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Food & Beverage

The opportunity

Increased interest and demand for New Zealand’s food and beverage products is being driven by China’s strong economic growth and its rising per capita income. Emerging second tier markets and wealthy coastal cities – not just the hubs of Beijing, Shanghai and Guangzhou – are providing opportunities for New Zealand companies to access a share of the market.

New Zealand is recognised by Chinese consumers as having a clean and green environment, with good quality products and brands. Many New Zealand exporters have taken advantage of this competitive edge by positioning themselves as suppliers of meat, dairy products, fresh fruits, seafood and other products.

Chinese market feedback has shown interest in New Zealand suppliers of:


Challenges

Market access for New Zealand agribusiness products to the mainland Chinese market remains a significant issue. In general, it is easier for processed foods and wine to access the market.

 

Solutions

Developing a market entry strategy

China is a complex and challenging market with an often uncertain regulatory environment. Investing time and resources in understanding your market segment is essential to build the right networks and develop a market entry strategy. Relationships are key, as is engaging local Chinese staff or China-based partners to provide on-the-ground insight and representation. Companies should not assume that success in New Zealand or its neighbour Australia, or other export markets, will automatically translate in China.

There are a number of actions that will help you succeed as a supplier with solid market insights. Please contact us for further information.

 

Exploring the potential of e-commerce

With the rapid growth of internet use and penetration in China, particularly in major urban centres, e-commerce is seen to offer considerable potential. Online trading is rapidly expanding and there are a number of e-commerce sites and developers such as JD.com, Alibaba (including Taobao and Tmall) and providers who specialise in F&B (food and beverage) products, such as Yihaodian.

Online food sales continue to grow in popularity as consumers seek convenience and choice. Improvements in cold chain logistics, particularly in first tier cities, allow same-day delivery of imported beef, milk and fruit. Several dozen online marketplaces currently deliver fresh and ambient (shelf-stable) New Zealand food to Chinese homes, including Yihaodian.com, fruitday.com and yiguo.com. It is estimated that between five and ten per cent of retail food is sold online. Popular categories include snack foods, milk, infant nutrition and health foods.

For new exporters, working with an online marketplace or shopfront can be a cost and time effective way to test the market, build a brand profile and gain consumer feedback. Pilot ‘cross-border’ policies in eight ports across China allow many products to be held on consignment in bonded warehouses and sold online directly to consumers without the requirement to comply with regular import standards or pay duties and taxes.

TEEYA offers you practical advice, facts and insights on how China’s e-commerce marketplaces work and how to access them. Please free feel to talk to us and learn more.

 

Making use of distribution channels

Distribution channels in China are complex and changing constantly. Exports into China can be handled through a number of intermediaries including import agents and distributors, wholesalers and sub-distributors. Only licensed importers can handle import procedures and have the right to import products, with different product categories requiring different import licences and distribution channels. Traditionally many food distributors or traders do not hold import licences and licensed importers usually do not act as distributors. This situation is changing, with more and more distributors acting as import agents or as wholesalers with a network of sub-distributors they have developed themselves.

Chinese partners are often keen to secure exclusive product rights; however, the decision to provide exclusivity should be based on a thorough understanding of the parties’ knowledge in the sector, import capabilities and/or relationships and distribution channels. In the F&B sector, distributors tend to be strong in specific areas and rarely possess the extensive distribution networks and national coverage to justify exclusivity. Partner selection and location is critical, preferably with a multi-party approach underpinned by both an online and offline strategy.

The Chinese Government has taken extensive measures to curb smuggling into mainland China via Hong Kong and Vietnam. To import products via the so-called ‘grey channel’ is illegal. Exporters are encouraged to establish a direct relationship with mainland importers and to invest in supporting their importers/distributors with product and marketing to build their brand in China.

Chinese consumers have limited brand loyalty and distribution channels are fragmented. The main competitive strategy is making products available to a wider selection of customers. While an online platform can help you access a large market much faster, off-line channels still possess the advantage of pushing the products to targeted customers, e.g. older customers. Also, there are huge regional differences in consumption patterns in China and it is important to consider, compare and select the most appropriate channels for different markets and regions.

TEEYA can help you develop a well-mixed of online and offline presence as your distribution channels, rather than focusing exclusively on one channel. Please free feel to talk to us and learn more.

 

Talk to us

If you have an enquiry to know how we can help you, please contact us for further information.

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