final report 2016-07-13
TRANSCRIPT
GeneratingExportstoChinaforNewYork’sAgriculture,Food&
BeverageSectorAProjectofCornellCooperativeExtension
FundedbyagrantfromEmpireStateDevelopment
FinalReport
July2016
Author:JimManning,CornellCooperativeExtension
ofOneidaCounty
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TABLEOFCONTENTSExecutiveSummary(page5)
IntroductionandProjectBackground(page7)
GoalsoftheProject(page14)
StepsTakentoImplementtheProject(page15)
SalesDevelopment(page15)
StrategicMarketTargetingandAnalysis(page16)
OverallMarketAnalysis(page19)
TheDistributionChannel(page21)
ProductCategoryAnalyses(page25)
DistributorLists(page34)
TheOnlineOpportunity(page37)
AnalysisofPrivateLabel(page41)
DatabaseofNYSFoodandBeverageProducerswithExportPotential(page42)
SurveyofExportActivityandPotential(page44)
EvaluatingtheProject’sOverallEffectiveness(page45)
ChallengesorUnexpectedEvents(page48)
StepsNeededtoReplicateThisEffortandFAQs(page49)
FeedbackRegardingthisESDProgram(page58)
Acknowledgements(page59)
APPENDICES(postedathttps://goo.gl/VTQctE)
1a–CCEProposal2013-06-07
1b–CreatingNYSJobsFinal2012-12-13(SSTproposal)
2–GrantDisbursementAgreement2013-07-18
3a–Databasenarrative
3b–Database–CompanieswithHighPotential
3c–Database–Allcompanies
4–Survey
5–SSTFinalReport2015-03
6–Marketanalyses
7–Outreachdocuments
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ExecutiveSummaryInearly2013SafeSourceTradingLLC(SST)hadmadethecasetoofficialsinNewYorkStategovernmentthattherewereimmediateopportunitiestoincreasesalesofNewYorkStatefoodproductstoChina,givenChina’sincreasingaffluenceaswellastheincreasingalarmamongChineseconsumersaboutthecountry’senvironmentalandfoodsafetychallenges1.InresponsetocontactsfromtheGovernor’soffice,AssociateDirectorofCCEChrisWatkins(nowCCEDirector)taskedtheauthorofthisreportwithdevelopingaproposalforfundingtoexploreanddevelopthisopportunity2.TheprojectwassubsequentlyfundedinJuneof2013,andtheauthorofthisreportservedasProjectManager.Asdetailedinthefollowingpagesandthevoluminousappendices,theresultsoftheprojectweremixed.SafeSourceTradinghadrepresentedthatasaresultoftheirefforts,withCCEandNewYorkState’ssupport,theywouldgeneratealargeandgrowingflowofexportsofNewYorkStateagricultural,foodandbeverageproducts.Inreality,despitethesupporttheyreceivedincludingadjustmentstothetermsoftheirsubcontract,SafeSourcewasabletoconsummatejustonesalerepresentingasmallfractionoftherevenuestheyhadprojected;andmorethanayearafterthatsalewasconsummatedthereisnosuggestionthatSafeSourcehasbeenabletobuildonthatsmallsuccess.Ontheotherhand,asalsodetailedintheattached,theCCEProjectManagerandasmallteamworkingontheprojectwereabletodevelopalargeamountofuseful,actionableinformationaboutthemarketopportunity;todevelopavaluabledatabaseofcurrentorpotentialexportersintheagriculture,foodandbeveragesectors;todisseminatetheinformationdevelopedtointerestedbusinessesalongwithrecommendationsfornextsteps;andgenerallytoincreasethecapacityofNewYorkStateandspecificallytheCornellCooperativeExtensionsystemtosupportthesebusinessesasexportmarketsbecomeanincreasinglyimportantconsiderationforthem.Thisreportincludesspecificrecommendationsfornextstepsincluding:
• Consolidatingandincreasingtheeaseofaccesstoexistingresourcesthatsupportbusinessesbeginningorgrowingtheirexportactivities;
• DevelopingaprogramofdirectChinamarketentrysupportformediumtolargecompaniesintargetedsectorswherestrongopportunitieshavebeenidentified;
• DevelopingastatewidedigitalmarketingstrategyforChinainrecognitionoftheexplosivegrowthoftheChinesecommercialinternet;and
• Strengtheningcooperativemarketingprograms,withaspecialfocusonexportdevelopment,forNewYork’smapleandhoneyindustries,whoseparticularcharacteristicsofferuniqueopportunitiesforgrowth.
1Appendix1b:CreatingJobsThroughChinaExportsandFDI-AProposalforNewYorkState(JeremyHaft,SafeSourceTrading)2Appendix1a:CCEProposal2013-06-07
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IntroductionandProjectBackground
Inearly2013,EmpireStateDevelopmentwasaskedbytheGovernor’sofficetoconsiderfundinganeffortthroughCornellCooperativeExtension(CCE)toincreaseexportsofNewYorkState’sfoodandagriculturalproductstoChina.TheimmediatedriveroftherequestwasaconversationorseriesofconversationsbetweenJeremyHaftandChrisLapetina,ofthenewlyformedSafeSourceTradingLLC(SST),andAndrewKennedy,theGovernor’sAssistantSecretaryforEconomicDevelopment,andothersintheGovernor’soffice.SSThadmadethecasethattherewereimmediateopportunitiestoincreasesalesofNewYorkStatefoodproductstoChina,givenChina’sincreasingaffluenceaswellastheincreasingalarmamongChineseconsumersaboutthecountry’senvironmentalandfoodsafetychallenges3.InresponsetocontactsfromtheGovernor’soffice,AssociateDirectorofCCEChrisWatkins(nowCCEDirector)taskedtheauthorofthisreportwithdevelopingaproposalforfundingtoexploreanddevelopthisopportunity.ProjectRationaleAccesstointernationalmarketsisastrategicgrowthopportunityforanycompany.Atthetimeoftheinitiationofthisproject,theincreasingpurchasingpowerofChina-andspecificallyofmembersofChina’smiddleclass-wasemergingasthelargestgrowthopportunityintheworldforconsumergoodsingeneralandforfoodproductsinparticular.However,openingdoorstothesemarketsclearlyrequiredspecialexpertiseandanabilitytocommitresourcesthatmightbebeyondthecapacityofmanysmallandmediumsizedbusinesses.Evenlargercompanieshavetoprioritizetheirefforts,andtherisksandpotentialrewardsofenteringanew,distant,andinmanywaysundevelopedmarketwouldneedtobecarefullyweighed.Onthedemandside,severalspecificfactorsinChinaprovidedthefundamentalrationaleforthisproject:
• IncreasedpurchasingpowerandchangingbuyinghabitsoftheemergingChinesemiddleclass.Atthetimethattheprojectwasinitiated,China’smiddleclasswasestimatedat300million,morethantheentireU.S.population4.TheriseinthepurchasingpoweroftheChinesepopulationhadbeenaccompaniedbyariseindemandforimportedproducts.
• Foodsafety/qualityandenvironmentalconcernsinChina.Hundredsoffoodsafetyscandalshadhappenedoverthepreviousfewyears,withhundredsofthousandsfallingsick(includingmanychildren,especiallyinthreemajordairycases)andseveraldeaths.
3Appendix1b:CreatingJobsThroughChinaExportsandFDI-AProposalforNewYorkState(JeremyHaft,SafeSourceTrading)4http://money.cnn.com/2012/04/25/news/economy/china-middle-class/index.htm
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In2011/12,theChinesepolicediscoveredover5,200casesofunsafefood5.Theproductsaffectedthemostthroughtheyearsweredairy,produceandmeat(especiallypork).
• RelativeunderdevelopmentofNewYork’stradewithChina.WhileChinawasalreadyAmerica’sthird-largestexportmarket,itwasonlyNewYork’ssixthlargestexportmarket.Furthermore,mostofNewYork’sexportsconsistedofdurablegoods,whileperishables,includingsafefoodproducts,wereurgentlyindemandbyChina.Chinahadrecentlybecometheworld’snumberoneimporterofagriculturalproducts6.Since2000,U.S.exportstoChinawereup542%;in2011alone,exportsgrew13.1%andbrokethe$100billionmark7.In2013,exportsofUSfood&beverageproductstoChinawerevaluedat$20billion.Intheperiod2009-2013food&beverageexportsfromtheUStoChinagrewata14%CompoundAnnualGrowthRate(CAGR).
Onthesupplyside,thequalityanddiversityofNewYorkStatefoodandbeverageindustriesappearedtobeagoodmatchforChinesedemand.In2011,NewYork’sagriculturalsectordelivered$5.3billioninproductsales,accordingtotheUSDA’sNationalAgriculturalStatisticsServices.Milkandotherdairyproductscontributedmorethanhalfofthatsalesvolume,butthestatealsoproducessignificantvolumesofavarietyofotheragriculturalandfoodproducts,includingspecialtycropssuchastreefruits;grapes;vegetables(cabbage,sweetcorn,onions,snapbeans,tomatoes,pumpkins,cucumbers,squash,andcauliflower);maplesyrup;meat;andpoultry.Someoftheseproductsshould,inprinciple,bewellmatchedtoChineseincreaseddemand,especiallygiventheabove-mentionedfoodsafetyconcerns.NewYorkStatealreadyexportedabout$1.3billioninagriculturalproductsaccordingtotheUSDA’sEconomicResearchService,althoughthemajorityofthattradewas(andis)withneighboringcountries.WhilecommoditieshavebeenthebulkofexistingfoodexportstoChinafromtheUS,thespecificsofChinesedemandandNewYork’sincreasinglydiversefoodandbeverageproductivecapacitysupportedafocusonopportunitieswithspecialtyproducts,includingvalue-addedandbrandedproductsthatcouldbeexpectedtocommandpremiumpricesor,atleast,nottocompeteprimarilyonprice.NewYorkState’sagricultural,food,andbeverageproductsareofcertifiablequalityandsafety,althoughtodatetheremayhavebeeninsufficientemphasisplacedonpromotingthosecharacteristics;andtherewasevidencethattheChinesewerewillingtopayapremiumforsafeproductsofrecognizedquality.AnecdotalreportsandCCEstaffobservationsconfirmedthattheChinesemarkethadbeenreachingoutforNYSagricultural,foodandbeverageproducts,buttherehadbeennocoordinatedstatewideefforttodeveloptheopportunity.Asnotedearlier,manycompanieslacktheresourcesandtheexpertiseinthemarket.TheprojectproposaldevelopedbyCCEwas5https://cricket.yahoo.com/news/china-wages-war-against-adulterated-food-fake-drgs-053258787.html6BloombergNews,“ChinaovertakestheU.S.asTopCropimporter”,September20,20127BusinessWeek,“China’ssurprisingU.S.buyingspree”,March27,2012.
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intendedtohelpunderstandthechallengesanddeveloptheopportunitiesinresponsetotheidentifieddemand.ProjectProposalTheprojectproposal8wassubmittedbyCornellCooperativeExtensioninJune2013andwasfundedbyEmpireStateDevelopmentonJuly182013.TheproposalprovidedforCornellCooperativeExtensionofOneidaCounty(CCEOC)toleadastatewideeffortoveran18-monthperiodwiththegoalofincreasingfoodandagriculturesectorexports,andtofocusthateffortonthedevelopmentofexportsofunique,differentiatedNYSproducts,includingbothfreshandprocessedproducts,totheemergingmiddleclassandaffluentconsumersofChina.MarketdevelopmentactivitiesweretobeledbySSTundercontracttoCCEOC.CCEproposedtodeployafull-timeProjectManagerfromCCEOCwhowouldleadtheinitiativefor18months.TheproposedProjectManager(theauthorofthisreport)wastoworkwithCCEandExtensionAgricultureEconomicDevelopmentstafflocatedaroundNewYorkState;andalso,asappropriateandavailable,toengageCornellUniversitystaff,facultyandgraduatestudentswithspecificexpertiseandinterestindevelopingmarketsforNewYork’sagriculturalproducts.Thebudgetalsoprovidedforapart-timeProjectAdministrator.CCEOCcommittedtocontractwithSSTforthefirst8monthsoftheproject.SSTwastoactasafull-service,non-exclusiveexportagentwithabrieftodevelopsalesandfulfillinitialordersfromChinesecustomers.SSTenvisionedateamcomposedof10people:6intheUS,withpeopleinchargeofthefollowingareas:Marketing,Sales,Logistics,Governmentaffairs,andProcurement;aswellasateamof3inChina.TheSSTeffortwastobeledbyJeremyHaft,aself-described“serialentrepreneur”basedinWashingtonDCwithover15years’experienceinChina,andhisChina-basedpartnerWangFeng,anativeChinesewithreportedstrongbusinessandgovernmentconnectionsSSTrepresentedthatithad,onitsown,beendevelopingtheChinesemarketfortheprevious12monthsandhadachievedsomeinitialprogress:
- Throughitsefforts,ithadestablishedrelationshipsandsalesopportunitieswiththehotelIndustryinChina.Tourismand,inparticular,theluxuryhotelindustryevidencingrapidgrowththiswasapromisingareaforfocus.AccordingtotheUnitedNationsWorldTourismOrganization,by2025,ChinawillbeoneofthetwolargesthotelmarketsintheworldalongwiththeU.S9.
- Inparticular,thebuyerforoneofChina’slargesthotelchains-JinJiangHotelGroup,
with795Chinesehotels–hadreportedlyexpressedtoSSTthecompany’sgreat8Appendix1a:CCEChinaExportProject,June72013(CCE’sproposaltoESD)9http://www.chinadaily.com.cn/cndy/2012-03/17/content_14853568.htm
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interestinbuyingNYSproductstosatisfythedemandoftheirsophisticatedbusinessandinternationalclientele.Betweenthisbuyerandothercontacts,SSTidentifiedsalespotentialforthefollowingspecificproducts:apples,maplesyrup,pork,yogurt,cheese,icecream,andwine.
- SSTdescribedanalliancewithSinoTrans,oneofChina’slargestlogisticfirmswithindustry-leadingcoldchainlogisticcapability.TheyhadalsodescribedexistingworkingrelationshipswithUSlogistics/freightforwardfirmsforthelogisticsinAmerica.
