China is the land for huge opportunities for international F&B Brands Food in China is a huge market, but why most International Food & Beverage Companies are not so successful?
Introduction to China Food Industry
China is known for a buoyant opportunity for International food companies at this moment in time. International companies are trying to break into the Chinese market not merely due to its unstoppable economic growth or for its inexpensive labor but rather for the increased purchasing power of its consumer market. China’s fast-expanding middle class is expected to triple its spending over the coming years, reaching $6 trillion by 2020. Multinational companies cannot afford to ignore the Chinese market, rather they are coming up with viable marketing solutions to target the second biggest consumer market in the world.
Bigger middle class = Growth of Chinese food Industry
The growing middle-upper class has been spending on health and wellness tremendously over the last decade. The market is expected to reach nearly $70 billion by 2020, as a result of both rising incomes and awareness about wholesome living.
Chinese urbanites are increasingly drawn towards “all-natural,” edible products, they are keen on checking details on food labels and as a result, they are willing to pay a premium for healthy food. The country is already the world’s most health-conscious, according to a 2017 BCG survey. This has created tremendous investment opportunities for foreign investors in the food business in China, especially for the ones involved with organic and health food products.
China Food Industry Trends
For a long time, China has been under food scandal highlights. Now that Chinese consumers are more aware of healthy eating habits and have high purchasing power they are ready to pay for foreign-produced healthy, save food products to steer themselves away from domestic food safety issues.
Chinese Consumers Pay for Safety
According to Food and Beverages Consumer Insight in China survey, 86% of consumers from tier 1 and tier 2 cites consider food safety before buying the food. Chinese consumers are very cautious about the food products they use, it doesn’t take long for them to stop using a product if a food brand has been under safety incidents. According to a survey by Ipsos, up to 90% of Chinese consumers prefer edibles without any food additives. As part of wholesome living more than half of the Chinese population strictly watch their weight and like to consume food with fewer calories.
Natural & healthy food Segment growing in popularity with Chinese Consumers
Food brands that cater to segments such as; no artificial additives, organic ingredients, low calorie, and slimming effects have huge potential in the Chinese food market.
“If you were born in the 80s and live in a first- to the third-tier Chinese city, chances are you’re into healthy living,” says Tian Tian Mayimin, founder and CEO of Shanghai-based V Cleanse, one of China’s first cleanses companies.
Trust is Really important in China especially in the Food industry
Trendy Food in China
Chinese consumers are developing and adopting healthy, fast, nutritious, and safe food items. They are opting for foods that favor their lifestyle. Purposeful eating is more of a trend in prime Chinese cities Shanghai and Beijing consumers opt for detox and cleansing juices. This trend has given a major opportunity to health food companies to sprout over the last few years. According to new research from Mintel on plant protein drinks (PPD) in the country, nearly nine in ten (87%) Chinese consumers now drink plant-based prepared drinks, it can be soybean drinks, juices, or grain drinks. According to reports consumption of coconut water, has grown by 30 percent over the last year, due to its beneficial properties.
Organic Food: a non negligeable segment of china F&B market
Usually, 30% of people living in 1st and 2nd tier cities purchase organically produced food. Chinese families with children also prefer to buy organic or green food. High and middle-income families are more willing to spend their money on organic food. Many people in China are still reluctant to buy organic food as the biggest impediment is the trust factor and it is hard to distinguish from counterfeit products. Other people find organic products expensive and inconvenient to buy.
Functional Drinks in China
Running and fitness sports are gaining popularity among Chinese consumers. This trend has given an immense boost to sales of functional drinks in first and second-tier cities of China. Chinese customers prefer having a functional drink to keep themselves hydrated during sports activities.
Flavor Snacks Trendy in China
Chinese consumers prefer to have a snack during the afternoon as a meal replacement food. This helps them to keep fit and intake fewer calories. According to a survey, Chinese professionals prefer snacks during lunchtime, which also helps them to have a quick snack on a tight schedule day.
Read: Snacks in China
Vitamins & Supplements in China are now Mainstream
With improved living standards in Chinese cities and rising belief that vitamins contribute to better health, Chinese urbanites are taking vitamins as part of their daily diet. This has generated greater demand for nutritional supplements in recent years. The demand has attracted foreign nutritional supplement manufacturers from around the world seizing the opportunity provided by this trend.
In China, fresh food is high in demand witnessing the sector grew up to 59.7% in 2017 with 139.1 billion yuan revenue (22.1 billion USD). Chinese consumers prefer fresh foods which fall under the all-natural category, safe from any hormones or chemicals. The most popular fresh products are fruits, vegetables, eggs, milk, meat, honey, and nuts.
