I.

Introduction

We as a group chose to import raw corals to Mongolia from Taiwan. Since Taiwan, Japan and
Italy are considered as the main sources of raw corals to Mongolia and these origins corals are
well-known in Mongolia.
1. What is coral?
Coral is a biogenic material which is skeletal remains of marine polyp that is located in ocean
of deepness around 10 to 500 feet. It is usually used as a precious stone gem and considered
as a luxurious jewelry mostly in Asian country.

2. Price of raw coral in Taiwan

Price has a wide range since it is evaluated by colors, hardness, diameter and origin.
Therefore, since Mongolians are interested to pay USD 200 till 240 per gram, in Taiwan coral
per gram with middle but still valuable quality is sold between USD 80 and USD 110 in
Jianguo Jade Market in Jianguo South Road, Zhongshan District,Taipei, Taiwan.

3. Knowledge of the product.

In Mongolia, we usually buy shiny reddish colored corals because we consider orange
reddish and dark red corals are less precious than middle reddish colored corals. Therefore,
we are planning to collect middle reddish corals which Mongolians are mainly interested
from the coral market in Taipei, Taiwan.
Since of our member has been in the market, our member run into many Mongolians who
only come to Taiwan to buy corals through Mongolian Embassy in Taiwan in order to
guarantee to take a return if the coral is not original, mixed with other plastics or colored into
the favorable color middle reddish color. On the spot, when people want to be clear if they
are buying genuine corals, most professional people come with HCL (Hydrochloric Acid)
and acetone to check if the color is made unnaturally or make corals to react with lime
solution. It will react to these substances since corals are made 95 percent of calcium
carbonate.

4. Reasons why corals can be a good business in Mongolia

Mainly it is a culture that Mongolians think corals are precious stone that can be a valuable
heritage from ancestors to their children. In Mongolia, corals are often used for snuff bottle,
jewelry, decorations and etc. It is considered as elegant and luxurious use for many upper
class of the society. During the holidays, such as Lunar New Year and Naadam with 3 main
events, all men and elder women bring around sniff bottle to greet each other by exchanging
their bottles and sniffing the ingredient inside of the bottle. Even though it is ancient
tradition, Mongolians still appreciate this culture today.
Secondly, on sniff bottle, people carve beautiful flowers, shapes, lions, and eagles to make it
more luxurious, so if we import it to Mongolia, there are two ways to do business with corals,
such as selling raw corals itself to consumers and hiring professional cravers to make semifinal product our of coral.
Thirdly, studying in Taiwan can be a good opportunity to start the business of corals because
Taiwan coral are deeply recognized and well-known among Mongolians like a brand name.
Later, after developing the business we can enter new product to our business by craving god
feature Buddha out of coral, since 5 percent of the population are extremely rich and are
interested in collecting luxurious precious souvenirs as an expensive hobby

5. What are the risks and barriers that we might encounter?

Limited target Since it is considered as upper class consumption, only few
percentage can afford the big coral, however, there is unwritten law to have snuff
bottle for Mongolian men when they become an adult. Therefore, there is still
opportunity to sell snuff bottles heads.
Expensive only little amount of corals can be imported since it is a start up
business.

Risky to differentiate between fake and genuine coral is a professional skill. Before
starting coral business, we have to learn how real genuine coral looks like.
Only 5 percent of the population are considered to be rich to buy coral carved Buddha
features.

II.

We as a group decided to import 2 kg of raw corals after searching each piece of

corals carefully in Jiangguo Jade Market. Current rate of NTD and MNT:
1 USD = 1983.50 MNT

1. Product cost for 2000 grams( 2kg) in Mongolian currency:

In order to define the percentage of each cost we asked from businessman in

Mongolia who knows how to handle the costs very well. He told us approximate costs
of each considering other factors, however, he told us there cannot be exact cost
number since it is not set business but personal business where costs can be changed
easily to one another. Moreover, the costs cannot be limited in three months
depending on the sales of corals at the moment. We do not know if we can sell all in 1
months or in 3 three months.
Material Cost (raw corals from Taiwan) = 119,010 MNT/g *2,000g= 238,020,000
MNT
Labor Cost includes 1 seller and 1 craver working for three months = 238,020,000 *
0.05=11,901,000 MNT = 6000$
For each worker it will be 2000$ per month for three months. It can be considered a
very good deal for employees in Mongolia ( the basic starts from $500)
Factory Overhead = 238,020,000*0.04 = 9,520,000MNT= $4,800 for cravers
machine
Actually we do not have exact factory cost since the craver will work wherever he
wants because it is free art.
Administration Cost = 238,020,000*0.01=2,380,200=$1,200
Selling Cost = 238,020,000*.02 = 4,760,400MNT=$3,400
Here we will include two way plane ticket which costs approximately = 1,500,000
MNT for one person who travels to Taiwan to buy corals and the left amount can be
used for other bills, such as hotel, phones and transportation fee.
Advertising cost = 238,020,000 * .02= 4,760,400MNT = $3,400 for TV s and
newspapers since Mongolians households watch TV during evening around 8-9.
However, it can be eliminated since we are going to targeted consumers to advertise
our product to gain customer loyalty and prove high quality since it is expensive
product.
Product cost =
238,020,000+11,901,000+9,520,000+2,380,200+4,760,400+4,760,400=
271,341,800MNT

Material
Cost
MNT in
millions

Labor
Cost
MNT in
millions

Factory
Overhead
MNT in
millions

Administration Selling Advertising

Cost
Cost
MNT in
MNT in millions MNT in millions
millions

MNT 238

5%

4%

1%

2%

2%

238

11.9

9.52

2.38

4.76

4.76

Product
cost MNT
in millions

271.34

2. Export Cost in Mongolian currency

Product
Cost
MNT in
millions

Crating
Cost
MNT in
millions

Documenta
tion Cost
MNT in
millions

Required
Profit
MNT in
millions

0.3%

Insurance Cost
Deduct
MNT in millions Duty
Drawback
MNT in
millions
10%
3%

271.34

2%

271.34

5.43

0.81

27.13

67.84

8.14

Basic
selling
price
MNT in
millions

25%
380.69

However, the basic selling price for 2000 gram will be in total MNT 380,690,000 = $191,928.
Basic selling price per gram will be 380,690,000MNT : 2000= 190,345. However, we can
increase this till 400,000MNT considering the economy and demand, since the price for corals is
around that amount in Mongolia.

Financial issue We will borrow 180,000 USD = 357,030,000 MNT from Mongolias
bank with interest rate of 1% per month. We are planning to repay in three months paying
$ 5,400 = MNT 10,710,900 to the bank for the interest in total.

Basic selling price + Interest = 380,690,000 + 10,710,900= 391,400,900MNT = $197,328

This will be factory sales price or FOB for 2000 gram.
FOB price per gram will be 391,400,900 : 2000=195,700MNT= $98.66 per gram. This will bring
us at least 25% profit.

3. Since we are bringing the corals personally, there will not be any shipping cost, the travelling
expense is included in product cost .