SST’sroleintheprojectwouldbetocreatejobsinNYSbyactingasadirectsalesagentinChinaforNewYorkStateagriculturalandfoodandbeverageproducts.Bybeingadirectagent,theybelievedtheycouldavoidthetypicaltradingintermediarieswiththeassociatedcosts,delaysandpotentialformisalignedincentives.SSTproposedtoobtainpurchaseordersdirectlyfrombuyersbasedonthedemandtheyhadstartedtobuild,asdescribedabove,andtheywoulddoathoroughfollow-uponleads.Theywouldthentakefullresponsibilityforthefullcommercialcycletoensuretimelysettlementandcoordinatethecross-borderlogistics,includingcold-chainlogisticsasneeded,withtheexpertisetheyhadinChinaIntheirproposal,SSTofferedacompetitiveanalysisdescribingmanytypesofintermediariesandtheircapabilities,includingbothexportfacilitatorsintheUSandplayersinChina.TheiranalysispointedoutthepitfallsfacingcompaniesattemptingtoselldirectlytoChinaandcitedseveralexamplesoffailure.Finally,SST’sproposalconcludedthattheypossessedsignificantcompetitiveadvantagesoverothercompaniesbecause:(i)theywerealreadybuildingadirectsaleschannelintoChina(asopposedtootherstransitinggoodsthroughHongKong,forexample);(ii)theywerealreadyestablishingdirectrelationshipswithhotelandsupermarketbuyers;(iii)SSThadalreadyestablishedpartnershipstomanagethecoldchain;andfinally(iv)becauseoftheirexpertiseinnavigatingtheregulationsandpermittingprocessinChina.Insummary,SSTproposeditselfasa“one-stop-shop”forNewYorkStateagriculturalandfoodproducersseekingtoexpandintotheChinesemarketwithacomprehensivelineofservices:marketing;salesdevelopment;logistics;andtradefinance.Althoughtheymadenobindingcommitment(norwassuchacommitmentrequiredbyNewYorkStateorCCE),SSTdescribedthelikelyoutcomeoftheireffortsduringthe8-monthcontractperiodasthegenerationofatleast3to5purchaseorderswithavaluetoNYSproducersof$500,000.00to$750,000.00.Afterthat,SSTexpectedtobuildoninitialsuccessestocreateasustainedmulti-million-dollarstreamofincome.SSTestimateditwouldgenerateaperannumrateofsalesofapproximately$10millionbytheendofthe18monthsabout60%ofwhichwouldbegrossrevenuestoNYSproducers.Byyear3,itexpectedperannumsalestoreach$50millionand,byyear5,$200million.SomeotheraspectsmentionedinSST’sproposalandworthnoting:
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- Thetariffenvironmenthadbeenevolvingfavorably.SinceenteringtheWorldTradeOrganizationin2001,Chinahasgraduallyrelaxeditspreviouslyunreasonableprotectionisttariffs.Thisisstillaworkinprogress,withmanypendingissuesofUS-Chinatradestilltoberesolved.Nevertheless,attheoutsetofthisproject,thetariffofsomeproductslikedairyhadbeensignificantlyreduced.
- PoliticaltrendsinChinaseemedtobefavorabletoincreasedtrade.XiJinpingassumedofficeasGeneralSecretaryoftheCommunistPartyofChinainNovember2012andhadcreatedexpectationsofeconomicreformsandgrowingbilateraltrade,namely,inatriphedidtotheUS,stillasVice-President,inFebruary2012.
- Therewastheexpectationthatincreasedexportsmight,inthefuture,leadalsoto
increasesinChineseForeignDirectInvestment(FDI)intheUS.Basically,thepointistwo-fold:evidenceoftheenormousamountofFDIinterestandmoneyinChina10andthefactthat,ifexportsofNYSfoodproductsweretogrow,itcouldbeexpectedthat,atsomepoint,ChineseplayersmightwanttocontrolthesourcethroughFDI.
- TheChinesefoodretaildistributionsectorwasgrowingintandemwiththetrendsthathavebeenmentioned.AccordingtoareportontheChinesesupermarketindustryfrom201011,thetotalsalesofsupermarketsinChina’stop100chainretailersgrewfrom$54billionto$91billionduringtheyearsof2006–2009,andthenumberofsupermarketoutletsgrewfrom16,025to23,814.SSTproposedtotargetfirstthefollowingchainsthatseemedtobemorecredible,mainlyintermsoftheircoldsupplychaincapabilities:WuMart,BeijingHualianHypermarketCo.,LianhuaSupermarketHoldingsCo.,NonggongshangsupermarketGroup,BubuGaoTradeChainShareCo.
Insummary,theroleofeachofthepartiesinimplementingtheprojectwasasfollows:CCE:
• Overallprojectmanagementandcoordinationoftheproject• IdentifyingNewYorkStateproducerswiththepotentialcapacitytobenefitfrom
participationinexportmarketsgenerallyandtheChinamarketspecifically;creatingadatabaseofthosecompanies
• HelpingNewYorkStateproducersunderstandandevaluatethemarketopportunity;workingwiththoseproducerswhochoosetopursuetheopportunitytobecomeexportready
• Assistingproducersinthedevelopmentofdesirablebusinesstermsandinthesuccessfulconsummationofdeals
• Troubleshootingissuesastheyarise10http://www.ecomonitor.com/blog/2012/02/why-chinese-fdi-remains-marginal-in-theunited-stats/11http://www.researchchina.com/Htmls/report/2010/5989.html
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• Grantadministrationandreporting• Evaluatingtheprojectandrecommendingadditionalactivities
SST:
• IntroducingidentifiedNewYorkStateproducerswithexportpotentialtotheChinamarketopportunity
• IdentifyingChinesebuyersforNewYorkStateproducersanddevelopingsalesorders• WorkingwithNewYorkStateproducersandCCEtoresolveallpermitting,regulatory,
labeling,packagingrequirementsinordertofufillorders• Arrangingandmanagingend-to-endlogisticsfromNewYorkStateproducerstotheend
buyer,includingcold-chainlogisticsasneeded• Managingallotheraspectsofthesalesandorderfulfillmentprocess• Followingupinitialorderstoincreasesales.ItwasunderstoodthatSST’sgoalwasto
developaprofitableenterprisesellingNewYorkState’sproductsinChina,andthatattheendofthe8-monthcontractperiodtheirbusinesswouldbeself-sustaining.
1.3 ProjectBudgetandTimelineTheProjectbudget,tobeexpendedoveran18-monthperiod,hadthefollowingcomponents:
SubcontracttoSSTTrading: $332,000CCEStaffsalary,travel,officesuppliesandcomputers: $200,570Surveysanddataanalysis: $25,000EquityfromCornellCooperativeExtension(Oneida): $67,272
$624,842SST’sactivitiesunderthesubcontractweretotakeplaceduringthefirst8monthsoftheoverallcontractperiod.
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GoalsoftheprojectAsstatedinCornellCooperativeExtension’sgrantproposal12thegoalsoftheprojectwerethreefold:
1. TodevelopandimplementasuccessfulresponsetotheidentifiedopportunitytoexportdifferentiatedNYSagriculturalproductstohigh-endconsumermarketsinChina.
2. Toidentifyadditionaloverseasmarketsfortheseproductsanddevelopaplantoreachthosemarkets.
3. ToincreasethecapacityoftheExtensionsystemtoengagewithoverseasmarketopportunitiesonbehalfofNYSagriculturalproducersandbusinesses.
Centraltotheprojectplanwastheimplementationofanambitioussalesandmarketingeffortproposedby,andtobespearheadedby,SafeSourceTrading,thestartupcompanywhoseapproachtoNewYorkStateofficialsinAlbanyprovidedtheinitialimpetusfortheproject.Also,asnotedintheproposal,SafeSourceTrading’sgoalfortheprojectwastodevelopaprofitablecommercialenterpriseservingNewYorkstatefoodproducers.Tosummarizewhatisdetailedinthepagesthatfollow,theprojectwasunsuccessfulinachievingtheambitioussalesgoalsprojectedbySafeSourceTrading;infact,salesgeneratedasaresultoftheprojectafter18months’effortbybothCCEandSSTwereafractionofwhatSSThadprojectedtheywouldachievein8months’time.Inthissense,SafeSourceTradingalsofailedtoachieveitsgoalofdevelopingaprofitablebusinessexportingNewYorkStatefoodproducts.Ontheotherhand,asaresultoftheproject,theCornellCooperativeExtensionsystem(and,asthefunder,NewYorkState)gainedinsightsandtoolsthatshouldsignificantlyincreasetheircapacitytosupporttheneedsoftheState’sagricultural,foodandbeverageproducersinthecomingyearsastheexportofdifferentiatedproductscontinuestobecomeanincreasinglyimportantcomponentofthemarketingopportunityforthisindustry.Itmustbeacknowledgedthattheprojectdidnotachieveitsgoalofidentifyingandplanningforadditionaloverseasmarkets,giventhechallengesencounteredintryingtoaddressjusttheChinesemarket.However,asnotedinthepagesthatfollow,manyoftheinsightsgainedfromtheprojectcanbefruitfullyappliedtootherexportdestinations.
12Appendix:CCEChinaExportProject,June72013
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Stepsimplementedtoachievethegoalsoftheproject,andresultsSalesdevelopmentDuringthefirstfourmonthsoftheproject,CCEdevelopedlistsofpotentialexportersandintroducedSSTtomorethanfiftyproducers.SSThiredasitssalesdevelopmentleadJeffreyMills,whohadaparticularinterestinsmaller,artisanalproducts,whereasCCEbelievedthatthelargerproducersandprocessorshadgreatercapacitytobenefitfromtheexportopportunity.CCE’sProjectManagerarrangedformeetingswithcompaniesinbothcategoriesandtraveledextensivelywithSST’sMillsacrossNewYorkStatetointroducetheproject.Companiesvisitedduringthisperiodincludedsmallandmedium-sizedbusinesses(cheese,honey,maplesyrup,barbecuesauces,meats,wine,spirits,etc.)aswellaslargerprocessorsandmarketers(includingBeech-Nut,CayugaMilkIngredients,O-AT-KA,Saranac).DuringthistimeSST’sMillsalsoattendedtheFingerLakesWineFestival;theFancyFoodShowinNewYorkCity;andtheHongKongFoodShow,prospectingforpotentialexporters.InNovember2013,CCE’sProjectManager,alongwiththeExecutiveDirectorofCCELewisCounty,participatedwithSST’sMillsandtheirChinalead,WangFeng,inamajortradeshow–FHC2013-inShanghaiandChengdu.WiththesupportofFoodExportNortheastfundingandpermissionfromNYSDepartmentofAgriculture&MarketstousetheTasteNYbranding,theprojectwasabletorentaboothandrepresentseveralNewYorkStateproducerswithproductsandmanymorewithpromotionalmaterial.RecognizingthatUS-sidelogisticsandaggregationwasgoingtobeanimportantfactorinfacilitatingefficientandreliabledeliveryofproductsfrommultipleNewYorkproducerstoairorseaportsforexportsales,CCEintroducedSSTtocapablepotentialpartnersincludingBaldorsinNewYorkCityandRegionalAccessintheFingerLakes.Bytheendof2013itwasclearthat,despitethesignificantinvestmentsmadeoverashortperiodoftime,SafeSourcewasnotgoingtobeabletodeliveranythingclosetotheirprojectedsalesresults.Bythattime,theirefforts,withconsiderableassistancefromCCE’sProjectManagerandotherCCEstaff,werealmostentirelyfocusedonestablishingfinaltermsandfulfillinganinitialorderofhoney,maplesyrup,andchocolate-coveredfruits/nutswithatotalvaluetotheproducersofUS$31,077(describedinmoredetailbelow).GivenSST’sunderperformancevis-à-vistheexpectationstheyhadgenerated,theProjectManagerrecognizedtheneedtomakeachoiceinDecember2013:either(1)continuetopayaccordingtothetermsofthesubcontract,knowingthattheresultswereunlikelytochangedramaticallyintheremainingthreemonths,andthatoncegrantfundswereexpendeditwasunlikelythateffortsbegunwouldbebroughttofruition;or(2)renegotiatethetermsofthesubcontracttokeepSafeSourceworkingonbehalfofNewYorkproducersforanextendedperiodwithoutanyincreaseincost.WithEmpireStateDevelopment’sapproval,theProjectManagerrenegotiatedthetermsoftheagreementwithSafeSourcesuchthattheremainingfundswouldbedisbursedovera13-monthperiod.