The Fresh Food online demand is booming, and the Etailer JD.com offers special fresh products on its website with online recipes to push the purchases of fresh vegetables, meat & Seafood, and fruits, and also make the buzz by opening its first fresh-food (off-line) supermarket 7FRESH where consumers can either buy locally or order via an App. Alibaba is dynamic in this segment too with the creation of the Hema hypermarket, with the ambition to open 35 stores in China. Hema provides customers a dining area to “eat as you shop”
Seafood in China
With rising incomes and awareness regarding making better, healthier eating habits, Chinese nationals are including seafood in their diet more than ever. The choice ranges from salmon to abalones, to shellfish, and shark fin, etc. China now accounts for one-quarter of the world’s seafood consumption, and the United Nation’s FAO projects China will need an extra 16 million metric tonnes of seafood by 2020 to meet growing demand.
Example of Seafood on Chinese E-Commerce Plateform Tmall
Packaged healthy foods
The health and wellness trend is expected to increase the value growth of naturally healthy packaged food. This will be driven by increasing household incomes and rising education levels, as well as health consciousness. Naturally healthy packaged food is one of the main categories in the health and wellness market, which is expected to be a key growth driver as consumers seek more nutritious food to become healthier. Consumers strongly believe in the benefits associated with naturally healthy packaged food.
For example, there is a rising demand among consumers to have salads with virgin olive oil, as they perceive olive oil to be healthier than other types of oils, such as traditional oil.
Chinese consumers, especially young people, are interested in food trends. Trendy snacks like kale chips and superfoods items. More often, trendy snacks are not available in local Chinese snack shops. China is the 2nd largest savory snack market in the world (market size of US$10 Billion in 2016 with an overall volume of + 1 Billion kg). With an estimated growth of 11%, it is the most dynamic market in the world. China’s new trend is the imported snack that is gaining popularity among Modern young Chinese consumers, 42% of urban Chinese are interested in buying imported snack products they’ve never tried before. In China, you can find a variety of new Imported Stores that are specialized in selling imported Food.
An example of Chinese Influencers introducing to her Communities Thai Snacks
Consumers in China have become extremely fond of fruit juices. Fruit juices can be classified into two categories; FC and NFC juice, and the nutrition value and flavor of the two types are different. NFC is the abbreviation of Not From Concentrate, indicating that it contains almost the same nutrition and flavor from fruit but has a higher storage cost since it deteriorates more quickly as compared to FC, which consists of other ingredients like water that makes the juice less in nutritional value. Chinese consumers prefer healthy fruit juices over carbonated drinks and the emphasis is rising after learning the health benefits of fresh fruit juices.
A quite popular ECommerce website http://www.happyligo.com
China is the second-largest market for wine in the world. Investors or business leaders cannot ignore this opportunity of increasing the influence of customers. There are 48 million regular wine drinkers in China and these individuals belong to the upper-middle-class sector of the population. This, group, has more disposable income compared to others. Therefore, despite the higher prices, they choose to purchase and drink imported wines from International brands rather than drinking local Chinese brands.
Chinese are very sensitive to Wine Brands and are afraid of unknown Wine, due to too many scandals of fake French Wine.
China is the world’s largest market for infant milk formula, and consumers have been extremely quality conscious since the 2008 safety scandal. Other than milk now Chinese parents opt for international baby food brands that use organic and all-natural ingredients to manufacture baby food. With 18 million new births in 2016, the baby population in China is growing even further at an accelerating rate in 2017, this means there is greater demand for baby food in China.
Baby Food is always a Top Market for E-Commerce Giants in China. Example: https://baby.tmall.com
Household consumption: FMCG Edible Items
China’s consumption habits are shifting and now consumers are making safe and informed choices when it comes to packed edible items. Growing demand has also been noticed in foreign brands FMCG. Packaged food includes; biscuits, chocolate, instant noodles, candy, chewing gum and infant formula, milk, yogurt, juice, beer, ready-to-drink (RTD) tea, carbonated soft drinks (CSD), and packaged water, these items contribute to 80% of China’s FMCG purchases.
Consumers prefer to buy beer in convenience stores and grocery stores in Tier-1 and Tier-2 cities. The rise in demand is also accredited to convenient E-commerce channels, growing by more than 52.0%.
Non-Household consumption: Hotel, Restaurant, Bar
Chinese now prefer to eat out or order food delivery, instead of cooking meals in their kitchens. According to the latest research, food purchased for home cooking grew by an annual 3% from 2013 to 2016 whereas, food delivery rose by 44% and a 10% increase was noted in dining out. Futuristic brands are already benefiting from this trend. For example, the foodservice divisions at Unilever and Fonterra that sell ingredients to restaurants are achieving double-digit growth. Private equity brands have targeted online-to-offline (O2O) food delivery platforms such as Ele.me and Meituan, a segment of the food delivery market that has grown by 40% to 50% annually since 2013 and is expected to continue to grow along with Chinese consumers’ increasing appetite for convenience and for quality food and beverages. The popularity of products like cheese and pizza was signifying that consumers are becoming more adventurous and increasingly have a fondness for Western-style products when they are eating out or delivering food. This is a good sign for direct-to-consumer food sales too. As ingredients and dishes become more common outside the home, it’s more likely the Chinese consumer will try, become familiar with, and eventually buy for in-home consumption.
