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Selling food to China

Why China?

In recent years, China has introduced over 20,000 types of imported food from over 60 different countries. This covers a wide variety of products such as dairy, bottled water, biscuits, snack foods, sugar, chocolates and confectionary, beverages such as coffee and tea, meat and even rice. The result of this is that over the last 6 years the market for imported food has grown annually at a rate of approximately 15%, compared with the worldwide average of around 4%.

In 2014 the imported food market in China was valued at 500 Billion USD. This shows that China offers a huge potential to UK companies of all sizes who can offer high quality products.

However, at the same time China is a highly competitive place. A growing market attracts a lot of interest from all over the world and China has, over the last year, developed a tough regime on food safety and other compliance issues. This means to be successful companies need to be prepared to “do what it takes” to win business by being persistent yet patient and also needs a significant investment of resource.

 

Will your Product find a market?

The first thing to consider is if China is a market for your products. This is relatively straightforward and requires some basic market research, but also remember that there is a thirst for new experiences amongst the rapidly growing middle class, who are prepared to pay more for food from what are seen as reliable and safe sources. A product that is not already in the market may simply be “the next big thing waiting to take off”. Once you decide that China is the place for you, then you need to develop a workable strategy and make your product market ready.

 Fortunecookie Consultancy

 

First things first – Market readiness

Market readiness is vital if you are to succeed and is, initially, based around compliance issues. These appear to be highly complex and ever changing. As soon as you begin to look at regulation it quickly becomes apparent that the food industry requires a dependable intermediary to interpret China’s complex regulations, registration projects and ultimately remove the regulatory barriers preventing enterprises accessing China's markets. A recent BCC review showed that for SME’s one of the biggest barriers export trade is “regulation” but it doesn’t have to be that way.

Anderen with their partner Chemlinked, have great connections with the various Chinese Government Offices, AQIQS – who deal with testing and Customs Offices.

Anderen's team is a multidisciplinary team composed of food technologists, toxicologists, nutritionists, chemists, regulatory analysts and language experts with vast insight and practical experience dealing with Chinese regulatory obligations and is managed by senior regulatory compliance experts. You get a comprehensive package dealing with compliance for all food types. They make it as simple for you as possible. You provide details of the product you want to offer and get a list of what you need to provide in the way of documentation, product specifications, samples for testing and any other specific compliance requirements. You get an approved label to be attached to the product and also details on the time scales involved and the associated costs. You are then ensured that your product meets all the requirements, meaning that it can be easily imported.

Obviously going through the regulatory compliance carries a significant cost, but should be viewed as an essential investment, simply because nowadays serious Chinese dealers will no longer take the risk of placing even sample orders if this has not been done. Any effort you put into selling into the market without compliance could easily be a waste of time and money.

Here is part of a typical compliance menu showing some of the many (but not all) steps that need to be dealt with for various food types, as you can see this can be quite complex. Many of these documents will actually already be familiar to you as they apply to exports in general:

 CIQ inspection and Customs clearance

Items

Legal basis

Customs declaration and commodity inspection

① Food Safety Law

② Law of Import and Export Commodity Inspection of the People’s Republic of China

③ Measures for Safety Administration of Imported & Exported Foods (No. 144 Order of AQSIQ)

④ Regulations on Supervision and Administration of Imported & Exported Prepackaged Food Label Inspection (No. 27 (2012) Announcement of AQSIQ)

⑤ Administrative Measures for Inspection and Quarantine of Imported & Exported Dairy Products (No. 152 Order of AQSIQ)

⑥ Announcement on Regulating Health Certificate Management of Imported Dairy Products (No. 125 (2009) Announcement of AQSIQ)

⑦ Notice on Further Strengthening the Inspection and Supervision of Imported Edible Vegetable Oil (GUO ZHI JIAN SHI HAN [2012] No. 229)

⑧ Supplementary Notice on Supervision of Imported Edible Vegetable Oil (ZHI JIAN SHI HAN [2012] No. 493)

⑨ Other regulations released by national administrative departments

⑩ Competent department: AQSIQ

 Documents need to be submitted by the client

No.

Name of document

All kinds of foods

Letter of authorisation of customs declaration and commodity inspection service for imported foods (see Appendix 1)

All kinds of foods

Necessary documents including contract, invoice, packing list, and bill of lading

Prepackaged foods for first-time import

Original label and translated version, Chinese label, copies of the business license of importers, distributors or agents listed in the label, relevant evidentiary materials for the awards, certificates, legal producing area, geographical indication, special ingredients contained in the product, etc. that are emphasised in the label, conformance evidentiary materials for the nutritional ingredients content marked on the label

Prepackaged foods not imported for the first time

Certificate of label filing, label samples both in English and Chinese (it will be deemed as first-time import without the certificate of label filing.)