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ThesingleorderdevelopedbySafeSourceasaresultofthisprojectwasfinallyshippedinDecemberof2014.Product Producer Unit Price Qty TotalsaleMaplesyrup Lyndaker(LewisCty) 250mlglass $8.50 1,728 $14,688Honey Finster(HerkimerCty) 1lbglass $5.30 2,160 $11,448Chocolate TropicalValley(EssexCty) 85gbags various 2,328 $4,941 TOTAL: $31,077ThebuyerwasidentifiedbySSTasShiWeiFoodTradingCo.,“anewfirmformedbyateamofsuccessfulAmwayexecutiveswhoarecommittedtomarketingNewYorkStateagproducts.Althoughthecompanyisjustdevelopingitssaleschannel,themaple,honey,andchocolateproductsarebeingsoldthroughachainofhealthclubs…”SSTpredictedthatsignificantfollow-onorderswouldresultoncetheseproductswereinthemarket.Ifthathadproventobethecase,thequestionwouldhavebeenwhetherthosesalescouldbeprofitabletotheproducersoncegrant-fundedassistance-forspecially-designedlabelsandshippingcasesaswellasairfreightandlogisticsdemandedbytheclientand/orSST-wasnolongeravailable.Iffollow-onorderswerenotprofitabletheproducerscouldnotbeexpectedtorespondpositivelytothem;inlightofwhichCCE’sProjectManagerrecommendedspecificpriceincreasesthatwouldensurethatfuturesaleswouldbeofinteresttotheproducers.Asofthedateofthisreport,nofollow-onordershavematerializedandSSTisnolongermakinganyvisibleeffortinthatdirection.AmongtheproducerstowhomCCEintroducedSSTwereseverallargerNewYorkStatemeatprocessors(themeatindustryisdiscussedatlengthinanattachment).Duringthesummerof2014,SSThiredacontractor,DonaldSong,withsignificantrelevantexpertise,havingworkedfortheUSMeatExportFederationinChinaforsixyears.TheProjectManagerandCCEstaffarrangedandparticipatedinnumerousmeetingsandphonecallswithMr.Songandpotentialsuppliers,includingdetaileddiscussionsofpotentialporksales.CCEstaffworkeddirectlywiththesupplierstoensurethattheirofferingswouldbecompliantwithChina’simportregulations.Despitetheseefforts,nosalesmaterializedinthiscategory.SST’sHaftadvisedCCEthathewasindirectconversationswithaNewYorkStatebeefprocessor(ChamplainBeef)aboutdevelopingwhathebelievedtobeasubstantialopportunityexportingbeefhidestoChinese“endbuyersrepresentingverylargevolume”.Again,asofthiswritingwehavenoindicationthatthisefforthasyieldedresults.StrategicMarkettargetingandanalysisWhilesupportingSST’sefforts,CCEworkedindependentlytoanalyzeandunderstandtheChinaexportopportunityforNewYorkState’sproducers,andinitiatedconsultativediscussionswithseveraltargetedpotentialexporters.Inearly2014,CCEsoughtandreceivedpermissionfromESDtoreallocateasmallportion-$25,000ofthe$332,000initiallyallocatedtoSST-specificallytopursueamorestrategicapproachtothemarketthanSSTwasinterestedinorapparentlycapableof.Withthosefundsfreedup,CCEhiredanindependentconsultant–LuisGato-
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whosebriefwastofocusonanidentifiedlistofabouttenlargercompanieswithsubstantialproductionandmarketingcapacity.Mr.Gatoisanindependentconsultantwith20yearsoffoodindustryexperienceininternationalsettings,havinglivedandworkedon3differentcontinents.AlthoughhehadnodirectexperienceinChina,heparticipatedinorheadedupteamsthatexploredforeignmarketsforpreviouscompanieshehadworkedforand,insomecases,managed.AmongthecompaniestheConsultantwasaskedtofocuson,andtheproductcategorieswithpotentialforentryorgrowthintheChinamarket,were:
MottsLLP(ADr.Pepper/SnappleCo.) Welch’s SmithPacking CayugaMilkIngredients O-AT-KA ByrneDairy SenecaFoods LiDestriFoods&Beverage
Thecriteriaforchoosingtheseparticularcompaniesincluded:sufficientscaletosuggestthecapacitytomanagethecomplexityoftheChinamarket;evidenceofcurrentorpriorexportexperience;andunique,differentiatedproducts.Basedonthislistofcompanieswithsignificantpotentialtobenefitfromexportgrowth,Theproductcategoriesofinterestwere:
• Dairy• ProcessedFruits&Vegetables• Meat• FruitjuicesandFunctionalDrinks• PastaSauces• Spirits
TheConsultantwasdirectedtoprovidedetailedwrittenanalysesoftheChinamarketopportunityforthesecompaniesandtheirproducts,includinganalysisforeachproductof:
• Chinesedemandandtrends• Domesticandinternationalcompetitors• Chinesemarketchannelstructure• Tariffandnon-tariffbarriers,and• Potentialin-marketpartners.
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Intheprocessofdevelopingtheaboveanalyses,theProjectManagerandtheConsultantidentifiedtwosignificantspecialareasofpotentialinterestforNewYorkcompaniesconsideringenteringtheChinamarketorgrowingtheirpresence,andtheContractordevelopedin-depthanalysesofthefollowingspecificaspectsoftheChinesefoodandbeveragemarketopportunity:
• PrivateLabel• Online
Alltheabovemarketresearchisdocumentedinanalysesbelowandattachedtothisreport.DatabaseCCEidentifiedavarietyofprimaryandsecondarysourcesofdetailedinformationaboutpotentialexportingcompaniesintheagriculture,foodandbeverageindustriesinNewYorkState.WorkingwiththeConsultant,thesedatasourcesweremerged,analyzedandorganizedtocreateacomprehensivedatabaseofsectorbusinessesaswellasaselectedsubsetofcompaniesbelievedtohavethegreatestpotentialtosuccessfullygrowinexportmarkets.Theresultingdatabasesareincludedasattachmentstothisreport,alongwithadetaileddiscussionofthemethodologyusedincreatingthedatabasesandsomeanalysisoftheircontents.SurveyWiththesupportofCornell’sSurveyResearchInstituteandtheConsultant,CCEfieldedasurveytoawiderangeofagriculture,foodandbeveragesectorbusinesses.Theresultsofthatsurveyprovidedinsightsintotheexperience,interest,andperceivedneedsofthosebusinesseswithregardtopotentialexportopportunities.CCE’sanalysisofthoseresultsalsosuggestedsomespecificstepsthatNewYorkStateshouldconsidertakinginordertosupportthegrowthofexportsinthesesectors.Theresultsofthesurvey,includingadetailedanalysisandasummaryreportareincludedintheattachmentstothisreport.OutreachTheProjectManagerandtheConsultantpresentedtherelevantportionsofthedetailedmarketanalysesdescribedabovedirectlytoseniormanagementatthetargetedcompanies,alongwithrecommendedpreliminarymarketentrysteps.TheProjectManagerpresentedtheresultsoftheprojecttodateatthe2014CornellStrategicMarketingConferenceinNovember2014.ApresentationoftheresultsoftheprojectandrecommendationswasmadetoEmpireStateDevelopmentandCornellgovernmentaffairsstaffinMarchof2015.TheJulyandAugust2015issuesofCornell’sSmartMarketingnewsletterweredevotedtoarticleswrittenbytheProjectManagerabouttheproject–thefirstbeingasummaryoftheresultsandthesecondidentifyingkeyresourcesforprospectiveexporters.Copiesoftheseoutreachmaterialsareattached.
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OverallMarketAnalysis(Appendix6a)Thisanalysistakesahigh-levelviewoftheoverallChinesemarketforNewYork’sagricultural,foodandbeverageproducts,includingbasicdemandsize,characteristics,driversandtrends.Keyfindings:
• China’s“uppermiddleclass”($16kto$34k/yearincome)willrepresent54%ofthetotalurbanhouseholdsin2022,increasingdramaticallyfromthecurrent14%.“Affluent”households($34k+)willgofrom3%to9%.Withthis,itisexpectedthatthegrowthofprivateconsumptionwillbeofaround10.3%peryearfrom2012onforthenexttenyears,ormultiplyingbyafactorof2.6.
• AccordingtoChina’scensus13,atthetime,theurbanpopulationrepresentedabout712millionpeople.Thismeantthattheuppermiddleclassandaffluentshouldincreasebyanywherefrom400mllionto500millionby2022iftherateofincrease14ofurbanareaswastobemaintained.
• Riseinincomelevels,andrelatedchangesinconsumptionpatterns,seemedtoindicatethatmilk(dairy)andoverallmeat/poultrywouldlikelybethefastestmovingsegments.Milkandmeatconsumptionincreasescorrelatewithincreasedfoodsafetyconcerns.Governmentpressureandnaturalimprovementofpeople’sstandardoflivingshouldalsodriveincreasedconsumptionofgrains,vegetables,andfruits.
• HealthandwellnessawarenessanddemandaresignificantdriversofChinesedemandandcertainlyonewouldexpectgrowingdemandforfortified/functionalproducts(mainlyrelevantfordairy-basedandotherprocessedbeverages).
ThisanalysisalsolooksatbroadmarketcharacteristicsthatmustbeunderstoodbyNewYorkStatecompaniesapproachingthemarket.TheChinesefooddistributionmarketisimmaturerelativetodevelopedWesterncountries,andhighlyfragmentedasshowninthechartbelow.ThismakesitmorechallengingtopenetrateeffectivelyinChina.Paradoxically,whilethetotalmarketopportunityislarge,inordertoachievescaleafood/beverageproducerwouldneedtopenetratealargenumberofchainsandsmallmom-and-popretailers.
13"Census:Populationhits1.37b".Europe.chinadaily.com.cn.2011-04-29.Retrieved2014-02-1614“HealthandWellnessTrendsinChina”–February2011,AgricultureandFoodCanada,InternationalMarketsBureau(GovernmentofCanada)
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Theregulatoryenvironmentisalsoamajorchallenge.Thechartbelowbrieflysummarizesthecomplicatedandineffectivehierarchicalchainthatisinvolvedintheprocess.
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TheDistributionChannel(Appendix6b)
ThisprovidesamoredetailedanalysisofChinesefoodandbeveragedistribution,lookingspecificallyatthreechannelcomponents:theFoodService,RetailandIndustrialdistributionchannels.ThegoalwastounderstandwhereandhowfoodandbeverageproductsweregettingtoconsumersinChinaandwhowerethekeyplayers.Keyfindings:
1. FoodService:• Stronggrowth,recentslowdown:Thissectorgrewatanaverage9.2%from2005to
2010.Futuregrowthwasexpectedtobeof8.2%peryearaccordingtoonesource15.• Factorsdrivinggrowthinthefoodservicesector16:
• Robustgrowthintheeconomy• increasingurbanization,alongsidegrowthinthemiddle-classitsincome• Growthinthenumberofsinglememberhouseholds• Growthinthenumberofworkingwomen• Increasingratesoftravel/tourisminChina.
• GrowthintheFoodServiceslowedslightlyin2012,largelyowingtotheeconomicdownturninChina,ongoingglobaleconomicinstability,andthegovernment’scampaigntocrackdownoncorruption17.
• Strongtrend:Thesectorwasvaluedatover$333Billionin201018.ThisisabouthalfofthatoftheU.S.18foracountrythatismorethan4timesaslargeinpopulation.Anotherwaytolookatitisthatthismeanseachpersonspentonaverageperyear$244inFoodServiceproviders,or5%to6%oftheirdisposableincome.Thisisaratesimilartothatofmostcountries(5%intheUS).SoonecouldexpectFoodServicetocontinuegrowingatarateclosertothatofdisposableincomepercapita.McKinsey19predictedthegrowthofprivateconsumption(notnecessarilydisposableincome)at10.3%sothiswasclosetothe8.2%growthpredictedbythisreport18.
• FragmentedMarket:Therewereabout5.9millionfoodserviceoutletsinChinain2010.Ofthese,98%wereindependentlyoperated,suggestingthattherewere100,000outletsbelongingtorestaurantchains.Fastfoodrepresented21%ofoutletswhileFull-
15“FoodserviceProfileChina”,February2012,InternationalMarketsBureau,AgricultureandAgri-FoodCanada,GovernmentofCanadahttp://www.ats-sea.agr.gc.ca/asi/6114-eng.htm16“ChineseFoodservice:thefutureofFoodserviceinChina2016”,Nov122012,PRNewswire,http://www.prnewswire.com/news-releases/chinese-foodservice-the-future-of-foodservice-in-china-to-2016-178897981.html17“ConsumerFoodserviceinChina”,Sep2013,Euromonitor,http://www.euromonitor.com/consumer-foodservice-in-china/report18NationalBureauofstatisticsofChinaasCitedbywww.trading.com,January14,http://www.tradingeconomics.com/china/disposable-personal-income19“MappingChina’smiddleclass”McKinseyQuarterly,June2013,Mckinsey&Company
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Servicerepresented74%.Thefastestgrowingsectorwasthehomedelivery/takeawaysector.
2. Retail:
• Chinawasexpectedtogrowata14%rateuntil2016andatanoverallcagrof16%until
2022.20ChinashouldbepassingtheU.S.asthelargestretailmarketintheworldby2016anditshouldalreadybethelargestgrocerymarketintheworld.
• Thelargestopportunityseemedtobethee-commercesectorwhichgrew65%in2012andalreadyrepresents6.3%oftotalsales23.
• Thisisstillafragmentedmarketwithmanyplayersandwherethelargesthavearelativelysmallshare.
• Smallstores(conveniencelike)aregainingpopularity.• Themarketistrendingtomaturitywhilemaintainingstronggrowth.Allmajorformats
existinChina.Managementandpromotionalactivityresemblethatofmanymaturemarkets21.
• Hypermarketswillcontinuetogrowanddominatebuturbanizationandconveniencebegettheveryfastgrowthofconveniencestores23.
• KeyconsumertrendsaffectingRetail:• Convenience:impactingthegrowthofconvenienceandlocalstoresandalsothe
growthofsmallpackagingsizesandreadymeals• HealthandWellness• High-qualitybabyproductsareaparticularlyimportantretailcategory
3. Industrial:Theindustrialsectorarepurchasersofcommodityfoodproducts,generallyasingredientsforuseinfinalproductsafterfurtherprocessing.Inthispartofthereportwehighlightthemainfoodprocessingindustries,theirrecentperformance,andtheirinterestaspotentialcustomersofNewYork’sfoodproducts.
• Chinaistheglobalindustrialleader,withalaborforceof815millionworkersanda
leadershippositioninthemanufactureofindustrialandconsumerproducts.22In2010,20“RetailinChina–ApaneldiscussionofthepotentialwithintheChineseretailindustry”,2013,TheEconomist,IntelligenceUnit.Thiswasapaneldiscussionthathadthefollowingpeople:JonCopestake,chiefRetailandConsumerGoodsAnalystofTheEconomist,Dr.LiuQian,DeputyDirectoroftheChineseForecastingserviceofTheEconomist,TinoZeiske,VPofInternationalAffairsofAsiaPacificatMetroGroupandBernieStefan,HeadofStrategy&BusinessDevelopmentintheChinaregionforNestle.21“ConsumerandRetailTrendsinChina”,January2013,InternationalMarketsBureau,AgricultureandAgri-FoodCanada,GovernmentofCanada22“FoodserviceProfileChina”,February2012,InternationalMarketsBureau,AgricultureandAgri-FoodCanada,GovernmentofCanadahttp://www.ats-sea.agr.gc.ca/asi/6114-eng.htm
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China’sindustrialoutputexceededthatoftheU.S.marginally,butthishadsincebeenconsolidatedintoamorethan20%lead,withthegapcontinuingtowiden23.
• CalculationsbasedonestimatesintheCIA'sWorldFactbookindicatedthat,in2012,thevalueofChina'sindustrialproductionwas$3.7trillioncomparedto$2.9trillionfortheU.S.–whichwouldmeanChina'sindustrialproductionwas126%thatoftheU.S.level24.
• ChinesefoodmanufacturingsectorhadgrosssalesofUSD$1.1trillionandgrew28%vs2011and301%vs2005,althoughsomeofthishadtodowithcurrencyfluctuations.
