New Zealander and long time Beijing resident David Mahon said as attractive as the market can still appear, the need for NZ companies to ensure they have scale, market intelligence and do thorough due diligence on entry is greater than ever.
“You have to remember this is now a market that has almost quadrupled over that time and with that comes a lot more competition and that includes strong competition from within, from Chinese companies themselves.”
Enforcement of standards for food production now also means there is growing Chinese confidence in locally produced products, compared to a decade ago.
NZ’s two big success stories to date in his mind are Zespri and A2 Milk.
Zespri has an edge in selling a product already well understood by Chinese did itself a lot of good dealing with the issues it had with the staff arrests several years ago.
“It was an open, honest approach and built real respect from the Chinese.”
He rates one of the most successful overseas companies in China as Nestle.
Having established 33 major factories and now employing 50,000 staff it is recognised as having put back strongly into the Chinese economy and that is an approach China is seeking more and more from overseas companies wanting to participate in the market.
Successful operators also require a high level of buy-in at a board level when committing to China, with management enthusiasm simply not enough to last the time needed to reap rewards.
“Zespri and A2 have achieved this.”
In terms of food and beverage opportunity Mahon sees Manuka honey as a product with huge potential in a country where a significant amount of the product is fake. Honey is one of the three most faked food products in the world
“If that industry could do what Zespri did, then great, otherwise producers who are all relatively small will just cannibalise each other, despite the demand that there is here.”
Consumer preferences in China are becoming more sophisticated very quickly, with a middle class that is well educated, healthy and increasingly wealthy seeking out quality, health-giving food products.
“They are going to where they see the greatest nutritional value and one big one is yoghurt and for infant formula it is preferred it is from a pasture-fed milk source.”