E-commerce consumption +52%
The e-commerce channel has continued to skyrocket, growing by more than 52% in value. Chinese consumers are also faster at adapting to e-commerce and social media.
E-Commerce is more utilized in China than in other markets, this is mainly due to the nation’s strong digital infrastructure. Chinese consumers prefer to buy products online more for convenience than price. Chinese customers are extremely tech-savvy and use mobile technology to increase their functionality. Consumers in China appreciate new technologies and show the early adoption of new products.
To reap the benefits of strong e-commerce platforms, foreign brands are advised to lay in competing for the Right digital marketing strategy to create awareness about their services and products that seamlessly connect online and offline elements. At every step of the purchasing pathway, consumers need to be kept entertained and engaged. In China, if a service is appreciated people like to chat about it and automatically customers are transformed to brand loyalists who further talk about your service and brand among their friends and family.
The biggest e-commerce company in China, Alibaba, has introduced a growing chain of cashless supermarkets unlike anything in the US. The chain store is called Hema and seeing the popularity among Chinese consumers Alibaba plans to double its locations in China to nearly 60 this year.
Shoppers use their phones to pay for food at Hema, much like at Amazon’s new cashless stores, Amazon Go.
In addition to that, Hema has two other services: on-site chefs offer to cook shoppers’ groceries on-demand, and there is a courier service that can deliver online orders within 30 minutes. This is a new concept that gained instant popularity in China, seems like Chinese consumers like some entertaining action.
Marketing Strategy for Food Brands in China
China’s economy is flourishing, and the growth of China is probably one of the best stories of the time. Companies that build a detailed digital marketing strategy and focus on the evolving trends and further address these trends and learn how consumption is driven by new shopping behaviors, preferences, and habits will be forerunners in a market worth trillions of dollars.
Marketing to Distributors
China is a completely different market than elsewhere in the world. If foreign brands can not find quality distributors then it gets difficult to gain a return on investment. Local Chinese distributors are very picky in the Chinese market and they also maintain a reputation therefore firstly, to get noticed by them and get chosen by them is close to impossible if a brand doesn’t already have created awareness on Chinese digital platforms and portrays a good e- reputation.
E-reputation of French Wine: Chateau Fourcas Dupre
Focus Dupre, was a highly welcomed wine in China. The local Chinese digital marketing agency, knowing the Chinese consumer mind, entailed the story of this French wine in such a way that it made its way to the tables of upper-class Chinese consumers in a short span of time.
This wine was recommended by a British writer Jancis Robinson, who specializes in the wine industry and is known as the queen of England’s wine industry as a consultant. Due to extremely good E-reputation, the wine was soon rated as the best on Chinese retailers’ websites. E-reputation is extremely important in China to promote a foreign brand or a product.
Social media: the key to engaging with potential Clients
Chinese netizens follow social media platforms religiously. A big part of their spending on a product is dependent on reviews they read from other users. Chinese consumers do not trust in advertising of the products from the company itself. It is critical for companies to have social media presence to be successful in the Chinese digital ecosystem. Social media presence can backfire too, if not taken care of properly, therefore it is vital to partner with a reputable digital agency in China for guidance on social media presence.
Branding is the Key in China
No matter how popular a brand is outside China, to a Chinese audience only what is visible on Chinese digital platforms is known. In B2B lead generation, more trust and visibility are needed.
In China, consumers look for new and trustworthy Food and Beverage brands. Firstly, consumers must be told about the benefits of the product, and Intellectual property rights must be availed, in order to protect one brand from counterfeit products. Several well-known brands want to convey friendly messages to attract Chinese consumers but sometimes end up offending Chinese consumers due to a lack of knowledge about Chinese culture. Therefore, It is extremely important to understand the local culture in China and conduct branding accordingly.
Brand activation is key in China
The secret to brand activation in China is when a company is promoting its products or services it must focus on similar communities or one kind of consumer. Brand activation is a process of making a brand well-known among the consumers and eventually focuses on moving the consumers to move them to the next phase of the buyer’s cycle. The activation can be promoted in an experience-based way. This generates consumers’ interest and allows them to use and experience the brand. Social media platforms are highly advisable to create brand activation in China.
Brand exposure or brand awareness is the familiarity of the consumer with the brand. In China, brand exposure is done using social media websites, such as; WeChat, Weibo, and QQ. Chinese consumers learn about new brands via social media. According to most international food brands, Chinese consumers do research about a product or service on their smartphones.