• GrowingIndustrialsectorsrelevanttoU.S.exports25:• FrozenFood,inparticular,quickfrozenflour-based,likedumplings• PreparedMeats• SnackfoodsandChocolatecandy• Dairy,particularlyUHTmilk,flavoredmilkdrinks,cheese,yogurt,milkpowder
andwhey• Healthyfoodsingeneral• Babyfood• Treenutsanddriedfruits
Thedetailedreportattachedincludesanexplanationoftheflowofdistributionfrommanufacturertoconsumer,aswellassomerecommendationsforU.S.companiestakenfromseveralrelevantsources29,26:
- Exhibitionscanbeacosteffectiveapproachtounderstandingthemarketandmeetingagents/importers.
- Chinesebusinessculturematters.ThemostdistinctiveaspectofChinesebusinesscultureistheneedtocultivateguanxiorrelationships.
- Don’tnecessarilyexpectdramaticorrapidsuccess.- Suppliersofperishableproductsneedtobealerttothecoldchaincapabilitiesof
distributors,becausetheinfrastructureisuneven.- Protectyourintellectualpropertybyregisteringimmediatelyyourpatents,
trademarks,labels,etc.inChina.(andintheU.S.)- “ThemostimportantadviceforU.S.suppliersbeforeenteringtheChinamarketisto
partnerwithagooddistributor”.Businesscultureisheavilydependentonpersonalrelationships.Face-to-facecontactplaysakeyroleinensuringreliabilityin
23“KeytrendsinGlobalization–ChinahastakenovertheUStobecometheworld’slargestindustrialproducer”,Sep32013,JohnRoss,SeniorFellowatChonyangInstituteforfinancialStudies,RenminUniversityofChina24“KeytrendsinGlobalization–ChinahastakenovertheUStobecometheworld’slargestindustrialproducer”,Sep32013,JohnRoss,SeniorFellowatChonyangInstituteforfinancialStudies,RenminUniversityofChina25“ChinaFoodManufacturingAnnualReport”,Feb4,2013,USDAGAIN26“China,PeoplesRepublicof,HRIFoodserviceSectorAnnualReport2009,USDAGAIN
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situationswherelegalstructureandcontractenforcementarevague.Selectingsuitabledistributorsrequireseffortandcooperationonbothsides.U.S.suppliersshouldworktodevelopanunderstandingoftargetmarketswithinChinaandclearlydefinetheirmarketexpectationsfortheirlocaldistributor.
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ProductCategoryAnalysesAsnotedabove,theConsultantwasdirectedtoprovidedetailedwrittenanalysesoftheChinamarketopportunityforashortlistofNewYorkStatecompaniesandtheirproducts,includingthefollowinganalysesforeachofthoseproducts:
• Chinesedemandandtrends• Domesticandinternationalcompetitors• Chinesemarketchannelstructure• Tariffandnon-tariffbarriers,and• Potentialin-marketpartners.
Followingaresummariestheinformationcontainedinthedetailedcategoryreports(seeAppendices),includingsomehighlightsasfollows:
• ProcessedFruitsandVegetablesisamatureandhighlycompetitivemarketinChinawithenoughsupply,butitdoeshavevalue-addednichesworthexploring(andmostnichesinChinaarebigenough)
• PastaSauce–stillasmallmarketbutAmericanproducthasgoodacceptance,andinfactLiDestri’sproductcanalreadybefoundinChinaalthoughnotdirectlysoldbythem,suggestingmargin/profitforadirectrelationship
• Spirits–Americanproductshavenotbeenverywellvaluedwiththeexceptionofhigh-endbrandedspirits,yetChinesehavebeenimportingmoreandmorefromtheU.S.
Dairyproducts(Appendix6c)
Thisresearchwasprovidedto:
- O-AT-KAMilkProducts- CayugaMilkIngredients- ByrneDairy
Keyfindings:• DairyproductsareanenormousmarketinChinaandwasgrowing:35millionmetric
tons(MT),growing6%/year.• ChinatotalimportsofDairyproductshadbeenincreasingby34%/year• Importedproductsoffersafetyanddiversity.Safetyseemedextremelyimportant,
especiallyafteracoupleoflargemilkadulterationscandals.ImportedmeanssafetyfortheChineseconsumer.
• Alldairyproductsseemtobeagoodprospect.Milkpowderandotherhigher-endmilkproductsseemedtobeparticularlyattractive.Non-fatdrymilk,forinstance,a290,000MTmarketwasgrowing24%/year.
• ThereseemedtobeanopportunityworthexploringforNYSproducts.
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• SellingtoChinaisanintricateprocessthatrequirestimeforseveralprocedurestohappen.AccordingtoDezanShira&Associates27,first-timeproductapprovalcantakeupto8months.
Processedfruits&vegetables(Appendix6d)Thisresearchwasprovidedto:
- SenecaFoods
Keyfindings:
• Thetotalmarketoffruitsandvegetables(includingfresh)inChinawasworthover$50billionandwasprojectedtogrowbetween4%and6%peryear(similartorecentgrowthrates)inthenextfewyears,withabitfastergrowthoffruits.Theprocessedfruitsandvegetablesindustryhasbeengrowingatanastonishing32%/year.Consumptionofprocessedproducehasbeenincreasingwithurbanization,tothedetrimentoffresh.Thistrendwasexpectedtostayinforce.
• However,internalproductionhadmatcheddemand.Thisisawidelycommoditizedindustry,mostofitrequiringsignificantlevelsoflaborandarelativelysimpletechnology.Chinais,therefore,acompetitiveproducer,self-sufficientandanetexporterwithmanyforeigncompaniesproducinginmainlandChinaattractedbythetremendousgrowthofdomesticconsumptionandbythissourceforinternationalcompetitiveness.
• Whilemassconsumptionmightnotbethemostobviousprospect,goodopportunitiesmightresideinsomespecificproductswherequalityorvolumedrivenefficienciesmighthaverenderedtheUScompetitive(likeperhapssomeraisins)orinmorevalue-addedproducts,possiblyinthefrozensegmentorinsemi-preparedmealsthat,beingvalue-addedproducts,couldbecomeanopportunity.Thereisagrowingmarketforthese(andcommoditiestoo).
• Givenacompetitiveproduct/producer,itcouldmakesensetoexploretheopportunityforexports.
Meat(Appendix6e)Thisresearchwasprovidedto:
- SmithPacking27“GuidetotheShanghaiFreeTradeZone”,ChinaBriefing,Issue142,March2014,byDezanShira&Associates
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KeyFindings:• Chineseconsumedonaverageofabout156gperdayofanimalprotein,whichisabove
theWorldHealthOrganizationRequirements28,29.However,itwouldseemreasonabletoexpectabigdifferenceintheconsumptionpatternbetweenpeopleofmoreorlessincome.Certainlyonewouldexpectthegrowthofdisposableincome,andhenceofthemiddleclass,toprobablyincreasethepercapitaconsumptionofallmeatgroupsbutparticularlythatofbeef.Forinstance,theaverageAmericanconsumes252g/dayofanimalprotein,70gofbeefvs.11bytheChinese30,31.
• Infact,thenumbersaboveshowthat,eventually,allmeatgroupsshouldgrowatleastatlowsingledigits,butmoresobeefandlamb/mutton.Poultrywasatthetimetheonlymeatshowingdecreasingconsumption,whichisattributedtotheH7N9virusoutbreak.
• BeefseemedagreatprospectfortheUSifandwhentheexistingbanwastobelifted.Infact,theUShasthereputationforgreatbeef,whichappealstotheupandcomingaspiringhigherclassesinChina.TheChinesebeefmarketis,initsownright,verylargeandisthesectorofthemeatmarketshowingthemostpromisinggrowth.
• ChinahadbeenimportingmoreporkfromtheUSthananyothercountryandChineseimportsareestimatedtoincrease.TheUShad,however,beenfacinggrowingcompetitionfromGermany,the#2supplier.Chinawasalsoimportingalotofporkoffal;again,theUShasbeenakeysupplier.
• PoultryhadbeenalsoamainexportfromtheUStoChina.Pricesandmarginswere,
however,verysmallandtheChinesehadbeenpresentingdumpingcomplaintsandpushingforincreaseddutiesonUSpoultry.Note:therewas(atleastatthetime)abanonpoultrytobesoldfromNYS.
• Lamb/Muttonseemedlessofanopportunity.Mostofitisbannedandnowordofthischanging.
28“Energyandproteinrequirements,WHOTechnicalReportSeries724”,1985,FoodandAgricultureOrganization/WorldHealthOrganization/UnitedNationsUniversity,Geneva,WHO29“ProteinandAminoAcidRequirementsinHumanNutrition,WHOTechnicalReportSeries935”,2002,Geneva,WorldHealthOrganization30http://www.nationalchickencouncil.org/about-the-industry/statistics/per-capita-consumption-of-poultry-and-livestock-1965-to-estimated-2012-in-pounds/31http://www.beefusa.org/udocs/annualpercapitaconsumption-meat-boneless491.pdf
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• Inconclusion,pork(duetoitsvolume)andbeef(toitsmargins,potentialgrowthandUSreputation)seemedtobethebestopportunitiestopursue.While,atleastatthetime,ChinahadabanonUSbeef(allegedlyduetothe“madcowdisease”),thisbanwasexpectedtobeliftedasearlyas2015.Inanycase,whilethisopportunitywasnottoclearupinmainlandChina,salestoHonkKongcouldbepursued.
• NYShadasmallerpercentageoflivestock32,33,34tothetotalU.S.thanthatofits
populationwhichmeansitprobablyproduceslessthanitsconsumption.Nonetheless,specificslaughterhousesand,especially,aggregators,mighthaveprocessingand/orsalescapacitytoexporttoChina.
Fruitjuices&functionaldrinks(includingdairy-baseddrinks)(Appendix6f)Thisresearchwasprovidedto:
- O-AT-KAMilkProducts- CayugaMilkIngredients- ByrneDairy- Welch’s- Mott’s- LiDestriFoods
Keyfindings:
• Thefruitjuicemarketwasabout22millionmetrictons,growingatabout15%peryear
andexpectedtokeepgrowingataratebetween8%and10%.
• Chinawasprojectedtobecometheworld’slargestbeveragemarketby2015andthiscouldbejustthebeginningasChina’spercapitaconsumptionisextremelysmallandshouldgrowtremendouslywithmiddle-classexpansion.
• Mainopportunitiesseemedtobeinspecialty,functional,fortified,protein,energy
drinks,etc.Thiswasparticularlyvalidatedwhenseeninthelightofthegrowingtrendfordiversityidentifiedearlier.
• TheU.S.hasbeenanetimporterofJuicesandimportsweregrowingslightlyfasterthanexports(5%vs.4%).ChinaisthemainsupplieroftheU.S.whenitcomestofruitjuices,with39%ofthetotalvolumebutonly30%ofthetotalvalue.However,theUSexportstoChinavalue-addedproductsandimportslessvalue-addedproductsorcommodities.
32http://www.meatami.com/ht/d/sp/i/47465/pid/4746533http://www.cattlerange.com/cattle-graphs/all-cattle-numbers.html34http://www.stuffaboutstates.com/agriculture/livestock/chicken_eggs.htm
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• ThereseemedtobeanopportunityworthexploringforNYSproducts,particularlyfor
value-addeditems.PastaSauces(Appendix6g)
Thisresearchwasprovidedto:- LiDestriFoods:
Keyfindings:
Note:Therewasnotnearlyasmuchinformationonthiscategoryastherewasinanyotherstudied.Furthermore,thiscategorydoesnotyethavethesameimportanceinChinaasitdoesintheU.S.Thisproducessomechallengesfortheanalysissuchasthefactnotallretailersresearchedforthesamplingofproductsshowedacategoryfor“PastaSauces”,andtheseproductsweresometimesfoundunderbroaderaggregates.Wedidfind,however,themarketofSaucesandDressingswasgrowingabout9.5%/yearintheperiodfrom2011to2013.
• Chinahasbeenself-sufficientinthecategory,butisimportingmoreandmore.China
wasexportingmorethanitwasimportingundertheaggregate“tomatoketchupandothertomatosauces”.Yetitwasimportingmoreandmoreanditseemedtobeimportingmorevalue-addedproducts,possiblymostlyfromtheU.S.Nonetheless,theseimportsarestillrelativelysmalltotalingabout$4Moftomatobasedsaucesin2011;theseimportsmightbetiedtoQuickServiceRestaurant(QSR)chainsfromtheU.S.(imposingsuppliersontheirChineseaffiliates).
• Thisisnotahugemarketbutcouldbeanemergingone.TheU.S.hasbeenabletopenetrateitsofar.ItislikelythatdomesticproductionmightbecomemoreandmorecompetitivebutopportunitiesmayexistineithercommoditizedproductswheretheU.S.hasveryefficientcost/automationprocessesorinmorevalue-added,brandedorotherwisedifferentiatedproductsappealingtoanaspirationalpopulation.
Spirits(Appendix6h)Thisresearchwasprovidedto:
- LiDestrifoods:
Keyfindings:
• Chinahasbeen,andis,byfar,thelargestmarketforalcoholicbeveragesintheworld.Spiritsrepresentabout8%ofthatmarketwithabout1.3Billiongallons,and
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consumptionhasbeengrowingat2%peryearandisexpectedtorampuptosomewherebetween3.5%and8%ayear.
• Baiju,thenationaldrink,adistilledspiritwitha50%-60%ormorealcoholcontent,dominateswith90%+ofsales.
• Importsofspiritshadbeenrisingatamodest4%peryear.
• TheUSexportsofspiritstoChinahadbeengrowing–up21%in2014.Americanwhiskeyrepresentedabouthalfofthoseexports,withthoseexportsalsogrowing21%.Ontheotherhand,theoverallimportsofwhiskeysinChinahadactuallybeendecreasing,likelyduetothegovernmentcrackdownonlavishpublicexpensesandbanquetsaspartofitsanti-corruptionefforts.
• TheChinesealsowerealsoexportingmorespiritsthantheywereimportingandtheaveragepriceofexportswashigherthanthatofimports.TheU.S.wasexportingtoChinaatalowerprice,onaverage,thanthatoftheoverallChineseimports.
• TotalU.S.exportsofspiritstoChinarepresentedonlyabout$12Min2014,lessthan1%oftheindustry’soverallexports.ThegrowthwasinterestingbutitmaynotbeeasytofindthecustomersforAmerican-madespirits.