First-time imported foods without food safety national standard

License files issued by NHFPC

Dairy products

Health certificate issued by the authority of exporting country (template: http://jckspaqj.aqsiq.gov.cn/ybzspjyjy/ggshrzpzsyb/)

Fresh milk

Certificate for Quarantine Examination and Approval of Entry Animals and Plants

Dairy products imported for the first time

The testing report listed in food safety national standard

Dairy products not imported for the first time

Copies of the testing report of first-time import, and the testing report of the items required by AQSIQ

Health food

Approval Certificate for Imported Health Food released by NHFPC

Wines

Certificate of Origin

Prepackaged edible vegetable oil imported for the first time

Testing report of the items required in relevant food safety national standard

Prepackaged edible vegetable oil not imported for the first time

Copies of the testing report of first-time import, and the testing report of the items after importer risk analysis and designated by inspection and quarantine institutions

Others

Other documents needed to be submitted

 

In addition to compliance and labelling, it is a good idea to register your trademark/brand in China. Whilst many companies assume that their trademark is registered worldwide, it needs to be specifically registered in the Chinese market. It is also a good idea to have a Chinese version of your trademark/brand.

In China the Government operates a “first to file” system which means that anyone can file a trademark and then, if it happens to be yours, can block you from using it in China. The cost of registering is modest compared with the cost of trying to buy your trademark back from anyone who has beaten you to it.

That all said, there is a kudos attached to maintaining the product identity as being from the UK, simply because in China, UK products are seen as being of high quality and are safe. As a result they can command a premium price.

 

Routes to Market

So you have a product that has been approved and has a Chinese label and a registered brand – Congratulations, you are market ready! Now you need to look at developing a distribution network and creating brand awareness.

Finding routes to market in China is a potential minefield. We often hear people exhibiting at shows with the intention of getting a “Chinese Agent”.

Remember that China is a big country – the size and complexity of Europe. Ask yourself if it makes sense to have a single European Agent to cover the whole of the EU. Just like the EU the various regions of China have their own identity and requirements and as such you will need to develop a dealer network. Having your own “office in China” is a great help, but ultimately your success in the market will depend on the strength of your dealer network. There are few if any dealers who can truly cover the whole of China no matter what they may say. The vast majority will cover their home city, (remember many Chinese cities have populations running into millions of people). Some will cover their home province, but few will really have the ability to cover China as a whole.

Also you need to consider if you will actually “Do China”. Having a single dealer in say, Guangzhou, is no more “doing China” than having a single dealer in, say, Paris means that you are “doing Europe”.

The best and most economic approach is to find a good place to start and then once that region is developed and you have some brand identity, you can then start to expand. This is where having an understanding of the various regions is helpful. We based ourselves in Guangzhou (Canton) and believe it makes the ideal stepping-off point for your China adventure.

 

Why Guangzhou?

Along with Beijing and Shanghai, Guangzhou is one of China’s main first tier cities. It is the administration centre for Guangdong Province which is, without doubt, the wealthiest area of China with a GDP of over 1 trillion USD.

For imported food, the annual value of purchases in Guangzhou alone is in excess of 1 billion USD per year with an annual growth in excess of 10%. Created by the growth of the more affluent middle class, who are able and prepared to pay higher prices for what is seen as higher quality food produce. This is also a sector which is experimental and desires new food experiences.

Guangzhou is also home to China’s main exhibition centre at Pazhou which hosts the world famous Canton Fair. This means that it has a brilliant infrastructure and is also a place where companies from all over China will have a presence. Figures show that over 42% of food buyers in China are based in the South, with Guangzhou being the main city.

The city has good links internationally via the Baiyun International Airport, serviced by many of the world’s leading airlines and also has a number of ports based on the Pearl River.

For 2014, Forbes rated Guangzhou as the leading commercial city in China. Shenzhen, which is about an hour away, and so in easy travelling distance, is rated number 2 with Shanghai at 3. This is interesting because invariably when people in the UK think China, they think Shanghai and neglect Guangzhou. Guangzhou, unlike Shanghai, has the geographical ability to grow as a city – something that Shanghai can’t do. This is important because the potential catchment area, within a 1 hour travel radius, is heading for 120 million people.

Another interesting fact is that Guangzhou has one of the highest average salary rates in China - this means that it has an increasing aspirational middle class.

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So how do I get my product in front of buyers?

Food exhibitions are a good place to start – in China there is a food exhibition somewhere every week, and so you need to take a strategic approach. In Guangzhou, we recommend the Food and Hospitality World Exhibition (FHW) which takes place in September each year. FHW is in fact, an international franchise and operates shows throughout the BRICS countries. Anderen Ltd offer a fully managed package which includes space, stand-building, provision of trained interpreters, translation of literature and event management. They can also help to bring samples into the show, even if they are not yet compliant, through a legitimate exclusion system, making it as easy as possible to exhibit.

New for this year we have introduced a web portal which will enable manufacturers to engage with professional Chinese buyers (www.food2china.com).

The internet is now a vital tool for engaging with both B2B and B2C in China. Trade on the internet in China is growing at a phenomenal rate, you simply have to have an internet presence, ideally in Chinese.

When you have attended a show and created managed pages and social engagement via the web portal, you will have started to have a presence in China, but you still need to work at it, we are here to assist you on your ongoing journey to ensure that your business in China is the success that you hope for.

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Source – Anderen Ltd


 

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