Soft Drink Case Study: Twist&drink Campaign in China
Twist & Drink is an Austrian brand catering to children. The drink is made from natural mountain spring water. The product line boasts several fruity flavors, in colorful easy to open bottles. Twist & Drink is a family-owned business since 1973 and produces over 50 million bottles each year. Currently, the brand is available in more than 20 countries.
Twist & Drink on Wechat
Wechat is the most adopted social media platform by brands to engage consumers. It has over 860 million monthly active users. With the help of a local digital marketing agency, Twist & Drink launched a game, consisting of various characters that users needed to compete with in order to collect points in the ‘Twist & Drink arena’. WeChat games are extremely popular and work as a great marketing tool if branded appropriately.
Twist & Drink game informed the consumers about the different flavors with the help of characters in the game. Each character also came with key messages displayed before and after the game was played. More than 10000 Chinese consumers participated per day, using their WeChat accounts. On the other hand, regular posts and content were shared on other major social media platforms every day.
The official Twist & Drink account was made using H5 using the Wechat mini-site which was hosted within the application.
Positioning of Twist & Drink Digital marketing strategy
In order to attract Chinese customers, the product or service must be extensively visible on digital platforms in China. Like all other foreign brands no matter how famous a brand is in some part of the world when rolling in China, the brand needs to create awareness for the targeted market. Along with functional benefits, Chinese consumers are extremely focused on the value of products and services. They require companies to justify their prices.
On the other hand, E-commerce has become more prevalent as the buying channel in China, food companies must create a platform that seamlessly integrates online and offline elements. At every step of the purchasing pathway, digital interaction needs to be integrated and design meaningful touchpoints that deepen the brand’s engagement with consumers. In Twist & Drink case, awareness was created among mothers using digital channels, highlighting the health benefits as the selling point of the drink for their children.
Canadian Citadel Maple Syrup Digital Strategy
Citadelle is the world’s largest supplier of 100 percent pure maple syrup. Previously, Chinese consumers found maple syrup just too expensive to include in their diet. Citadelle realized the opportunity in the Chinese market and felt that Chinese consumers are looking for healthy and safe food, especially imported food, and when it comes to sweeteners, maple syrup is the healthiest option. Citadelle also targeted babies under 12 months of age, a key demographic in China. Maple syrup is safe for babies under 12 months old whereas, honey is not advisable for babies. Maple syrup also has 25 percent fewer calories than honey. These selling points coupled with a well-known brand name soon became popular among Chinese consumers on the Tmall e-commerce site.
To encourage customer engagement Citadel also conducted cooking contests and made Chinese recipes using maple syrups.
Epermarket- Shanghai Online Supermarket
Jean Yves LU is the founder and CEO of Epermarket, Shanghai’s ultimate online supermarket. Jean Yves LU saw the potential in catering to the ex-pat community of Shanghai. He aimed to offer Epermarket as a one-stop that sells foreign products and food that the foreign communities in China can trust. E-permarket also has high-class wine to satisfy even the most refined foreign and local Chinese customers, which has been handpicked from more than five thousand wineries around the world. However, Epermarket soon realized the interest of the local Chinese community in fresh, safe imported products. Initially, they were targeting foreign consumers and ex-pats in Shanghai, soon after realizing the local Chinese consumers’ demand they laid their digital strategy to attract Chinese urbanites. This gave a boom in their sales by targeting several segments in the market.
Brand Building is Vital in China
China has become one of the fastest-growing lucrative markets in the world. Chinese consumers are opening to foreign brands even faster than expected especially for food and beverages brands due to the ‘safe food’ feature attached to them. There is a huge potential for growth for foreign brands in China. E-commerce is a vital part of consumer shopping behavior in China. Therefore, the online Chinese population has exceeded 731 million people, which is equal to the total population of Europe. Online shopping has become an important factor in China’s economy, contributing highly to annual GDP growth. The trend in digital shopping in various industries is growing rapidly and shows no signs of slowing down anytime soon.
To gain success in Chinese marketplaces a brand must be known by Chinese customers. Products and services must be offered to cater to China’s preferences and tastes. This can call for innovating a new product assortment or could be altering the brand name or logo. Chinese consumers are extremely reliant on social media for learning about new brands and products. Online forums where product reviews are shared also count a lot in brand building.
Lifestyle around the Product: it is not just Food
With increased awareness, Chinese consumers’ preferences and habits are changing. On the other hand Chinese use particular brands and products for self-expression. Through urbanization, modernization, and internationalization, Chinese consumers are adopting at an extremely fast rate, and now they have developed an appetite and tastes for foreign products and cuisines too.
