Interview with China import professionals
How to prepare your brand for entering and selling in the Chinese market?
Maria: Based on the market research, BAP’s team looks for information which would conclude the ”readiness” of your brand to enter the Chinese market. How does this work?
Let’s take a look at the market research points we do, which show whether your brand is ready for the Chinese market:
- Analysis of competitors and pricing
- Overview of investment in marketing in order to enter the Chinese market
- Overview of the target FOB price and whether it is competitive on the current market
- Proposal of the client’s cost reduction if necessary, consulting on specific points that must be “untouched” to be attractive within the Chinese market.
Within BAP’s services, there are more interesting points that companies need:
- Estimation of sales volumes in the first, second and third years.
- Operation on client’s behalf – shortlisting of buyers and importers, developing business, controlling sales, assessing supply, controlling the price within the market, protecting the brand image, developing new private brands, collecting reports from distributors, and ensuring price stability.
Based simply on observing retail prices in supermarkets, BAP’s team can strip away layers of expenses and estimate what the FOB prices of competitors are and what the target price should be for new players in order for them to remain competitive within the given quality range.
Ambre:We see many brands failing within the first years in China due to their lack of understanding of the market. BAP helps companies save the money and time if they are not suited for the Chinese market, as well as develop and multiply profits for companies that are a good fit for this market.
Sometimes we can conclude that a product won’t fit well on the market simply based on its look and positioning.
Maria: It is also very important to know your import regulations, as some categories or ingredients within a recipe are not approved by the country for import. In addition to the packaging and labelling regulations which are becoming more demanding in China. Certain products may not have a health customs protocol between China and the respective country of origin, so these cannot enter China. Furthermore, if you export not under the regulations of China, once your product arrives to the port it will be declined, sent back to origin or destroyed.
Or maybe the product has only recently been approved for import, but the market is yet not ready for it, and predictions of import volumes might not be as optimistic as what the client was expecting.
Managing client expectations is something we pay close attention to when carrying out market studies and estimations for our clients.
Maria: Another factor of companies that want to enter the China market is their ability to swiftly change and adapt strategies Those that are reactive within their production process, quick decision making process when it comes to marketing and sales strategy, are definitely having advantage and more survival chance. For food sector, we are talking about medium size companies, or someone who is dedicated for this market.
Development of China Agriproducts Market Entry strategy post pandemic
If a brand is only gathering information about the market, we can offer a development of business strategy service. But what is especially interesting in working with them is that they would adapt the strategy on the way, when the changes will come.
Maria: With the development of your business, having local staff in China is becoming more and more important. Why? We live where your buyers live, have the direct insights of the market, communicate daily with them and can react immediately under certain “pandemic” short and medium term consequences. We find local solutions, and expand business optimizing processes locally.
Ambre: If you ask around, many companies will also tell you that once they start selling in China via importers and distributors, they lose control of where the products are and will wonder why products are suddenly popping up on Taobao or other marketplaces for very different prices, creating “distribution wars”. In this case, BAP is acting as your brand office in China, tightly controlling the distribution channels and prices, having monthly reports of the sales performance and companies involved in the business development process. This is a very important factor for companies who are in China for a long term.
What are the main difficulties of brands entering Сhina in this post-pandemic period?
Maria: Chinese importers and distributors are less tolerant towards risks these past two years. Thus, we must work mostly with low-risks strategies. We must find ways so that the pressure of importing a new product is not borne entirely by the importer. Plus, importers are resisting to try new products, giving preference to tried-and-tested products.
New market trends in China in 2022 for local Chinese and imported F&B products
Maria: The Chinese government is making an amazing effort in improving local production.
Processing factories are equipped with European technologies and the quality standards of these producers, the laboratories, the R&D, and the quality control follow similar regulations as imported products. Local producers have invested so much in these areas, bringing in the best technicians from abroad.
Plus, the state subsidizes these factories to improve and assure the quality control of the products. Not many countries can compete with them, and it is only getting better.
Ambre: The regulations for both imported and local food producers are equally demanding, and the number of documents needed to be able to operate is always increasing. The regulators also inform the population about the changes and local buyers are becoming more and more accepting towards local products. This creates more competition for our clients. But also, this “cleans out” low quality products from both local and imported producers.
Shortage of local Chinese food and beverages: what is needed in China now?
Maria: With a huge population China is always needing essential categories of food such as meat , dairies, seafood, fresh fruit, grains, and other day-to-day products.
If we are talking about the wealthy population, who are looking for more luxury category products, we see an increasing demand in high added value and health improvement related products (baby food, pet food, superfoods, cosmetics), albeit not in huge volumes. It is not always about the type of product, but more about a brand or the technology behind it. Would this product make me younger looking, healthier, stronger etc.?
But to really look into the opportunities within the China market, we should try and see how we can either improve the situation or bring new ideas to consumption habits. For example, since there is a market for vegetables and seafood, and importing fresh is very costly, we were looking into frozen food products.