• BesidesAmericanWhiskey,U.S.keyexportstoChinahadbeenrumandbrandy.
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ProposedmarketentrystrategiesForeachoftheabove-mentionedcompanies,theConsultant,undertheguidanceoftheProjectManager,developedacustomizedmarketanalysisandpreliminaryrecommendationsformarketentry.Eachreportcontainedthefollowingcomponents:Acompetitivelandscapeoverviewinwhichthemainplayers/competitorsintherelevantsectorareidentifiedanddescribed.
Areviewofexistingproductofferingsinthecategory.(SincetheonlinesectorinChinaisverywelldevelopedwewereabletouseChineseinternetsitestofindalargesampleofrepresentativeproducts.WethensummarizedafewthingsmeanttohelpcompaniesadapttheirproductofferingstotheChinesemarket:
• mainproductclaimsonthelabel• percentageofimportedversusdomesticproducts• marketshareofeachbrandbasedonthesample• packaging:percentagepertype(e.g.cans,glass,plastic,tetrapack,other)• containersize:percentagepersize
ArecommendationforNextSteps.
AprofileofChinesedistributorswewereabletoidentifyaspotentiallyappropriatepartnersfortheNewYorkStateexporter.Eachprofilecontainedsomeimageryaboutthedistributorplusthefollowinginformation:
• Whichoftherelevantfunctionstheyperform:import/customs’handling,sales,
marketingandlogisticsmanagement,itbeingweonlyidentifiedcompaniesthatdoatleastimport/customsandsales.
• Perceivedsize(small,medium,large).• Whatweretheproductcategoriestheywerealreadyrepresentingwithanindicationof
howclosetheyweretothelinesofproductsthattheNYScompaniesweretryingtosell(seecriteriaonnextpage).
• WhichregionsofChinatheyhadofficesinandcovered.• WhetherornottheywerecurrentlyimportingF&Bproducts(weonlyselectedF&B
distributorsofcourse)fromtheU.S.andorotherdevelopedcountriessuchasJapanortheEuropeanUnioncountries.Weonlyselectedcompaniesthatwerealreadydoingatleastoneofthesecountries.
• Whichchannelstheycateredto:Industrial,Retail,FoodService,On-lineretail.• Whetherornotwewereabletoidentifyaspecificcontactatthecompanyorweonly
hadageneralcontactforthefirm.• Somegeneralcommentsaboutthedistributor.
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• Asubjectiveevaluationofhowgoodafittheyseemedtobeforthecompanywewererecommendingthemfor.
Thecriteriaweusedforthepotentialpartnersweselectedwasasfollows:
- Whatkindofproductstheexportingcompanywastryingtosell,namelybrandedor
PrivateLabel,andthespecificcategory.- Whethertheexportingcompany’sproductswereabetterfitforRetailandFood
Serviceandwhatwasthespecificexpertiseofthedistributor.- TherewasalsoafocusonplayersintheCentralEastandSouthEastregionsofChina
whereimportedfoodsandhigh-endretailchainsaremoreprevalentandlikelytocarryimportedproducts.
- TherewasalsoapreferenceforfirmsalreadyimportingfromtheUSorEurope.Ideally,iftheprojectwastocontinue,afteradeeperevaluation,wewouldwanttoaskforU.S.(orEuropean)references.
- Wespecificallychosesomecompaniesthatalreadycarriedthelineofproductstheexportingcompanyproducesaswellasothersthatwecouldnotfindanevidenceofdoingso.ThiswasdoneinordertoprovidetheNYScompanywithoptionsofdistributorsthatdonotcarryverysimilarproductsbecausesomecompaniessimplydon’twanttoworkwithdistributorsthatmightcarryproductsthatcompetewiththeirs,althoughmanyenduphavingtodosobecausethosedistributorsusuallyhavethebetterrelationships.Inanycase,wealwaysalsoprovideddistributorsthatwereabletogettothedesiredcustomertypes.Forinstance,ifacompanywastryingtosellfruitjuicestotheFoodServiceIndustry,wemighthavegiventhemdistributorsthatweresellingcoffeeoralcoholicbeveragestothatchannelbutnotfruitjuiceswhilewealsoprovideddistributorsthatwerealreadycarryingfruitjuices(althoughwetriedthemnottobequitethesametype).
Thefollowingreportswereprovidedtoourcontactsatthetargetedcompanies:
- O-AT-KA:NYFood2China-PartII.b-Distributors-O-AT-KA-VF.pdf;40pages,272
productssampled,10potentialdistributorsidentified:Brightview,EGDIS,Goodwell,Jebsen,Longchi,Longmore,Pinlive,ShangaiNanpu,ShenzhenYifan,SunnyLife.
- ByrneDairy:NYFood2China-PartII.b-Distributors-ByrneD-VF.pdf;40pages,272productssampled(sameasforO-at-ka;theyareinthesamesector),10potentialdistributorsidentified:Citures,DahChong,EGDIS,Goodwell,GuangDongFoodstuffs,GuangDongZhontian,Longchi,ShenzhenYifan,SunnyLife,wideCareer.
- SenecaFoods:NYFood2China-PartII.b-Distributors-SenecaF-VF.pdf;29pages,111productssampled,8potentialdistributorsidentified:BeijingGanghu,DahChong,Longchi,Pinlive,ShanghaiFoodstuffs,ShanghaiKingfoods,ShanghaiTakKwong,ShenzhenYifan.
- Welch’s:NYFood2China-PartII.b-Distributors-Welchs-VF.pdf;48pages,563productssampled,10potentialdistributorsidentified:Assure,Citures,EGDIS,Finigate,
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GuangDongFoodstuffs,GuangDongZhontian,Longchi,ShanghaiNanpu,SunlightCoffee,SunnyLife.
- Mott’s(Dr.Pepper/Snapple):NYFood2China-PartII.b-Distributors-Motts-VF.pdf;48pages,563productssampled(sameasWelch’s,theyareinthesamesector),10potentialdistributorsidentified:EDGIS,Finigate,GuangDongFoodstuffs,Longchi,Pinlive,ShanghaiGourmand,ShanghaiKingfoods,SunlightCoffee,SunnyLife,WideCareer.
- SmithPacking:NYFood2China-PartII.b-Distributors-SmithP-VF.pdf;26pages,92productssampled,7potentialdistributorsidentified:Brightview,DahChong,GuangDongFoodstuffs,HengTai,ShanghaiFoodstuffs,ShanghaiGoldenFields,Wilsonfoods.
- LiDestriFoods:o ForFruitJuices:NYFood2China-PartII.b-Distributors-LiDestriFJ-VF.pdf;48pages,
563productssampled(sameasWelch’sandMott’s,theyareinthesamesector),10potentialdistributorsidentified:BeijingJustBusiness,EDGIS,Finigate,GuangDongFoodstuffs,Longchi,ShanghaiFoodstuffs,ShanghaiNanpu,SunlightCoffee,SunnyLife,WideCareer.
o ForPastaSauces:NYFood2China-PartII.b-Distributors-LiDestriPS-VF.pdf;39pages,103productssampled(sameasWelch’sandMott’s,theyareinthesamesector),13potentialdistributorsidentified:BeijingGanghu,Citures,GuangDongFoodstuffs,HengTai,LeeWooTai,Longchi,Pinlive,ShanghaiFoodstuffs,ShanghaiGoldenFields,ShanghaiKingfoods,Tingfoods,WideCareer,YanSheung,Kee.
o ForSpirits:NYFood2China-PartII.b-Distributors-LiDestriPS-VF.pdf;34pages,149productssampled(sameasWelch’sandMott’s,theyareinthesamesector),10potentialdistributorsidentified:Breightview,Finigate,Jebsen,Pinlive,ShanghaiFoodstuffs,ShanghaiKingfoods,ShanghaiNanpu,Summergate,Vandergeeten,WideCareer.
Ascanbeseen,someofthedistributorsweresuggestedtodifferentcompanies.Afterall,especiallyiftheNYScompanieswerenotcompetingcompanies,havingacoupleofproducersfromthisprojectselectthesamedistributorwouldincreasethedistributor’s“shareofmind”ofNYSproducersandperhapsresultinmorefocusfromtheChinesepartner.Ontheotherhand,wewerealsocarefultoprovideadifferentlisttoeverycompany,especiallycompetingones(wehadseveralDairyandseveralFruitJuicecompanies)sothattheyalwayshadtheoptiontopursueauniquesolution.
-34-
DistributorlistsFollowingare2schedulesshowing:
1. AlistofChinesedistributorsouranalysissuggestswouldbesuitableformarketentryfor
NewYorkStatefoodandbeveragecompanies,withcontactinformation2. CharacterizationofeachdistributoraccordingtowhichtargetedNewYorkState
companiesandproductsouranalysissuggeststheywouldbemostappropriatefor
-35-
CompanyNam
eAk
aAd
dress
Web
-site
Est.
Teleph
onenu
mbe
rNam
ePh
one
1AssureCom
panyLimite
dAssure
Room
2807,28/F,Tow
er2,M
etroplaza,223HingFongRoad,KwaiFon
g,NT
www.assure.com.hk
1985
(852)23888839
RickyLee
8620-8130-4981
ricky-le
.hk
2Be
ijingGanghu
BeijingGanghuZhon
gfa
NA
2003
Mrs.ZhaoShujuan
8610-65422466
3Be
ijingJu
stBusiness&
TradingCo.,Ltd.
BeijingJu
stBusiness
HaidianDistrict,Be
ijingPurpleBambo
oVillaApasserbyJiDo
ng(B
uilding3)Roo
m104,100048
www.ju
st-m
art.com
1996
88556332
MissX
u8610-8855-6332
xlf@
just-m
art.com
4BrightViewShanghaiTradingCo.,Ltd
Brightview
UnitB,10/F
.,WahShingCen
tre,5Fun
gYipStreet,ChaiW
an,H
ongKo
ng
www.brig
htview
sh.cn
1997
85236285221
ZhuJie
8621-6253-0090
zhujie@chefon
line.com.cn
5ShangaiCitu
resT
radingCo.Ltd.
Citures
10thFloor,BlockAChinaNo.55,La
ne800,Zho
ngshanRoad,ShanghaiG
reen
T.H
ouse
www.citu
res.cn
2003
86-21-52061025/52061026
WangQi
8621-5206-1025
jhon
g0818@
hotm
ail.com
6Da
hCh
ongHo
ngLtd.
DahCh
ongHo
ng8/F,20KaiChe
ungRo
ad,Kow
loon
Bay,Kow
loon
,Hon
gKo
ngwww.dchfood
.com
1949
(852)27683388
Vincen
tPan
8621-5252-4628
trade_A@
food
.dch.com
.hk
7EG
DistriSelecta
EGDIS
Suite
720,KIBS,No.928,XiKangStreet,200040,JingAnDistrict,Shanghai,China
www.egdis.cn
<2009
862132270196
8Finigate
Finigate
No.572Ku
nmingRo
adRon
gGuangBusinessC
enterA
reaB,Roo
m401A,401DShanghai,200082,P.R.China
www.finigate.com
<2005
862151196896
Nicho
lasW
u8621-5119-6896
info@fin
igate.com
9Go
odwell
Good
well
27F,NO.228MEIYUA
NROAD
,ENTERP
RISESSQ
UARE,SHA
NGH
AI200070,CH
INA
www.goo
dwellchina.com
1993
(8621)60863200
DanielZho
u8621-60863200
daniel@good
wellchina.com
10Gu
angD
ongFood
stuffs(5)
GuangD
ongFood
stuffs
www.china-gdf.com
1954
11Gu
angdon
gZhon
gTian(2)
Guangdon
gZhon
gTian
Rm.1919,W
uYangNew
Plaza,111SiYou
New
Road,Guangzhou
,China
www.zho
ntian1919.com
1998
862087380248
GuoP
ingLi(2)
zhon
gtian@
263.ne
t.cn
12He
ngTaiCon
sumablesG
roup
Limite
dHe
ngTai
31stFloor,G
uangdo
ngFinanceBuilding,88Co
nnaughtR
oadWest,Sheu
ngW
an,H
ongKo
ngwww.hen
gtai.com
.hk
1986
85226280077
GaoQinJian
852-2628-0077
contact@
hengtai.com
.hk
13Jebsen
&Co.Ltd
Jebsen
28/F,CarolineCe
ntre28YunPingRoadCausew
ayBayHon
gKo
ng
www.je
bsen
.com
1895
(852)29238777
KevinYan
8610-8519-8688
kevinyan@jebsen
.com
14LeeWoo
Tai
LeeWoo
Tai
BankBuilding,Roo
m902,409-415Hen
nessyRo
ad,CausewayBay,H
ongKo
ng,G
uangdo
ngwww.le
ewotai.com
1992
852-25747388
AlexLa
m8621-5836-0188
alam
@leew
otai.com
15Shen
zhen
LongchiFoo
dCo
.Longchi
Rm.E,22/F,Sou
thFlat,ParkwayMansion
,3019SungangEastRoad,She
nzhe
nwww.lo
ngchi.com
.cn
1994
0755-25933960/3961
JHLa
ng86755-2593-3969
.cn
16Ha
nngzho
uRo
ndoTradeCo
.,Ltd.
Longmore
OldHillRoad,XihuDistrictB
uilding,Roo
m609,N
o.76Yitai
www.lo
ngmore99.com
?0571-88826937
NicoleYieyiu
86571-8882-6937
yieyiu@gm
ail.com
17Pinlive(shanghai)Foo
dsCo.Ltd
Pinlive
Room
308,Building10,652Changshou
Road.Shanghai
www.pinlive.com
1995
021-51863006
Rebe
caXu
8621-5186-3006
rebe
18ShanghaiFoo
dstuffsImp.&Exp.Corp.ShanghaiM
aojiIm
p.&Exp.Co.,LTD
.ShangaiFoo
dstuffs
AerospaceBu
ilding8-17F,No.525Sichu
anRoad,Shanghai
www.shfiec.com
1954
021-63216233
JonathanLu
o8621-6357-1761
hy_xia@shfie
c.com.
19ShangaiG
olde
nFieldsLtd.