Initially, when Starbucks rolled out in China, its customers were mostly ex-pats but now Starbucks is extremely popular among Chinese consumers. Starbucks positioned coffee drinking as an experience, and a symbol of an upwardly mobile lifestyle, this trend was readily welcomed by young Chinese consumers as it made them feel more independent and allowed them to appear cool and successful among their peers.
Engaging more consumers: Chinese love taking Pictures of their meal
In the highly connected environment of China, customer engagement must be the top priority in the food industry. Chinese customers like online interactions and it can be achieved with the help of interactive apps and games. Netizens seek personal experience in an app, that could be encouraged with one-to-one dialogue or contextual engagement. A successful mobile strategy should also draw actionable data in order to understand the customer’s perspective and intentions.
Apart from mobile applications customers can be engaged on Chinese social media, where Chinese consumers are very active, and responding to each and every post is considered an obligation. Although handling social media engagement in China is not easy, one negative comment can flare up into a bad image, therefore companies need to develop new models and processes for effectively engaging individuals in a way that communicates brand identity and values along with keeping customer preferences in mind. Responses on social media must satisfy consumer concerns, and should not lead to a negative viral spiral. Customer engagement on social media in China has the power to make or break a brand.
Retargeting: Multiplicate the Contact with Brand
The marketing campaign must target customers on various social media platforms. Creating awareness of the brand, interacting online with customers, and creating a seamless transition between each social media platform. The Chinese digital ecosystem is fragmented. However, the major platforms like Weibo, WeChat, Baidu, and Taobao boast the largest volume of users. Platforms are either segmented by function or cater to niche interest communities.
Engage more 0ffline 2 0nline: Food needs visual Engagement
China is becoming increasingly digital. Foreign companies especially food brands need to incorporate online and offline features in their business model. A strategy that enables food and beverage brands to avail full advantages of both online commerce and physical retail.
The French Cellar, a top winery in Asia, derived a purposeful Online to Offline strategy to enable Chinese customers to subscribe to their organized offline events in major cities of China. During the events, Chinese consumers could taste the wine and this strategy was also meaningful in connecting existing customers to potential customers
This online to offline strategy was implemented with the help of Wechat, where The French Cellar engaged with the customers present at the event on their WeChat accounts. The attendees were educated regarding wine and step by step discovered the wide selection of The French Cellar. In this course, the brand also encouraged customers to taste the wine. Wine is not part of Chinese culture, but with internationalization, Chinese consumers have become increasingly drawn to wine and want to learn about its various characteristics and how to appreciate a good wine.
Discovering Brand’s Charisma
When entering the Chinese market brand has to be extra careful of the local Chinese consumer’s values, traditions, and preferences. A market entry must not feel like attacking current customs or replacing their values. Therefore, in-depth market research is highly advisable to learn about the Chinese market.
Starbucks: not coffee but the aura
When Starbucks entered China as a tea-drinking nation, it didn’t focus on replacing tea but enhanced tea culture by bringing about drinks that contained tea ingredients. Starbucks gave consumers the option of drinking and hanging out in Third place.
The main target of Starbucks was China’s middle-class consumers who are inspired by western culture and quite fast at adopting it. Starbucks created an environment that recharges the customer by providing upbeat music and chic interiors. Many Chinese consumers go to Starbucks not just to have a cup of Frappuccino, but to enjoy the “Starbucks Experience” that makes them feel cool and trendy. Thus, Starbucks has established itself as an aspirational brand and is able to charge premium prices.
Tracking Customer Actions
In order to stay ahead of the competition, in China retailers must invest in identifying customer needs, and preferences along with finding the right partners and investing beyond O2O into omnichannel fulfillment. E-commerce has enabled international retailers and brands to enter China more quickly and easily than before through online-only business models.
Today, China is driven by mobile-consumer behavior, vibrant social commerce adoption, and a ubiquitous digital payments infrastructure. On the other hand, the Chinese market is fiercely competitive. Internet giants and international, and local brands are investing hugely to learn about customer actions in order to provide an exceptional customer experience. It won’t be wrong to say that only the most innovative will survive in this dynamic retail environment.
Identify Best Products
As the digital platform shared between eCommerce, mobile, and social have created so much noise, at times it gets difficult to identify the best products. Therefore brands are integrating online and offline shopping experiences to fully satisfy a customer before they make a purchase. In this way, digital becomes a platform for not just online growth but everything from, brand building and customer engagement to supply chain operations and physical store formats.
Influencers are another strong way of branding products in 2020. Retailers look for influencers that are relatable to their brand values. This way a target market is already in place. Customers already trust the influencer and their recommendations. According to a report by PWC, 29% of Chinese consumers, as compared to 13% globally, use social media to see what brands or products KOLs and celebrities are endorsing. KOLs differ from E-commerce merchants in three ways, they interactively interact with consumers, raise awareness and help build brands.
