Establishment of a Diary Products Subsidiary in Canada

It is recommended that a food processingdairy products subsidiary be established in Canada. The target market for this subsidiary would be Cuba.

The processed food in shortest supply in Cuba is canned milk. The Carnation Company, headquartered in Los Angeles, is particularly well suited to establish a Canadian subsidiary for the purpose of producing canned milk products for export to Cuba. Canadian raw milk production is more than sufficient to support such an operation.

Cuba does not have a strong dairy industry. Canada, by contrast has an excess supply of dairy products, with respect to domestic consumption demand. The Carnation Company has, over a period of almost 100 years, developed a particular expertise in the processing canned milk. A Carnation subsidiary located in Canada, thus, would hold a comparative advantage of some significance in the context of exporting canned milk products to Cuba.

The product line for export to Cuba from a Carnation Canadian subsidiary would not be restricted to canned whole milk. The product line would also include evaporated milk, condensed milk, condensed sweetened milk, and baby formula products.

The mode of participation for Carnation in Canada would be the direct foreign investment in a whollyowned subsidiary. Such a subsidiary would be under the direct control of Carnation, but would be subject to the export laws of Canada, as opposed to those of the United States. Political/Legal Environment

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Category: Foreign - E