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THE mLL sdRtET JoURNAL.

@ 2000 Dow lones & Company,Inc. All Rights Reserued.

NO. 115A SUMMER 2OOO


.. ...i,
The
HOW AND WHERE TO'DTITER:
products-the
i.lil"itv tttut.gv ror food
TRADE tigs,il"^Ji"eiq g*l'ry: .11',.il: -9Hl'9'"?
ja::,

.'!.,
irringnii t..ttern seaboard)' Beijing qnrne
ffiihT*d T,nerg
Guangzhou (in the south)-
il;;;;;40;ih6r imP-ortant cities' but You
*r*i.tuiiittt yourseif in the Big Three be'

ROIITES TO i,jt.i"r*c
'"'"d;il;[t; t" 1-5s 1s5s-dsveloned areas'
ilnina tvpicatlv-travel in this
..orilti.., U.S. exporter to'Hong
L'rH;;ifi;tter/'distributor
iiinutor to tocal retailer'
to
Kong.or
local dis'

GHINA
a Chi-
Navigating this system without-
lirows trre complex' un'
r.r.'iirl?iuili6r wno
;;tlil;;;fil;* is almost imPossible' ro
-'-'fi
iTiffiiiffi lff Hri'#l;li'.','T'x:
ket eweitd rmall hflxH+,tr#f, tlilrt*:1";.ir**61; non'
ff;blfth.d tiliitinationals that handle-
pr er to
Distributors ef
tOO . BY LaurelDelaneY iililpi,T*"g tild"cts' - .

;;i;lifi bompanies that ofvisit frequentlv


thg *"tlg!:,.'
;fti;;;'il;ierstanding
-""NJii, easlly
.iitinit in a trade show'Depart'
such t."rifiriitirin'iit! u's' Agriculture
come from other Asian countries'
HO WOULDN'T WANI to
'as
;iffi ffi'g";nd iui*"n, not-necessarilv
i.u.tt ittit market: 1'3 billion
in' iiffimL^ pti*te'sector companies'
r"J"i
elo*ing household *nrr'ai rn" pvnorr China is so huge
".oniu, slim market Pen- Tne market for export to
Some and ontY
tirut'ioi tinii,riiitv ta^Lt I'll focus on one in-
.;dl; bv ionsumer-Product
duiiti-iood products - since tle- ll?Igce
dustry-
The inarket, of course' ls
firms.
ciliii"-trt. most lucrative sPot biilil ffi;ior'i iPqnqs ubo3! ?
Fl'd
food' sut much of the
''::ron the planet in the coming
years' ;iiiffiffi;;n to other
: "-'ii6 potentiat is forincredible'
,: iOui.* iun be translated
.Aith9ugn
of gov' """ii.iet goods'
, mosi diriiui. ttil opt the security to start consumer Iook at how to get
" ffi;#i;ni, anoul zrE' are looking
i=;' started. " 'q':
i .:, fil,ii: .i''i'i uuli*" - "ng^lt, HI3'"lt"T:, :' DO THE MATH: Annual.m'
'F* t,
,
;i gt'.xJt-J['tr llT"tf'H."T6t{iq.6rui1ft
il;fi;illttnet.r.eallv ttl:lti.?1t'lic*:
come Per caPita for rest'
rtents of China's 10 malor
wat equal to $2,6?0
f
ot t'l uiuion c-hi- "iti.i
'iit,i #iv'$ff;iiriJn'out
Iti":
u:re'tnierntt users' but that'number
ts in 1999, uP from $2'490.in
'. il;;.i;A to:umP to 2o million bY 2oo3'
1997. With disPosable tn-
come so low, savry mar-
"^"1*ni nor-
**iii tegistation to permanently xel1ns in cnina must include
*uritJtlie ieiilions witiLchina headed to- const-ant consumer testing
ano
' wardfinalpassagetnCongress'
alO!nt11;
.xneiimentation to ensure that
gll'ii it?ii:u"tiiJieo consumers will
ff l':iTfl :l'a'll}3;r,ru;'$:if,
*f'ff
cioose vour Product'
't'rrt." ivplcat customer. oJ
be sreater than ever'
"""ffi'no;tu better put 0n y'ur boxin-g -1-'
ctrineie dripermarxet or hypermar: ,
a spar- ,- - -
i.s. tor Crrina can seem more like ;i'il1;ft;i and usuallY female' -nas
iil';i,tU,l*#-[?X'i,1f,ilTlliyi9j
"rn