For Example, Miss Yeah produce a very funny video, she cooks in her office
Maximize Communication Channel
With immense E-commerce penetration of about 5%, now(FMCG) and the groceries sector could be the next major growth driver. Even though online grocery has been a challenging proposition for retailers globally, in China, it is offering an attractive opportunity.
China’s luxury consumers are much more willing to access and buy brands online, take advantage of promotions, and have concerns over authenticity. Therefore, brands must communicate and interact with customers on communication channels as much as they can. This strategy increases trust in the brand and also educates customers about the product or brand.
A recent survey conducted by PwC shows that 40% of Chinese consumers shop from their favorite retailer. Consumers trust the brand offered by that particular retailer with respect to product quality and price. This attribute is highly prevalent in the grocery and food categories.
Safety and quality issues have given international supermarkets and brands offering imported products an edge in the Chinese food market. The high demand for imported food items has encouraged the development of cross-border E-commerce. Cross-border E-commerce enables retailers and brands to try the Chinese market entry model without the compulsion of setting up a physical store, a local Chinese entity, or any enormous capital investment.
Many retailers consider cross-border E-commerce as a “test and learn” strategy.
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Engage with more Distribution Dealers
In the case of cross-border and E-commerce market entry, retailers must engage with and partner with as many local distributors as possible. Since this strategy will make more possibilities to be successful on Chinese online platforms. The vita way to increase exposure is lead generation. Inbound marketing offers extremely useful options to be applied in lead generation, a few to name are;
Content development, SEO, PPC, and E-reputation. In B2B lead generation, more trust and visibility are needed. Firstly, branding and consumer awareness of the food brand needs to be comprehensive with respect to its content, high-quality photos, and consumer insight. A foreign brand must have a local Chinese customer-oriented website along with other useful features on social media.
New platforms exist in China and help Brands to connect with a large number of distributors.
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Engagement with Distributors
In China, dealing with distributors can be a ruthless experience sometimes. Due to high demand, Chinese distributors look for brands that are popular with consumers or have features that Chinese consumers prefer. Distributors, don’t help in promoting your product on their website in fact if a brand is not doing well they will leave it and opt for a similar featured brand. Therefore, a digital marketing strategy needs to be extremely important to survive the highly competitive market of China.
Brands need to make their own space on digital platforms by being sensitive to the needs of customers, regularly coming up with interactive digital activities on social media and promoting one’s brand as the best among all other brands present in the market.
To Have high engagement of Distributors, Branding is the Key
- Good Branding = easier to Sell = Good Engagement of your Chinese Distributor, and the network of resellers
- Poor Branding = Hard to Sell = No engagement of your Distributor
I invite you to read this article to understand. Problems of New Brands in China
In China, the franchisee undertakes business operations under a uniform business model as a part of the agreement by the contract and pays franchising fees to the franchisor. International Chinese tourism has developed the demand for foreign food brands and restaurants in China.
Chinese consumers are becoming more aware of western tastes and have started to appreciate foreign cuisines. Foreign restaurants and food brands want to materialize this opportunity and open their franchise in China.
Foreign brands of eateries need to embrace digital opportunities in order to find a suitable franchisee. They need to focus on building their own digital capabilities and defend their ground by activating the online channel. Companies need to design their business functions with a full-channel vision to win the future Chinese shoppers who are becoming increasingly sophisticated and multichannel.
The Key to Develop a Franchise: A Strong Branding
E-Commerce: new Channel of Distribution for F&B Brands in China
E-commerce is continuously developing showing strong growth momentum in China. It has penetrated extensively in higher and lower-tier cities. They need to focus on building their own digital capabilities and defend their ground by activating the online channel. Companies need to design their business functions with a full-channel vision to win the future Chinese shoppers who are becoming increasingly sophisticated and multichannel.
There are three main search engines in China. Baidu is the biggest and most well-known, is used the most boasting 70% of the market share. It is also the fifth most visited website in the world in terms of online traffic. To gain more traffic and gain, a brand can establish itself on Qihoo 360 and Sogou. SEM is another good option to attract traffic to a website, although it requires a bigger marketing budget. Pay Per Click strategy is more effective for bigger brands and requires a substantial budget. SEM is often used by companies looking for extra leads.
Optimize conversion rate: the E-Reputation Theory
To encourage conversion rate, brands that optimize their websites on Baidu also need to have a mobile site. This also generates mobile payments and is an easier way for a brand to reach conversions. Baidu is also enhancing the user experience on mobile phones. An optimized website is extremely important for a successful SEM strategy, this calls for rich content Mandarin website. Having a .cn domain increases the creditability of the website and improves ranking on the Chinese web. Informative Chinese websites hold an excellent reputation in China and help consumers to trust the brand.
