached Tuan Norizan and they started working together. They also hired the company Enescorp International Sdn Bhd to advise on how to penetrate the US market. In the USA, they focused on the honey energy bar as their main product. Last but not least, according to Mr Hisham, "Europe and the USA are our focus at the moment. Of course, we will not be closed to any opportunity, but the focus today is to try to structure the operation in Europe and the USA." 6.0 Future Direction of Bayu Gagah Sdn Bhd Bayu Gagah Sdn Bhd realized that choosing the right entry mode is an important strategy for expanding their market into foreign countries. However, Bayu Gagah Sdn Bhd still faced several questions. To what extent should the company direct its efforts to international markets? Also, in terms of the international market, should the company adopt a more proactive stance in seeking new partners or should it continue with the way it had been operating? Finally, should Bayu Gagah Sdn Bhd consider any other entry strategy? Will licensing be pursued instead of franchising in other international markets? Or should franchising be adopted in some countries, where the franchise culture is already fully established? Bayu Gagah Sdn Bhd's next mission is to keep growing in the US and European markets According to Mr Hisham: "Europe and the USA are our focus at the moment. Of course, we will still be open to any other prospect, but our attention today is on trying to structure the operation in Europe and the USA, because we are still new in this market." He felt that the American and European markets were not fully explored