**ii,'v*'tt need to understand your cus-


lli*;fmlru''.'#,::ff '.".1$m:,|ift p-ot-
tirt"t they.-want' You must also ;i;i ;;iii Chil;t
bne-cma'per-ramlv
ilffiii i"i amount of time
is particularly pre-
i.i. tnu-;ritu. emperor"pareirts are willing to
lii,..ittl""tst a sigriificant
sales' marketing and ;iir;.'i.il;i; iuuion, disposable income on
ii'l"ii,i"iio *cnit6r the Chinese govern- ;i.,;-i;ilh;f their
litffi"tt". Besides
will their children.
ii".'tii iiJliil v;ur sreatest competition
i-i

fr+ri!,:

***I*', a*raibhi*6*s*.

ment at www-fas.usda.gov (clickon


,,Market
two years'developing a product for the Chi.
j:e!oTs" and then ,,Attache Reports,'). The nese market.
u.s._uommerce Department, U.S. Commer-
ThO Chinese tend to like their foods
clat service or the American Consulate less
Gen_ sweet, disliking anything with a .honev;
eral (in certain major cities, such as Sh;;;_
----"o scent or taste. Northern Chinese prefer saliv
hai and Beijing) cah atsoheip. snack prolucts, while Soutndrners tikir
promote, promot6, promote. In_
.Then,. creamy-sweet flavors. In general, the Chi_
vestment in local marketing is ciucial. point_
nese enjoy strong flavors.
of-purchase merchandisers and samnlins
are the most effective ways to Oevetop s'ateil *."9 of course price matters. Although
., Chinese prefer the superior packasing"of
I,'0r specialty and snack foods, you should _the
Western products, which l;ive tn'e impresi'ion
consider promoting heavily Auring tn;
.top quality, they stilt demand bursii;
Chi- of
nese "Golden period," which lastifrom
fall prices. The market with the biggest poteitial
Io spring and includes National Day, New
i_s for products that retail for
Year's Day and Spring Festival. Giii:sivi;; t"eis tffin bt.;0:
Consider cookies and batery items, cinOv.
ll^1ullg1uw dunng_this time, and lrixuryl
food sales are brisk.-Shoppers also like
fresh fruit, snack foods, iorn ifrbien-6r
inn"o-
vallve products for gifts, and as treats for . canned), frozen french fries, nonalcoholic
beverages and milk powder.
tnelr pampered children.
THE PAYMENT PRbBLEM: The best way
Think you're going to short_circuit the to secure payment from any overseas cus-
process? Remember that most supermart<eii
tomer is to ask for funds in advance. Havins
ar€ not allowed to import foodstuifs Oirectiy, your customer open an irrevocable letter
g.o througlr an approved importei. oT
?1t,must credit, preferably confirmed, is another ex-
Anct even that can be tough, since imported
cellentTray to guarantee payment.
food-generaily has a tess tian rz ot ifrfiefaiJ
Unfortunately, both oi these widelv used
shelf space in Chinese stores, which tvnicallv
methods of paymOnt on internationat transl
only stock about 3,000 to 5,000 aiffere"n^iprod-
actlons create prob'lems for companies doing
lyls with 20,000 in the ave^ragb business in China. Cultural factors, tne iegij
-comnared
u.s. supermarket. framework and the bureaucracy make ii a
STAY FLEXIBLE: you will need to modifv complicated matter.
your products to suit the Chinese palate
and Sc, you must work through authorized
also to appeal to agents who are appointed Uy tne eovern_
the eye. Eyen Wal- ment and who work within a retationstrin
Mart tailored its known as guanfi, which can Oe snaOv. dai
product line to fit you avoid getting taken? Sorry, nut ttreieG
local tastes by of- no foolproof approach.
fering live snakes But you can improve your chances bv
and barbecued pi- communicating clearly with your customei
geons. Expect a and your bank on matters of payment. It is
trial-and-error ideal ifyour bank has branch ,irir., i" 6rii"i
period; it is so.they can provide on-the-spot assistince.
not uncom- Ask your U.S. bank if they hive .*prri.n.u
mon for a with the Chinese bank th-at wiil nairOfe tnu
packaged-food'
manufacturer to ,
pryspegtilg transaction, and if they cin
vouchJor that bank's reputation and profes_
spend up. to slonallsm, especially in their dealings with
-
U.S. compani-es.
.Even in the best-case scenario, expect to
wait for payment: Chinese supermarkets re_ .i;
qrdre 60-to-90-days' credit bn mosi nui-
chases, and some chains will deiaypayment
even longer. iilF
,z
IE
MS. DEI,ANEY RUNS GLOBAL TRADESOURcE l5
,. LrD,, A CHIcAco-BAsED cLoBAL td,{RIrnTTNg l<
l!4
. CONSULTING AND WEB CONTENT PRO!,IDING tk
rrRM. SHE TEACIDS AT LoyoLA UNrvnnstry
leH
ru q
CHTcAGo AND cAN BE REAcIIED AT
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