Best First Step Entry Strategy in China: Cross-border E-Commerce
Cross-border market entry in China comes with a whole different set of toolkits where integrated marketing on digital and offline platforms is the key. It’s not easy to grab the attention of customers who are spoiled in the digital world, daily bombarded with extensive quality content, used to paying conveniently in a cashless environment, and follow trustworthy KOL advice.
Although, connecting seamlessly with Chinese urban netizens need a carefully sketched digital marketing strategy to uplift the products and services from the crowd. It is true for companies pursuing to enter the Chinese market digitally, are also cost-effective rather than taking the offline door. Especially when the brand is unknown in the Chinese environment since digital is the only platform that can be used to draw the attention of Chinese consumers.
Do, Learn, adapt and Optimize: a Successful Philosophy in China’s Digital Economy
The digital strategy for China is completely different than the rest of the world. It is extremely important to learn the taste preferences, values, and traditions of Chinese consumers before offering them a product. Since offering them something that they cannot relate to is useless as the product will never be able to get their information.
Secondly, all previous brands that have entered Chinese brands have improvised their products according to Chinese taste, let it be Green tea Frapachino at Starbucks or Oreo cookies to Red bean drinks. After, adapting to Chinese tastes and preferences, companies must optimize their marketing strategy according to the trend in China. Which is ultimately digital.
Creating product awareness, interacting with customers on social media, using KOL for the product, providing interactive online to offline solutions, and providing high-quality mandarin content all come under the umbrella of the Cross-border digital marketing strategy of China.
Innovative Strategy For Leading brands
Until a few years ago co-branding in China of leading brands was a new concept and companies were not sure of what reaction they will receive from the Chinese market. On Thanksgiving 2017, Durex took advantage of Chinese consumers’ increasing awareness of foreign festivals, Durex China’s Weibo account published “thank you” posts to 13 brands in seemingly unrelated fields.
Further attention came when, the 13 “chosen brands” felt obliged to welcome or thank Durex back for something else, which left netizens glued to their Weibo accounts to see the interaction among the brands. The humorous responses among the brands gained extensive appreciation from the Chinese consumers and lead to being shared 16,000 times and receiving 4,200 comments.
CoBranding -Starbucks Alibaba
Starbucks, the coffee giant opened “The Starbucks Reserve Roastery” in Shanghai, which boasts a 30,000 square-foot retail location that the company refers to as the “first fully immersive coffee wonderland in China” and it is also the most ambitious project of Starbucks ever.
The Roastery incorporates the first-ever in-store augmented reality experience, built in partnership with Chinese tech giant Alibaba.
Consumers use a custom Roastery smartphone app, to learn about various features of The Roastery. The app entails a digital menu and rewards customers with virtual badges. Alibaba has provided its e-commerce giant, Tmall services by selling Roastery-branded merchandise and coffee, and Roastery tasting experiences.
Starbucks realizing the power of the digital ecosystem in China previously partnered with one more digital Chinese tech giant, Tencent, for social gifting integration on WeChat.
In China Starbucks witnesses the fastest-growing market with more than 3,000 stores across 136 cities, and 600 alone in Shanghai. The company opened one store every 15 hours in China, where there are nearly 700 million smartphone users.
Last July, Schultz gave clues on partnering with Chinese tech companies, “based on the fact that the consumer in China is well more advanced than the U.S. consumer in terms of being a digital native”, Schultz.
Fatima RIZVI: an international Marketer that spends several years in China. Fatima has a great understanding of Marketer Problems in China, and a deep understanding of the Chinese Food market.
Olivier VEROT: founder of GMA, Olivier is a “pragmatic” Marketer that prioritizes Results. After spending 11 years in China, he has good expertise in Chinese Marketing.
GMA a Marketing Agency Specialized in Food & Beverage Market in China
Performance Marketing Agency: the core DNA of our Agency is to bring Results to our clients. We work to optimize Sales. develop Branding, or increase Exposure.
Food Expertise: we have expertise in Market Food & beverage in China, know the best Channels, and best influencers, and understand the communication among the Chinese Middle Class.
Digital Attitude: as a pure Digital Player, we perform with Digital Marketing Campaign and have the Digital Philosophy to Do, learn, Adapt and Optimize. We believe that perfect Results arrive by analyzing and nonstop Optimize.
Return on Investment: We know that China is a difficult market for new Brands and we are obsessed with delivering Results that bring ROI to our clients. We provide cost-effective solutions to Maximize Results. It is when we make money that our clients make money.
Partner: we have a partnership approach with our clients. We Guide them, give feedback about Campaigns, and like to work in smart partnerships.
Our Case studies in F&B in China.
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If you have a serious project in China and want to develop your Brand, your distribution, your E-Commerce feel be Free to contact us.
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Traditional retail players persist in seeing “tech” as peripheral, both strategically and tactically, as Auchan has shown again in China.
