How to feed the dragon?
China is unlike any other market in the world to be successful in this market you must have an understanding on the business culture and more important how to build networks, relationships and partners. Importers are hard to find and often not quite what they seem to be.
The China became the world’s largest market for food and beverages in 2011 and is growing at unprecedented levels of 15% annually.
The gradually increasing distrust of domestic produced food and beverages, in combination with increasing disposable income and a growing taste for foreign foodstuffs in general, is creating new opportunities for European exporters in the long run. It is thus not surprising that the value of European imports of food and drinks to China has almost tripled during the last five years.
Learn how MWG helped launch two products into the Chinese market. The case study looks at a New Zealand fruit flavoured juice company and the MWG Balactan brand of infant milk powder.
Your product could be next to enter the market read more to see how：
Selling food and beverage products too China comes with many challenges for both the exporter and the importer of the products. These may include government regulations and standards, customs, shelf life of product, pricing, channel distribution, counterfeiting, lack of control of online selling, consumer brand knowledge, culture, plus many many more issues that will be faced.
One challenge that is rarely considered is one not faced by the exporter but that of the importer and is often insurmountable.
Recently the MWG was asked to provide our service to a medium size importer in Shanghai. In China a medium size business is often doing the equivalent turnover of $100,000,000USD per annum. The business has been doubling its revenue and customer base each year since 2009. They have a very clear vision of where there business is and what it will take to build a world class food import business in Asia, specifically in China and Singapore.
- Established in year 2009, build relationships with small European suppliers who do not yet have the opportunity to come to Asia themselves.
- To create a menu of world-famous food into Asia
- All of products will be 100% imported from overseas reputable company
- Combined a delightful mixture of high quality producers with their own specialty and trademark products.
The Shanghai importer supported this vision with a comprehensive distribution structure that include 9 cities covering over 200 million people, 10 network channel partners and positioning product on the 4 main online stores.
Despite these impressive credentials the importer was often overlooked by European food and beverage manufacturers.
MWG was contracted to provide services to find product suited to the importers requirements from European and Australian based countries. Essentially like many Chinese importers the issues related to a lack of trust held by the exporter in Chinese companies. The communication and cultural understanding was not effective enough to break down the barriers to create a relationship of mutual and beneficial business.
MWG was able to connect their resources throughout Europe and Australia and link both interested exporters eager to break into the Chinese market and of the importer who had the network and relationships to distribute high volume high quality products.
MWG became a supply chain partner to both the exporter and the importer and due to the MWG in country teams in both Europe and Australia was able to communicate extremely quickly and effectively to potential suppliers. The first products identified by the importer to be found was baby infant formula and fruit flavoured drinks.
【The Product Scope】
- Infant Milk Powder
The sky rocketing demand for infant formula in China can be linked the food safety concerns of locally manufactured products and the strong purchasing power of the Chinese consumer. Most multi-national brands have established their own branches in China and today it is almost impossible to establish a consistent supply channel to meet the market demand. Limited supply and an in-balance in demand results in inflated prices but more importantly market opportunity if you have a partner such as MWG who is able to find a supply line.
- Fruit Flavoured Drink
Fruit Flavoured drinks in China are currently dominated y an American brand ‘Snapple’. Snapple have managed to enter the market and control price and shelf space throughout the major distribution channels. Due to the surge of consumer wealth and desire for international brands opportunities exists for retailers looking for a new marketing edge and are actively searching for solutions. Niche markets in most countries are small, however in China with a population of 1.38 billion people this niche market is another booming opportunity. This opportunity has been grasped by an independent bakery chain with over 200 stores and are now leading the market with something exciting and new for consumers
【The steps to success】
The key to all MWG projects is to understand the customer requirements from the outset. This takes time and involvement and importantly a commitment from both parties to a target goal.
The importer allowed MWG to become part of their business by providing intelligential property details such as their marketing strategy, involving their channel partners and essentially allowing critical information such as meeting with retail decision makers and knowledge of pricing mechanisms to be met so the products are successful.
【The tasks set out for MWG】
- Deliver products that satisfied the customer requirements
- Provide a pricing program that assured success of the product in China
- Communicate with the exporter issues relating to Chinese regulations and labeling
- Manage the supply chain
- Supply product with a shelf life that can overcome the delays associated with Chinese import controls
- Offer brands that have “Country of Origin” strength
- Ensure quality of product
- Provide resources to manage the communication between exporter and importer
- Strive to continually improve products and offer the best products to the importer
【How does MWG add value to the process?】
MWG has a wide range of resources which connect many countries together and it is through these resources built up of many years that companies such as the exporter and the importer of food and beverage products can benefit.
The energy and cost to build a network as wide as MWG may often take years and unfortunately still deliver baron results. The key to China and many developing countries is the relationships, being able to find the right people with the right connections for the right products.
Both the exporter through new markets and importer through access to product benefit greatly from the tireless efforts of the MWG teams in their respective countries.
MWG can open new markets for exporters easily when the partners openly communicate the goals and strategies and understand that there is a benefit in allowing experts to connect suppliers and importers from different countries.
In both cases the result was a new product distribution contact for the Chinese importer and a new growth market for the relevant exporters. The key for all entrants into a growth market such as China is to have a local network that can ensue you product is treated correctly and is protected in the market so your product actually has a positive brand image and brand equity incease.
【Breaking News- New Zealand company lands new China contract】
New Zealand fruit flavoured drink manufacturer breaks into China market.
The product was destined for an upmarket bakery chain consisting of over 200 stores in China. MWG was able to exceed every expectation from the Chinese importer and today the product sits successfully on the shelf within China and has the potential to transform a small New Zealand manufacturer into a global market leader.
There is no enough supply – MWG bring new brand to China
The population of both China and India dictates that birth rates and population growth is quite high. In fact in China 38 new babies are born every minute.
These types of numbers mean there is demand for various associated infant products. One core product for both markets is the MWG Balactan brand of Infant Formula
MWG has launched this product and has worked closely with the manufacturing team in Spain to develop and introduce to the market their range of milk powder
The demand for European products in growing consumer market such as China, India, Russia and Brazil means our teams are constantly researching and working with manufacturers throughout Europe. Often this will involve ‘Coaching’ on how to develop a export ready product and provide assistance to the overall business so they are able to maintain the standards and quality expected from MWG and the customers that receive the products.
The network needed to create supply channels such as this takes time and perseverance. Finding a baby infant formula manufacturer in Europe took 6 months of dedicated work and capital investment from MWG.
The result was finally being able to provide Spain with another huge market with the MWG supplying the Chinese importer.