Taming the dragon - growing our exports to China
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There is one word for the current speed of change in China - “staggering”. Changes in legislation, tax, compliance, new train stations through to airports, are being made in months, not years. As Kate de Lautour discovered, keeping up with the pace involves a seriously high level of business fitness.
Managing director of Napier- based FPG (Future Products Group) Robert Darroch has been doing business in China for the past seven years. The company has a global partnership with BP which has seen them design shop fittings for petrol stations across China, and a strong relationship with McDonalds (FPG are globally approved suppliers) has the potential for fit-outs of around 7000 new stores, over the next four years.
Robert says companies wanting to get into China need to have their back of house, one hundred per cent, “ready to go” before venturing into any business transactions.
“Companies need to be fit and ready, they need to learn as much as they can about their potential market before they go, otherwise they will waste a lot of money and a lot of time.”
Key aspects to consider, says Robert, include branding, “does it fit with China?”
“Businesses need to take a hard look at their packaging, service, support, invoicing systems, and be prepared.”
Robert says “having a man on the ground” in China is proving invaluable for FPG.
“No matter how much people learn about China here in New Zealand, it’s not until you get your feet on the ground, that you will ever comprehend the scale of trade in China.”
Jim Wu is FPG’s Asia manager, based to the west of Shanghai, 25km from the city centre. The local population is 16m, plus a temporary population such as business travellers, foreigners and tourists of around 14m.
Jim says, in China, New Zealand is viewed as “clean, natural, small and remote.”
These qualities work well for our food and beverage industry with food safety becoming increasingly important to the Chinese. Various scandals involving locally produced tainted milk, pork and cooking oil are making New Zealand produce an attractive option.
“New Zealand food and beverage is considered to be very natural and clean, but expensive.”
As a Business Hawke’s Bay board member, Robert is passionate about helping would-be Hawke’s Bay exporters, and has willingly put business owners in touch with Jim Wu for some, on the ground, advice.
Sharing information and working collectively is a key focus for Business Hawke’s Bay’s China trade adviser Jim Poppelwell, who says more and more Hawke’s Bay businesses are willing to invest the time and resources necessary to succeed in China.
“There are an increasing number of firms wanting advice on trade with China and this reinforces the fact that China is steadily increasing in importance to local business.”
Jim says a common problem for firms contemplating China for the first time, is selecting the appropriate market for their products or services.
“The country is large and diverse and interconnection between cities and provinces can be surprisingly limited.
“Some commentators offer Europe as a useful comparison: a collection of politically and culturally distinct markets gathered under a single banner.”
“Perhaps the best piece of advice is to concentrate on identifying high-value niche markets that will achieve the price points necessary for a China venture to be viable.
“With the exception of Fonterra, few New Zealand companies possess the economies of scale to compete on price, in a market where both Chinese and international conglomerates fight for the consumer dollar, or Yuan as the case may be.”
Wine is a category where brand perception is key to achieving premium price points. Though it is difficult to change strongly entrenched consumer associations of quality with old world producers, continued excellence recognized by international accolades can only work to the benefit of Hawke’s Bay producers says Jim.
“Given the size of the market it is again important to emphasize the need to focus on niche markets in order to maximize return on marketing and promotional investment.”
One readily accessible tool that doesn’t require a huge capital investment is the experience of other companies and businesspeople that have been working in the market for some time. Business Hawke’s Bay actively encourages exchanges between new and experienced China traders in order to maximize the benefits of local knowledge. Regular meetings of China traders are scheduled bi-monthly, with the next get together on July 5th.
A Hawke’s Bay exporter’s trade mission to China is planned for November to coincide with the Shanghai Wine Fair but also including other traders and products. The group will also follow up trade opportunities in Hong Kong, Xhuzhou and Beijing.
Businesses wishing to register their interest should contact Jim Poppelwell at Business Hawke’s Bay.