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Country Spotlight- Breaking into China

By: Greg Seminara,Export Solutions
Topics: China Food Distributor

Many manufacturers are salivating over the prospect of sales to China. Middle class Chinese consumers are hungry for branded consumer goods. Middle Class population is estimated at 250 million people, with projections of 400 million by 2020. Wal*Mart, Carrefour, Tesco, & Metro, the four largest global retailers, are expanding at a rapid pace.

Listed below are practical steps for creating your China market entry strategy .

Does Consumer Demand Exist For My Brand ?
Non-Food product usage parallels USA and European habits and practices albeit at a lower per capita consumption level. Personal care products, Health Care products, Cleaning products, and Batteries all enjoy wide consumer acceptance in the cities. The story is different for food brands. Eating habits are very different in China, with traditional meal choices incorporating a unique mix of fresh food, rice, noodles, and local spices. Pioneers in Carbonated beverages, breakfast cereals, and cookies are making inroads with perseverance, education, and investment. The emerging middle class , particularly in Shanghai, is open to trying western brands. A logical first step is to evaluate your categories existing presence in China.

Crawl, Walk, Run
Start with a market test in one or more of the three large cities: Shanghai, Beijing, or Guangzhou. Future expansion priorities can include Eastern Seaboard cities such as Shenzhen, before gradually expanding to the top 100 cities.

Leverage Relationships with Global Retailers
Our market visits indicate that Wal*Mart and Carrefour are receptive to aiding global manufacturers in their quest to enter China. Global brands help position these retailers as trendy and reinforce their broad product assortment relative to local Chinese retailers.

Many Distributors: Tough Choices
The good news is that there are many distributors who can introduce and represent your brand in China. The Export Solutions China Distributor database includes 148 distributors. There is a wide range in sophistication and capabilities among distributors. Employee turnover is a significant issue. You need to decide between a national distributor or a regional distributor network. There are strong candidates, but you must calibrate your expectations to sync with an emerging market dynamic.

Don’t Forget Hong Kong
Hong Kong’s seven million people are affluent with many expatriates from Europe and the USA. There is strong acceptance and distribution of consumer goods from the USA and Europe. Many of these products are sourced directly from USA or UK wholesalers and lack traditional marketing or sales efforts. There are many excellent distributors in Hong Kong anxious to commercialize your brand. One warning is that slotting fees can be steep to help compensate for the high cost of Hong Kong Real Estate

China: Don’t Let the Size of the Prize Discourage you !
Realistically, the value of your sales in China will be modest for the first three years of availability. Your investment in brand development activities must reflect a long term view to establish a leadership position for your brand in an important, high growth, market.

Export Solutions Can Help !
Contact us to get your China development project started. We maintain good contacts with the leading distributors of imported USA & European brands.