ShangaiG
olde
nFields
SHAN
GHAIEVE
RBRIGH
TCO
NVE
NTION&EXH
IBITIONCEN
TER319CNo.70CAO
BAOROAD
XUH
UIDISTRICT,SHA
NGH
AICHI
www.shjtgs.com
1996
0086-021-64325920
HaoJia
ng8621-6432-5920
sj@shjtg
s.com
20ShangaiG
ourm
andFood
sTradingLts
ShangaiG
ourm
andFood
sG/FHo
ngLe
ongIndu
stria
lcom
plex,4W
angKw
ongRo
ad,Kow
loon
Bay,Kow
loon
,Hon
gKo
ngwww.wingkee
.com
1968
852-27963111
EricZou
8621-6249-3663
sh-ad20@
gourmandfoo
ds.com
21ShangaiKingfoo
d'sC
ondimen
tCo.Ltd.
ShangaiKingfoo
dsRo
om2404ABu
ildingNo.185Zho
nghu
aRo
ad,Shanghai;Zip::200010
www.kingfoo
ds.com
.cn
1990
021-63301868
MaoZho
ngGao
8621-6330-1868
kingfood
s-mt@
163.com
22ShangaiN
anpu
Foo
dShangaiN
anpu
Town,Son
gjiangDistrictinShanghaiJingyangRoad,ShanghaiJiugan1300
www.nanpu
food
.com
1992
(021)61923399
Benn
yXu
8621-6192-3399
marketin
g@nanp
ufoo
d.com
23Shen
zhen
TakKwon
gTradingCo.
ShangaiTakKwon
g2ndFloo
r，KailiBuilding，
WestSide，
BlockSouth，
33Cuizhub
eiRoad，
Luoh
uDistrict，
Shen
zhen，
China,518019
www.ta
kkwon
g.com
<2005
86-13825296718
TakWay"E
ddie"Y
eung
86-755-8240-4166
eddieyeu
ng@takkwon
g.com
24Shen
zhen
Yifa
nFood
Trading(2)
Shen
zhen
Yifa
n17A,SeaViewPlaza,Prin
ceEdw
ardRd
.,Shekou
,NanshanDistrict,Shen
zhen
,Guangdo
ngProvince,China
www.1fsp.cn
2002
075526889000
LuoShen
,CEO
(2)
075526895299
yifansp@
vip.163.com
25Summergate
Summergate
4FGolde
nFinanceTower,58EastYananRoad,Shangai
www.sum
mergate.com
1999
IanFord
8621-6329-4433
26Shen
zhen
Sun
lightCoffeeTrading
SunlightCoffee
New
sRoad,FutianDistrict,Shen
zhen
HuafengBuilding,Roo
m807
www.srjcoffee.com
<2007
0755-6130
PeterW
ong
86-755-6130-5660
27ShangaiSun
nyLife
Sunn
yLife
6thFloo
r,1265Changde
Road,Shanghai(XingYun
Building)
www.shsun
nylife.cn
1991
021-52527733
Mr.Xu
Jun
8621-5252-7733
xy@shsunlife
.com
28TingFoo
dsIm
p&Exp.Com
p.Ltd.
TingFoo
dsRo
om1209,Beijin
gon
the8thgifte
dwith
BlockB,G
uangqu
men
waiCou
rtStree
t,Ch
aoyangDistrictPo
stalCod
e:100022
www.tingfood
s.com
<2005
(86-10)5861.3768
Andy
8610-5861-3768
tingfoo
29(Beijin
g)Vande
rgee
tenTradeandCo
mmerceCo.Ltd.
Vand
ergeeten
Suite
720,KIBS,No.928,XiKangStreet,200040,JingAnDistrict,Shanghai,China
www.vdgcn.com
>10Y
862-132270086
JessicaGa
o8610-5935-9390
30Tianjin
WideCareerInt'lTrade
Co.,Ltd.
WideCareer
Tianjin
Frie
ndshipRoad,HexiD
istrict,Tianjin
Rom
eGa
rden
building,Roo
m1101,BlockE
www.widecaree
r.com
1997
86-22-23244092
LiJin
8622-2328-3382
expo
rt03@widecaree
r.com
31Wilson
InternationalFrozenFood
s(HK
)Ltd.
Wilson
Foo
dsRm
2104C-F,N
anFun
gCe
ntre,264-298Castle
PeakRo
ad,Tsuen
Wan,N
.T.
www.wilson
food
s.com.hk
1977
(852)36780888
DavidPan
8621-6354-4653
welloceansh@yaho
o.com.cn
32YanSheu
ngKee
(MingKe
e)Cocon
ut&SpicesC
o.Ltd.
YanSheu
ngKee
TsingYeun
gCircuit,Tuen
Mun
,New
Territories,Hon
gKo
ng,9thFloor,Roo
monthe1stcen
turyADIndu
stria
lBuilding
www.ysk-m
k.com
1991
(852)24310638
86-769-2250-2081
coconu
-36-
PerceivedSize
Proxim
ity2cu
rren
tlines
Officesin
Aka
ImpSalesM
ktLog.
SM
LNo
Similar
Same
Beijing
ShangaiG
z/Sz/HK(1)Ch
engdu
Other
FSR
On-LOverallfit
1Assure
XX
?X
XX
XX
XX
XXX
X2Be
ijingGanghuZhon
gfa
XX
XX
XX
X?
XX
XX
XX
3Be
ijingJu
stBusiness
XX
X?
XX
XX
XX
XXX
X4Brightview
XX
XX
Xx
X?
XXX
XX
XX
XX
XX
5Citures
XX
XX
XX
?X
XX
XX
XX
6Da
hCh
ongHo
ngX
XX
XX
XX
xX
XXX
XX
XX
XX
X7EG
DIS
XX
XX
XX
XX
xX
XX
XX
XXX
XX
XX
XX
8Finigate
XX
XX
XX
XX
XX
XX
XX
XX
XX
9Go
odwell
XX
XX
XX
XX
XX
X?
XX
XX
XX
XX
X10
GuangD
ongFood
stuffs
XX
XX
Xx
X?
XXX
XX
XX
XX
XX
X11
Guangdon
gZhon
gTian
XX
XX
Xx
xx
Xx
x?
XXX
XX
XX
12He
ngTai
XX
XX
XX
Xx
xX
xx
XX
XXX
XX
XX
X13
Jebsen
XX
XX
XX
XX
XX
XX
XX
XXX
XX
XX
14LeeWoo
Tai
XX
?X
XX
Xx
XX
XX
XXX
XX
15Longchi
XX
XX
XX
Xx
XX
XX
XXX
XX
XX
XX
XX
XX
XX
16Longmore
XX
?X
XX
X?
XX
XX
17Pinlive
XX
XX
XX
Xx
XX
?X
XX
XX
XX
XX
XX
XX
18ShangaiFoo
dstuffs
XX
XX
XX
XX
X?
XXX
XX
XX
XX
XX
XX
X19
ShangaiG
olde
nFields
XX
XX
XX
XX
XXX
XX
XX
20ShangaiG
ourm
andFood
sX
XX
XX
XX
X?
XX
XX
21ShangaiKingfoo
dsX
X?
XX
XX
XX
?X
XXX
XX
XX
XX
X22
ShangaiN
anpu
XX
XX
XX
XX
X?
XXX
XX
XX
XX
X23
ShangaiTakKwon
gX
XX
XX
XX
XXX
XX
24Shen
zhen
Yifa
nX
XX
XX
X?
?XX
XX
XX
25Summergate
XX
XX
XX
XX
XX
XX
X?
XX
X26
SunlightCoffee
XX
XX
XX
XX
XX
XXX
XX
XX
X27
Sunn
yLife
XX
XX
XX
XX
XX
XXX
XX
XX
XX
XX
28TingFoo
dsX
XX
XX
XX
XX
X29
Vand
ergeeten
XX
XX
XX
XX
X?
XXX
XX
30WideCareer
XX
XX
XX
XX
XX
XX
XXX
XX
XX
XX
XX
31Wilson
Foo
dsX
XX
XX
XX
XX
XX
XX
XX
XXX
XX
X32
YanSheu
ngKee
XX
XX
XX
XX
XX
(1)She
nZhe
n,Guangzhon
,Hon
gKo
ng(4)Foo
dService,Retail,On-Line
Retail
(3)A
ctivitiesit'sbe
lievedthecompanyperform
s:impo
rting,sa
les,marketin
g(/branding),logisticsm
anagem
ent
LiDestriSpirits
O-at-ka
ByrneD
SenacaF
Welch's
Mott's
SmithP
LiDestriFruitJuices
LiDestriPastaSauces
PastaSauces
FruitJuices
Dairy/MilkDrinksRecommen
dedFor:
Co.Fun
ctions(3)
Channe
ls(4)
ProcessedFruits&Veg.
Meat
Spirits
-37-
Theonlineopportunity(Appendix:6i)China’son-lineretailmarketisthelargestintheworld,havingrecentlysurpassedthatoftheUS.Giventhattheconventional“brickandmortar”retailsectorisrelativelyimmatureincomparisontothatofmoredevelopedcountries,theonlinesectorisinsomesensesleapfroggingratherthansupplementingconventionalretailchannels.GiventhatitiscriticalthatNewYorkStatecompaniesconsideringexportingtoChinagivedueconsiderationtotherolethatonlinecanplayintheirmarketingstrategies.RecognizingtheimportanceofthissectorwedevelopedadetailedanalysisoftheonlinesectorasitcouldapplytoNewYorkState’sfoodandbeveragecompanies,whichissummarizedbelow:OverviewofonlinelandscapeinChina
• Chinaiscurrentlythelargeste-commercemarketintheworldafterhavingsurpassedtheU.S.in2013,withsalestopping$300billionUSDin2013.(S4.13)
• WhileU.S.e-retailsalesweredoublethatofChinain2010,by2013ChinahadovertakentheU.S.tobecometheworld’slargestnationale-commercemarket.Beijing-basediResearchprojectedonlineretailsalesinChinawouldgrowanother45.8%in2014tomorethan$446billion.
• In2013,Chineseonlinesalesfor“Singlesday”(November11)tripledthemostrecentUS“CyberMonday”
• Chinahasover564millionInternetusersand755millionmobilephonesubscribers.Oftheseusers,270millionalsoshoponline.
• Oneofthemostrelevantphenomenaisthemassiveusageofsocialmedia.Infact,alotofonlinesalestodayareoriginatedatsocialmediaplatforms.
• Thisanalysisalsoincludedinformationaboutthefollowingaspects:• PCvsmobile• RegionalPenetration• Keycategoriessoldonline,whichdoesincludeFoodproducts• Asnapshotofgovernmentinitiativesconcerningon-line• KeytrendsandFutureofon-linesales• KeyPlayers
KeyfindingsAlternatives,andcomplexitiesforUScompaniesenteringChina’sonlinemarketplace;
• MostsitesrequirethatthemerchantsbeaChineseentity,soaforeigncompanymustsetupaWFOE(WhollyForeignOwnedEnterprise).OnecanavoidgoingthroughthelengthyproceduresofsettingupaWFOEanddevelopingone’sowne-commercepresencebyhiringanintermediarycompanytoassistinonlinesales.However,thatnaturally
-38-
bringsalongrisksandonewill,therefore,havetodecidehowimportantIPrightsaretoone’sbusiness.Onewillalsohavelesscontroloverone’sbusinessinChina.Ontheotherhand,settingupaWFOEanddevelopinge-commerceoperationswillrequirealong-termcommitmentandconsequentlysufficientresources.Justlikeanywhereelseintheworld,inordertoprotectone’sowninterests,onemustmakesuretoconductproperduediligenceonthepartyonewillbeworkingwithandwriteupasolidcontract.Protectingone’sbrandsisoftheessence.(S4.16)
• Furthermore,somecompanies,likeTmall,requirecompaniestoprovideaChina-basedproductreturnarrangementandChinese-languagecustomerservicesupport.
• ThereareacoupleofcompaniesinChinadedicatedexclusivelytobeingintermediariesforforeigncompaniesthatwanttosellinChinaforonlinesalesonly
• CROSS-BORDERwebsites.In2012,theCustomsAgencyofChinaopenedkuajington.com,awebsitededicatedtoforeigncompaniesthatdoesnotforcethemtoincorporateinChina.Thereportincludesmoreinformationonthemosteffectivewaysofusingcross-borderwebsites.
• Finally,companiescancreatetheirwebsitesintheirhomecountriesofferingtoshipproductsfromoverseas.Thisisalsocross-bordertrade.
• ChineseCustomscharge10%dutiesforfoodandbeverageproductsreceivedviamail.In
kuajington.com,dutiesarechargedtoconsumersviaprice.Theconsumeralsopaysthedutiesofproductssentbymailviaothercross-bordersites.Intmall.hk,however,themerchantwillpaytheduties.
• Thisreportincludesa2-pageprofileanalysisofeachofthekeyplayersineachofthe
followingsub-segments:• ConsumertoConsumer(C2C)–Taobao(Alibabagroup)• BusinesstoBusiness(B2B)–Alibaba• BusinesstoConsumer(B2C)(probablythemostrelevanttoour
companies):Tmall(Alibabagroup),hc360,Suning,Vip.Gome,Dandand,Amazon,Yixun,yhdandKaujingtong
• Keyinformationprovidedforeachoftheseplatforms:• Generalinformation:descriptionandpositioning,salesand
growth,whetherornottheysellfoodproducts,othergenericcomments.
• Statistics:rankinginChina,visitor’sengagement,audiencedemographics,audiencegeography,etc.
• Howtobecomeavendor.
• Thereportincludesfourcasestudies/examplesofUScompanieswithrelevantexperienceinChinesee-commerceandwhichstrategiestheypursued.
-39-
• Thisreportalsopresentskeyrecommendationsforcompaniesconsideringexploringthischannel,including:
• CleanandminimalisticwebsitedesignspreferredintheU.S.andothercountriesarenotreceivedwellbyChineseshoppers,whopreferacrowdedandcompactwebsite,whichgivesthemtheimpressionofa"high-energy”shoppingatmosphere.
• Shoppersalsoprefertoopenuplinksinnewwindowsforfastercomparisonofpricesratherthanswitchingbackandforthbetweenpages.
• Companiesshouldwritealotoftexttodescribeproductsandservices,eveniftheyhavegreatpictures.Searchenginesrecognizetext.Themorethetextthehigherthechancesofbeingfound.