Just look at the pangs experienced by distributors who have made the easy choice by performing in-store picking for their drive-thru service, while Amazon has made the requirement and can ship a package within 1 hour following a online order despite having a stock 3 times smaller than its peers.
And this is just the beginning, the Seattle firm invested $800 million in 2019 to deliver to its customers in 30 minutes by 2024. It should also be noted that these distributors outsource their digital strategy and tactics to “360 digital agencies °” rather than considering them as key assets as historical e-commerce players systematically do.
For ex-Pure-Players, it is the central notion of the customer that is the basis of their assessment of their long-term customer relationship. They are not based on the profitability of the receipt but on that of this customer, throughout his life with them.
This goes even further: ex-Pure Players know how to value, thanks to data, not only the transactional but above all the relationship with these customers, through the evaluation of the points of contact, to the benefit of experience and therefore loyalty.
Hi , owner of Chilian Wineries. I follow your posts with great interest, thanks for sharing your insights of the Chinese Market. we are the 5th largest exporter of South America to China, mainly doing OEM. Now we want to start working some of our brands, and need help on the communications. Would you ask someone from your team to contact me for reviewing how can we team-up
Very interesting article and good insights.
I am interested in your Break to Market solution and the F&B case studies. Can you please forward those to me?
internet visitors, its really really nice article on building up new strategy for China
Great article ! Your post is really informative. Earlier, I was not aware that High and middle-income families are more willing to spend their money on organic food rather than traditional food. Now, I am planning to start my restaurant and I will focus mainly on organic food. Thanks for sharing.
Nice to meet you. We are a large Chinese company based in Guangzhou. My leaders have a project to distribute exclusivly a beverage brand to China.
Contact me with your project, brand information , wechat email both ok.
We prefer big brands from rich countries like Europe, North America, Australia
Fantastic article.I learned a lot from this. I’m opening a fine dining restaurant in Hefei city next month and plan to implement a lot of these strategies. Thanks!
we will contact you Richie, and introduce to you our latest Solution 😉
I am working for Chongqing General Trading Group; and want to import and distribute Food Brand in China to west of China. We are the largest retailler in China, and are focus on good product, with good reputation in China.
contact us to know more
Mister Zhong I will add you to our database of distributors. Keep in touch.
I am following discussion, I work for a Shopping mall that want to focus at 100% on imported western F&B brands, based in Xi’an.
We offer special condition for Western Brands, send your information t ome, and lets discuss
Just crazy information , and very good sumup. I work in F&B in China for like 8years, and all solution you bring and what you say is right.
Miss part about restaurant and hotel, but I guess it is not your scope of work
The Guide that every professionals wanted to export in China should read at least ONCE
Congrats I enjoy
A very compact well written and useful insight into the food & beverage industry in China.
Very good article, and show your professionalism. We are a Chinese distributor and searching to import Foreign food Products and Water / Juice and seafood. Please send your introduction to us.
We have good english communication and searching to resell online and on our new imported chain stores.
My business is to promote french food producers to export to China mainland
French food is known as one of the best food rank
I assist my french and belgium clients in chinese food market
Don’t hesitate to contact me to talk about our next step
i work for Beer & Spirit Distribution , part of Beer Group, and we would like to represent high end imported Food brand in China. The brand need to be worldwide famous and be little bit know in China.
We would like to take share in a joint Venture, and can take the distribution cost if the Brand can invest in Marketing.
You can contact me for further information.
Although you eat much more Chinese foof in China, you may lose weight instead. I love the scene of Street Food in China, the shots. I love the I love the sound of Streetfood and I love the food and the colours
As Chinese consummer , they have lot of sarcasm bad faces with spicy … some bad words…and read dianping on the new APP
I do not understand your Comment LU
I love how strangers just sit next to each other in the Chinese culture. Doesn’t happen in many places., My favorite food in China is street food in Shanghai is on Jinshajiang road outside of global harbor.
Great article, the best one I never read about Food & Beverage Marketing in China.
Thank you Matthieu. Keep in touch on WeChat for your next big Project. 😉
Very deep insight and Great Article. The best article I read about Food in China.
I am doing my thesis and it will help me a lot. I would like to add some information.
The organic food in China has tripled in 5years to currently account for 1.01 percent of total food consumption, which is now bewteen 5 to 8 percent of total concumption.
Chinese consumers are a combination of the old and the new Food culture, mix of Old traidtion and new lifestyle. She enjoy Chinese old restaurant making Chinese hot pot, and the next day, she will taking picture in Wagas, eating a healthy Salad and smoothies.
China is the world’s largest market for food and grocery retail and this since 2011, nothing new…
Thank you Melissa.
I can not reply to all of your question, different organism have different source.
And yes you are right about your analyze of Chinese Consumers, mix between tradition and New western Lifestyle.