Ambre: If foreign brands have a trustworthy solution to control this temperature specific supply chain once the products are in China, there could be great opportunities here. Firstly, lifestyles in China are changing.
People realize now that there might be shortages in production due to different aspects whether it be a lockdown, production problems, international tensions and so on. People are storing products with longer shelf lives at home. This phenomenon has been amplified with the Covid 19 pandemic which created logistics issues affecting the food supply in some regions of the country.
Take a baby puree pouch, – what a great way to provide long-lasting healthy food for a child without the need to leave the house, find the trusted seller of the fruit, peel and process it.
If the government’s efforts in boosting birth rates are successful, tomorrow there will be many more children, so there will be market will be an increasing need for baby food.
When you talk to a young mother in China, you immediately feel her pressure when faced with the cost of education, real estate, and the cost of food, as you always want to bring the best to your children.
Baby as well as pet food are two categories in which there is always a space for some innovative and interesting products. People are ready to try new products and pay premium prices for them.
Who are Maria and Ambre?
BAP’s team offers a comprehensive package of services in China, helping brands who have no ability to physically be in China, to enter the market, develop it and stay in control of their sales and distribution channel. BAP backs up their work by doing a calculation of realistic achievements and ROI within the first 3 years on the brand being on the market, and outstands on their product development knowledge and brand development and protection.
What is the story behind BAP?
“Bap stands for Business Acceleration Partner.”
Founder and CEO, María de los Ángeles Awad Castro is a Chilean agronomist, who studied a master’s degree in France on Production and transformation of dairy and meat products, and a Global MBA in Spain, focusing her expertise on the complete value chain of food and beverages globally. Trained in operations and dedicated to developing value-added products adapted to the Asian market and their global sales strategies. Loving the Asian countries, she created her company in Chile and decided to settle down in Asia to localize her knowledge, staying confident that their where business needs to be covered between western and eastern countries.
Maria: When I first arrived to China, I was visiting some of my previous employer’s importer and distributors. I quickly understood the difference between doing business in China or with China. Not being locally in China makes it very difficult to have the understanding of what the Chinese customers expect from the products, the different generation consumption habits and how can we adapt these products for a better sales performance. And that is how BAP in China was born.
Ambre Lecrique is a trained marketer with a global business focus. She arrived to China in 2007 where she acquired her experience in business developments in wine industry and agri-foods. She joined BAP in 2018, later becoming one of BAP’s partner and a source of knowledge on market’s consumers behavior, brand awareness and corporate marketing in China. At BAP she is in charge of elaborating and implementing the marketing strategy for the companies BAP represents.
Ambre: It is crucial to not only understand the culture of this market, but also to stay on top of the ever-changing trends and customer habits. We are living in an age where imported products to China are comparable to high quality Chinese products. Lots of brands come and go, not being able to adapt to the market. And one of the roles of BAP is to help our client to understand how they can present their brands and products to be a good fit to the China market, what niche to enter and how to really have a ROI within a planned timeline.
Through the years of experience in China BAP has developed an understanding of the Chinese FMCG markets, combining with South American and European markets’ capabilities and ways of developing products to fit Asia’s customer’s taste.
What are the key services they provide?
Maria: We offer many services that assure a soft landing of agriproduct brands in China followed by their development in the market. It really depends on the needs of the client. Developed brands have very different needs compared with newer brands in China. Some companies are looking for a very technical product adaptation to the market –from formula to packaging (complying with China regulations), to support their work with distributors or importers, while others are looking for more, marketing and end-user related information such as, brand awareness, price control, local life habits and consultancy for additional value creation. Some brands are only interested in market research and market suitability – to help them assess whether it is worth entering the market with the products they have on hand, meanwhile others ask us for the creation of their China market business plan followed by executing it. We also offer an import preparedness service, where we look at packaging, labels and ingredient lists and prepare them for customs.
Types of products BAP works with:
General food and beverage, including snacks and complimentary foods, dairy,seafood, meat, fresh, frozen, and dried fruits and vegetables, supplements and ingredients (even for cosmetic formulas, such as essential oils, superfood powders) baby food, innovative snacks.
Countries BAP clients come from: Chile, Peru, Brazil, Spain, Italy, France, Germany. Teamwise, we are an English, French, Spanish and Chinese speakers, to make the communication with clients as smooth as possible. We also have the understanding of how businesses are conducted in Western Europe and South America as well as in China, which is ones of the most important factor when developing international business. We are open to work with any country, and would be happy to do the best we can to help our potential clients to understand the Chinese market and prosper in it.
Want to learn more about the ways to import your product to China and build a successful sales strategy for your brand? Send us an email, and we will be happy to tell you more about it!
HI-COM is a localization and multilingual communication agency dedicated to providing China-specific strategy, social media communication and e-commerce marketing services to businesses around the world. Working with more than 100 brands, HI-COM is the go-to partner of companies that want to enter China market! Contact us for your free consultation today!
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