• Textshouldbeimprovedastimegoesbyandcapturingandmaintainingthecustomer’sattention.Itshouldbewrittenasifitwasanovelorfictiontokeepinterest
• Chineseshoppersareextremelypricesensitive–sales,deals,andpromotionsaregreatcrowdpullers,andthereislittletonobrandloyalty.The‘timeismoney’concepthasn’treallycaughton,andbuyersrarelypaytheextratogettheirwarestoarrivefaster.
• Logisticsisessentialfore-commerce,andthird-partydeliverysystemshavebeenfoundtobelacking.Afterfindingthatmorethan60%ofcustomercomplaintsreceivedwererelatedtoproblemsindelivery,yihaodianrespondedbybuildingtheirownlast-miledeliverysystem.
• Trialanderrorwillgiveeachcompanytherightexperiencetohavegoodeffectivepromotions.Asmuchtimeaspossibleshouldbespentinthisprocess.
• Companiesshouldtrytohaveasmuchoriginalcontentaspossibleiftheycaninvestinsearchengines.
• Productinfoshouldberefreshedasmuchaspossible.• Smallcompaniesshouldaskfriendstoreviewproductsanddositeclicks!• Productsshouldbedescribedusingasmuchaspossiblethestandardname
knowntothepublicandusedbyothercompanies.Standardnameswillgetfoundbysearchenginesmorefrequently.
• Companiesshouldhiregreatcontractors.Theyaregoingtoneedexperthelpinareassuchas“search-engineoptimization”toattractcustomers,inpackagedeliveryandinmanufacturingiftheyarelaunchingaproduct.Companieswillimproveyourchancesofsuccessiftheyselectcontractorscarefully.
• Companiesshouldnotplanonmakingmoneyrightaway.• Companiesshouldexpecttobeimitated.Intellectualpropertyshouldbe
protected.
• ThereportendswithacoupleofspecificnotesonMarketing.
-40-
Finally,inanalyzingtheroleofonlineretailanditspotentialforNewYorkStatecompanieswehaveidentifiedtworecommendationsforconsiderationbyEmpireStateDevelopmentandotherNewYorkStateagencies:
• CreatearelativelysimpleChina-facingportalforNewYorkStatecompaniestopromote
theirproducts,whichNewYorkStatecouldsupportwiththetechnologicalplatform,languagetranslation,andbroadmarketingguidelinesasnotedabove
• ForqualifiedlargercompanieswithsignificantexportpotentialNewYorkStateshouldconsiderprovidingmoreprofessionalmarketentrysupportwithaspecificemphasisonthee-commerceopportunity.
WhileNewYorkStateisapowerfulbrand,itisnotnecessarilytopofmindforfoodproducts.MostChinesearenotlookingforNewYorkStateproducts.Astate-levelefforttoextendNewYork’sbrands(PrideofNewYork/TasteNY)toincorporatethecharacteristicsthatChina’semergingmiddle-classandaffluentconsumersareseeking–foodsafety,environmentalfriendliness,andhealth–canbeparticularlyeffectiveintheonlinespacewhereChineseconsumerscanbedrawndirectlytoNewYorkState’sofferings.ThisanalysiswasmadeavailabletoallofourtargetedNewYorkStatecompanies.
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AnalysisofPrivateLabelLandscapeinChina(Appendix:6j)PrivatelabelisanimportantpartofthebusinessmodelsofanumberofthelargestandmostcapablefoodandbeveragecompaniesinNewYorkState,includingseveralofthosethatwetargetedforthisproject:O-AT-KAMilk,ByrneDairy,SenecaFoods,SmithPackingandLiDestri.Giventhat,itwasimportantthatweconsiderthestateoftheprivatelabelsectorinChinaThisanalysiswaswasmadeavailabletoalltheabovecompanies.Keyfindings:
• PrivatelabelisarelativelysmallpartofthefoodandbeveragesectorinChina,representingonlyabout1%ofoverallretailsales.Consumerpreferenceformajorbrandnamesisaccompaniedbyaperceptionofprivatelabelproductsasbeingoflowerquality.
• GiventheexperienceofmoredevelopedWesterncountries,itseemslikelythatovertimethemarketshareoccupiedbyprivatelabelsmayincreasedramatically,especiallyastheretailsectorbecomesmoreorganizedandconsolidatedandlargerretailersbecomemorecapableofdevelopingqualityprivatelabelproductsastrustedalternativestomajorestablishedbrands.Europeancountrieshaveprivatelabelpenetrationsbetween20%and53%w,whileintheU.S.thecategoryisestimatedtorepresentabout17%ofthesector35.Furthermore,intheU.S.,privatelabelhasasignificantlyhighershareofthefoodcategorythannon-foodcategories.Thissuggeststhat,overthelongterm,NewYorkStatecompaniesabletopartnerwithstrongChineseretailersmayfindthatprivatelabelproductionbecomesanexcellentopportunity.
Thisreportalsopresentsthekeyretailchainsdevelopingprivatelabelprogramsaswellasthekeyprivatelabelplayersineachofthecoveredcategories;thesewouldbethecompetitorsforNewYorkStatecompaniesenteringthisarena.
35“PrivateLabel&NationalBrands:PavingthePathtoGrowthTogether”,Dec2013,IRI.http://www.iriworldwide.com/Portals/0/T_T%20December%202013%20Private%20Label.pdf
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DatabaseofNYSFoodandBeverageProducerswithExportPotentialAsoneoftheoutputsofthisproject,CCEstaffworkedwithconsultantLuisGatotodevelopwhatislikelythemostcomprehensiveavailablelistofNYSagricultural,foodandbeverageproducers–approximately21,000entries–includingvaluableinformationoneachcompanysuchasindustrysector,estimatedsalesvolume,numberofemployees,exportexperience,andcontactinformation.Wealsoidentifiedasubsetofthatlist,comprisingabout450companieswithhighexportpotential,includingatleastoneortwocompaniesfromeachindustrysub-sector.Thisshortlistshouldbeausefultoolforanyonewhoneedstoreachoutquicklytothemostlikelyprospectsforexportopportunities–e.g.,foraquickresponsetoarequestforNYSproductsbyaforeignimporter.Thedetailsofhowthesetwodatabasesweredeveloped–whichinvolvedbothcompilationoflistsfrommultiplesourcesandmanualsortingandselectingofthedatatoidentifythemostlikelyexportprospects-aredescribedintheAppendix3atothisreport.SomehighlightsofthedatabaseHavingcreatedthesedatabases,certainfindingsrelativetotheexportpotentialofvariousfoodandbeverageindustrysectorsemerged:
o SoftDrinks(includingwater):Thisisthelargestsub-sectorintermsofsalesvolumesandsecondlargestemployer;togetherwithbreweriestheyhavethelargestaverageemployeesperunit.Itappearstobethesectorwiththemostleverageforgrowthandemployment.Ithas,however,littleoftheconnectionwithagriculturalproductioninNewYorkStatethatisthefocusofthisproject.
o FruitandVegetablePreservingandSpecialtyFoodManufacturing:Thisisthesecondlargestsub-sectorinoverallsales,numberthreeinemploymentandnumberfourinemployeespercompany.It’salsothesecondintermsofnumberofcompaniesthatreportedthattheyalreadyexport.
o Dairy:Thissub-sector,whichincludesdairyprocessingcompanies,includethelargestnumberofcompaniesreportedtobecurrentlyexporting.Althoughonlynumber5insalesvolume,itisthesecondlargestemployerinmanufacturing.
Exportgrowthinbothofthesesectors,whichincludeslargeandcompetentcompanies,wouldhaveobviousdirectbenefitstoNewYorkStateagriculturalproducerswhosupply–andinsomecaseshaveequitystakesin–theseprocessingandmanufacturingcompanies.
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o Bakeries.Althoughthismightnotbethemostlikelyproducttoexport,bakeriesarethethirdlargestsub-sectorinsalesandarethelargestemployer.Theaveragebakery,however,haslessthan7employeesbuttherearesomelargerones.
o Breweries:Thissub-sectorisnumber3insalesgrowthandnumber1intermsofaveragenumberofemployeespercompany.Also,outsideofagriculturalactivities,theyareoneofthetop3non-agriculturalactivitiesintermsofemployeeintensitypersales,thatis,thesecompaniesgeneratethemostamountofjobspereachdollarofsales.Sothisisasectorwherelittlesalescangeneratealotofdirectemployment.Moreover,thecraftbrewerieshavebecomeanAmericanfavoriteand,astheyachievematurityandcompetitiongetsharder,theymaybeinneedoffindingnewermarkets.
Potentialnextstepsidentifiedasaresultoftheanalysisofthisdatabaseare:
• MeetingwiththeNYStateTradeAssociations.• Lookingforglobalmarketsfortheseindustries.Thiscouldbedoneintwosteps:
o First,identifyingoverallglobalmarketsorgeographieswithanapparentdemanddeficit.
o Second,perhapswithsomesyndicateddata,diggingdeepintothis,identifyingspecificcountries,analyzingthosemarkets,theirpotential,theirdutypolicies,etc.
• Consideringspecificincentivestohelpmaketheseproductsmorecompetitive.
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SurveyofExportActivityandPotentialWiththeassistanceofCornell’sSurveyResearchInstituteandtheConsultant,theProjectManagerdevelopedandfieldedasurveyofNewYorkStateagricultural,foodandbeveragecompanieswiththegoalofassessing1)theirlevelofexperiencewithexportmarkets;(2)theirassessmentofthefutureopportunitiesrepresentedbythosemarkets;and(3)theirperceptionofthechallengestheyfaceandtheassistancethatwouldbebeneficialinrespondingtothoseopportunities.The151respondentsrepresentedawiderangeofproductcategories,geographies,exportexperiencelevels,andbusinesssize.Keyfindingsfromthesurveyinclude:
• AlargemajorityofthoserespondingtoaspecificquestiononthesubjectbelievethatexportswillbeanincreasinglyimportantpartofthemarketforNewYork’sfoodandbeverageproducts;andtheybelievethatexportdemandwillbedrivenbytheperceivedqualityandsafetyofNewYorkState’sproducts.
• Whilenearbymarkets(Canada/Mexico)anddevelopedmarkets(theEuropeanUnion)areidentifiedasprioritymarkets,greatAsiaincludingChinaisalsoviewedasaverysubstantialopportunity.
• Multiplerespondentsidentifiedchallengesintwospecificareasinwhichgovernmentandindustryorganizationscouldprovideassistance;thesecanbesummarizedasfollows:
o Overcomingorganizationalcapacityconstraintstoallowinvestmentindevelopmentofexportmarkets
o Regulatory,tariff,andlogisticsissues
Inadditiontoacompleteanalysisoftheresultsofthesurvey,theProjectManagerdevelopedanumberofspecificrecommendationsforactionsthatNewYorkStatecouldtaketosupportexportdevelopmentbasedonthesurveyresponses.Theseinclude:
• Consolidatingandincreasingtheeaseofaccesstoexistingresourcesthatsupportbusinessesbeginningorgrowingtheirexportactivities;
• DevelopingaprogramofdirectChinamarketentrysupportformediumtolargecompaniesintargetedsectorswherestrongopportunitieshavebeenidentified;
• DevelopingastatewidedigitalmarketingstrategyforChinainrecognitionoftheexplosivegrowthoftheChinesecommercialinternet;and
• Strengtheningcooperativemarketingprograms,withaspecialfocusonexportdevelopment,forNewYork’smapleandhoneyindustries,whoseparticularcharacteristicsofferuniqueopportunitiesforgrowth.
Thesurveyresults,analysisandrecommendationsareincludedasappendix4tothisreport.
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EvaluatingtheProject’sOverallEffectivenessAsnotedelsewhere,thearticulatedgoalsoftheCCEChinaExportProjectwerethreefold36:
1. Todevelopandimplementasuccessfulresponsetotheidentifiedopportunitytoexport
differentiatedNYSagriculturalproductstohigh-endconsumermarketsinChina.2. Toidentifyadditionaloverseasmarketsfortheseproductsanddevelopaplantoreach
thosemarkets.3. ToincreasethecapacityoftheExtensionsystemtoengagewithoverseasmarket
opportunitiesonbehalfofNYSagriculturalproducersandbusinesses. Itwasfurthernotedintheprojectproposalthat“fulfillingtheChinamarketdemandpotentialwillentailscalingupNewYork’scapacity–fromproducersandprocessorsthroughdistribution.Developingthismarketopportunitywillbeapowerfuldriverofjobcreationnotonlyintheproducingsectorbutalsointhenumerousimportanteconomicsectorslinkedtoagriculturalproduction.”Althoughtheconsummationofaspecificlevelofsalesordersduringthefundedperiodwasnotafirmcommitmentoftheproject,achievingsomesignificantlevelofsalesintheshortterm,andestablishingaclearpathtowardrapidlyincreasingthosesaleswasclearlyanexpectationoftheparticipantsandthefunder.Thatexpectationwascertainlyreflectedinthefactthatmorethan50%oftheprojectfundingwascommittedtosalesdevelopmentactivitiestobecarriedoutbySafeSourceTrading.Asdescribedelsewhereinthisreport,SafeSourceTradingwasnotablyineffectiveatfulfillingtheexpectationstheyhadcreatedfortheproject,despitetheongoingsupportandeffortsatguidancebyCCEstaff.SSThadestablishedatargetofatleast$500,000insalestobecompletedwithinan8-monthperiod,tobefollowedbyrapidgrowththereafter($10millionperyearattheendof18monthsand$200millionperyearattheendoffiveyears).Inreality,ittookSST18monthstofulfillasingleorderwithatotalvalueofjustover$31,000.PerhapsevenmoretellingisthefactthatoncethegrantfundingsupportingtheireffortswasnolongeravailabletherewasnoevidencethatSSTwasbuildingoneventhissmallsuccess–northatitwasevenmakinganyefforttodoso.SST’sfinalprojectreport(includedasAppendix5here)canbesummarizedasstatingthatdevelopingthismarket,includingestablishingrelationshipswithcapableNewYorkStatebuyersanddealingwiththechallengesoftheChinesemarket,turnedouttobemuchmorecomplexandtime-consumingthantheyhadanticipated.TheProjectManager’sevaluationofthereasonswhythesalesresultsweredisappointingarequiteabitmorepointed.VeryearlyintheprojectitbecameclearthatstrongmanagementdisciplineandaclearstrategywerelackinginSST’soperation.JeremyHaft,SST’sfounder,US-basedleader,andtheconceptualizerofthisproject,didnotoncevisitaprospectiveNewYorkStateexporterinNewYorkStatethroughoutthetermoftheproject,despitetheProgram36Appendix1a:CCEProposal2016-06-07
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Manager’sfrequentrequeststhathedoso.Instead,hehiredahighly-paidVicePresidentforSales(JeffreyMills)withhigh-profileexperienceinrestaurantmanagementandschoolfoodservicebutnoexperiencewithChina,exportdevelopment,orthewholesalefoodbusiness,andnoevidenceofbeingabletoimplementacomplexstrategicsellingprogram.SSTmadethedecisionearlyontoinvestsignificantlyinparticipationinatradeshowinChina,andCCEstaffcommittedsignificantgrantresourcestosupportpreparationforthisshowandtoattend.JeremyHaft,however,didnotattend,insteadsendingMills;Haft’sChinapartner,WangFeng,whomaybewell-connectedbutevidencednocapacitytomakeheadwayinChina’sfoodandbeveragemarkets;andTripTaylor,arecentstudentofHaft’satGeorgetownwhoseChineselanguageskillswerehelpful.Whileparticipationinthetradeshowwascertainlyeducationalforprojectstaff,intheabsenceofaclearsalesstrategyitresultedinnosalesorevenstrongsalesleads.RecognizingearlyonthatnotonlywereSST’ssalespromisesprovinghighlyunrealistic,butthatSSThadnorealstrategicplantoapproachthemarket,theProjectManagermadeanumberofchangesdescribedinmoredetailelsewhereinthisreport.Insummary,workingwithaconsultantwithrelevantexperience,andwiththeknowledgegleanedinpreparationfortheprojectandinobservingSST’sefforts,wewereabletocreateanddisseminatesignificantresourcesthatshouldstrengthenthecapabilitiesofNewYorkState’spotentialexportingcompaniesandoftheagenciessupportingthosecompanies,includingCornellCooperativeExtension.Keyamongtheproductsofthatworkare:
• OverallChinaMarketAnalysisforAgriculture,FoodandBeverageProducts• CategorySpecificMarketAnalyses• OnlineMarket–SpecialAnalysis• PrivateLabelMarket–SpecialAnalysis• DatabaseofPotentialNYSExporters(Ag/Food/Beverage)includingTopProspects• SurveyofExportActivityandPotentialAmongNYSProducers
ThemarketanalysesdescribedaboveweredevelopedspecificallytobeofvaluetoashortlistofcompanieswiththegreatestpotentialtodevelopexportstotheChinesemarket,andwerepresentedtoseniorexecutivesatthosecompanies.SummariesoftheseanalysesandotherfindingsoftheprojectweresharedwithEmpireStateDevelopmentstaff,withCCEstaff,andwithotherinterestedparticipantsatthe2015CornellStrategicMarketingConference.TomaximizethevalueoftheworkdoneunderthisprojectanddescribedabovetheProjectManagerhasrecommendedthefundingofcertainfollow-onactivities,including:
(1) Consolidatingandincreasingtheeaseofaccesstoexistingresourcesthatsupportbusinessesbeginningorgrowingtheirexportactivities;
(2) DevelopingaprogramofdirectChinamarketentrysupportformediumtolargecompaniesintargetedsectorswherestrongopportunitieshavebeenidentified;
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(3) DevelopingastatewidedigitalmarketingstrategyforChinainrecognitionoftheexplosivegrowthoftheChinesecommercialinternet;and
(4) Strengtheningcooperativemarketingprograms,withaspecialfocusonexportdevelopment,forNewYork’smapleandhoneyindustries,whoseparticularcharacteristicsofferuniqueopportunitiesforgrowth.
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ChallengesorUnexpectedEventsAlthoughthereweremanychallengeswiththisprogram,andsomeofthemwerecertainlyunderestimated,CCEunderstoodthatitwasundertakingachallengingprojectwhenitproposedtotakethison.TheexpectedchallengesincludedfindingNewYorkStateproductsandcompaniesforwhichtheChinaopportunitywasappropriate,andunderstandingandnavigatingtheregulatorylandscapebothontheUSsideandontheChinaside.Onechallengeworthyofspecialnoteistheabsenceofa“brand”forNewYorkState’sagriculture,foodandbeverageproductsthatiseffectiveintheexportcontext,andspecificallyintheChinesecontext.Inourexperience,prospectiveChinesebuyersoftheseproductsareveryinterestedin“green”and“healthy”characteristicsandseekoutcertificationsandbrandsthatconveythosequalities.Theyrespondedpositivelytothe"PrideofNewYork"logoasanemblemofquality.Thatlogo,alongwiththe“TasteNY”branding,couldeffectivelybeusedtosignifyanumberofbrandcharacteristicsthattheChinesevalue:thatNewYorkhasacleanenvironment,ahighly-functioningfoodsafetyandenvironmentalregulatorysystem,cutting-edgefarmingsystems,etc.Unfortunately,atleastatthetimeofthisprojecttherewaslittleornocollateralmarketingmaterialavailablefromNewYorkStatetocommunicatethosecharacteristicstoprospectivebuyers.Toaddressthatlack,theProjectManagercreatedamarketingpiecewhichwassharedwithEmpireStateDevelopmentstaffandisincludedintheappendices(Appendix8–PrideofNewYorkMarketingPiece).Ofcourse,themostsignificantunexpectedchallengewasSafeSourceTradingfallingsignificantlyshortofthecapabilitiesthattheyhaddescribedtoEmpireStateDevelopmentandCCEandproposedtobringtotheproject.ThisnotonlyresultedindisappointingsalesresultsbuttheneedfortheProjectManagertodevelopandpivottoadifferent,morestrategicapproachtomarketdevelopmentinthemiddleoftheproject,asdescribedindetailelsewhereinthisreport.
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StepsNeededtoReplicateThisEffortandFAQsWhileitmaynotbenecessarytoreplicatethisspecificeffort,webelievethatcontinuedeffortstosupportthedevelopmentofexportsforNewYorkState’snon-commodityagricultural,foodandbeverageproductswillbeincreasinglyimportantforthecontinuedhealthofthosesectors–assupportedbythesurveyresultsdescribedelsewhereinthisreport.WealsobelievethatCCEcanplayanimportantroleinfutureeffortsbyhelpingcompaniesclimbthesignificantlearningcurvethatexportingentails.AndwebelievethatChina,althoughnotnecessarilythefirstpriorityforexportsinthesesectors,anddespiterecenteconomicchallenges,willcontinuetobeanincreasinglyimportantmarketopportunitythatcapablecompanieswillbenefitfromexploring.Forfutureeffortsalongtheselines,westronglyrecommendthatanyprojectbegroundedinacarefulreviewofthemarketanalysesthatareincludedinthisreport.Andwerecommendthatanycommitmentstomarketdevelopmentpartnersbebasedonamuchmorethoroughduediligenceprocessthanwasappliedinthiscase.Additionalspecificrecommendationsinclude:
1. SeveralofNewYork’sfoodandbeveragesubsectorsaremadeupofmanysmallproducerswhocompetewitheachotherformarketshare.Anyfutureeffortstodevelopexportsshouldrecognizeandprioritizetheneedtofindwaystoaggregatesupplyandmarketcooperativelyinordertoachievethescalethatwouldjustifytheeffortofdevelopinganexportmarket.Thehoneyandmaplesyrupindustriesareprimeexamplesofthisdynamic,butitisadynamicthatappliestomanyspecialtyproducts.
2. Inthiscontext,logisticsanddistributionbusinessesspecializinginhigh-endfoodandbeverageproductssuchasBaldorsandRegionalAccesscanplayanimportantroleinefficientaggregationofproductsfrommultiplesmallproducers.
3. ThemostlikelycompaniestobeabletodevelopopportunitiesinamarketlikeChinaaremediumandlargercompanies.ThesecompanieswillnotturnonadimebutwillrespondifNewYorkStateisabletoprovidemarketinsightsandactionableinformationsuchasthemarketanalysesdevelopedforthisproject.UnfortunatelythiswasnottheapproachtakenbySafeSourceTrading.
4. Chinaistheworld’slargestonlineretailmarketanditsconsumersareseekingoutfoodandbeverageproductsfromoverseasviathischannel.AnyfutureprojectssupportingexportsofNYSfoodandbeveragesshouldincludeasignificante-commercepushwhichwillpositionourproducersnotonlytoreachChinabutovertimetoreachotherdistantmarketsaswell.
Followingaresomemoredetailed“FrequentlyAskedQuestions”andanswerspreparedbytheProjectConsultant:FAQ:Whatkindofproductcategoriestopursue?
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Theoretically,onewouldneedtocrossreference(A)NYSindustrieswithexcesscapacityand/orcapacitytoexpandwith(B)worldmarketswithsomekindofsupplydeficitand/oraboveaveragegrowth.Then,ofcourse,thesemarketswouldhavetoallowforenoughmargintobeasmuchormoreprofitablethanlocalmarketsforNYSproducers.However,thisisnotafeasibletask.Soamorepragmaticapproachisneededinordertofindtheopportunities.
OntheSupplyside,andsincetheultimategoalofaprojectlikethiswasjobcreation,asweanalyzedthedatabaseofF&Bcompanieswecreatedinthisprojectandwhichisprobablythelargestsuchdatabase,weidentifiedthefollowingsectorsthatcouldbecomeapriority:
o SoftDrinks,(includingwater)–thelargestsub-sectorintermsofsalesvolumesandsecondlargestemployerinNYS;togetherwithbreweriestheyhavethelargestaverageemployeesperunit.Itseemstobethesectorwiththemostleverageforgrowthandemployment.
o FruitandVegetablePreservingandSpecialtyFoodManufacturing,secondlargestsub-sectorinoverallsales,numberthreeinemploymentandnumberfourinemployeespercompany.It’salsothesecondintermsofnumberofcompaniesthatreportedbeingexporting.
o Dairy.It’salreadythesectorreportedashavingmoreexporters.Althoughonlynumber5insalesvolume,itisthesecondlargestemployerinmanufacturing.ThisisalsoatraditionalNYsectorandonethatalthoughwithanagriculturalbase,hasachievedmaturityandhasverylargeandcompetentorganizationsinthestate.
o Breweries:seeminglyathrivingbusiness,theyarenumber3insalesgrowthandnumber1intermsofaveragenumberofemployeespercompany.Also,outsideofagriculturalactivities,theyareoneofthetop3non-agriculturalactivitiesintermsofemployeeintensitypersales,thatis,thesecompaniesgeneratethemostamountofjobspereachdollarofsales.Sothisisasectorwherelittlesalescangeneratealotofdirectemployment.Moreover,thecraftbrewerieshavebecomeanAmericanfavoriteand,astheyachievematurityandcompetitiongetsharder,theymaybeinneedoffindingnewermarkets.Alcoholisabigmarketalmostanywhereintheworldand,unlikewine,beerdoesnotneedarenownedterroir/originandthereareanumberofconsiderablesizebreweriesinNewYork.
OntheDemandside,thisprojectobviouslyonlyprovidedsomeinsightsintotheChineseMarketandthefollowingindustriesshowedpromising:
- DairyproductsareanenormousmarketinChinaandwasgrowing:35millionmetrictons(MT),growing6%/year.FoodSafetyconcernsenhancethisopportunity.Milkdrinksalsoseemtobeagoodopportunity.
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- Meat.Pork(duetoitsvolume)andBeef(toitsmargins,potentialgrowthandUSreputation)seemedtobethebestopportunitiestopursue.While,atleastatthetime,ChinahadabanonUSbeef(allegedlyduetothe“madcowdisease”),thisbanwasexpectedtobeliftedasearlyas2015.Inanycase,whilethisopportunitywasnottoclearupinmainlandChina,salestoHonkKongcouldbepursued.
- TheFruitJuicesMarketwasabout22millionMT;hadbeengrowingat15%/16%a
yearandwasexpectedtokeepgrowingataratebetween8%and10%.Mainopportunitiesseemedtobeinspecialty,functional,fortified,protein,energydrinks,etc.Thiswasparticularlyvalidatedwhenseeninthelightofthegrowingtrendfordiversityidentifiedearlier.
ThefollowingmarketsarelessofanopportunityinChinabutdohavesomenichesworthexploring.
- ProcessedFruitsandVegetablesseemstobeaverymatureandcompetitivemarketinChinawithenoughsupply,butitdoeshavevalue-addednichesworthexploring(andmostnichesinChinaarebigenough).
- PastaSauce–stillasmallmarketbutAmericanproductseemstohavegoodacceptance;actually,LiDestri’sproductcanalreadybefoundinChinaalthoughnotdirectlysoldbythem…thisindicatesmargin/profitforadirectrelationship.
- Spirits–AmericanproductshavenotbeenverywellvaluedwiththeexceptionofWhiskey,yetChinesehavebeenimportingmoreandmorefromtheU.S.
Finally,aswe’vesaid,scanningthewholeofNYSproducersandthewholeworldformarketsisjustnotfeasiblebutwethinkthat,withminimalresearch,itispossibletofindthemostlikelymarketsfortheaboveidentifiedNYSproducts,namelybyspeakingwiththeirtradeassociations.
Then,andwithoutspendingtoomanyresources,onecoulddoapreliminaryanalysisofsuchmarketsforaninitialvalidationoftheopportunity(likewedidintheContextdocument:NYFoodd2China-PartI.a-Context-VF.pdf)andthen,andonlyiftheopportunitiesseemedinteresting,proceedintoadeepermarketanalysis.
Companiesshouldnotgointoanewmarketwithoutdoingacarefulmarketanalysis.
FAQ:WhatkindofNYScompaniestosupport?
Theanswertothequestionabovealreadyansweredthisquestionintermsoftypesofindustries.
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Whatisworthaddinghereisthat,togetacceleratedresults,NYSagenciesshouldprobablysupportfirstmedium/largecompaniesbecausetheseare,mostlikely,moreexport-readyandhavemorecapacityandmoreofanabilitytoadapttheirofferingstoexportmarkets,andhavealreadyhadsomeexportexperience.
Smallercompaniescouldbehelpedaswellbutthisneedstostartwithsomeaggregationeffortsandmuchmorefollowingeffortsalongtheway.
FAQ:Whatarethekeystepsacompanyshouldtakeconsideringnewexportmarkets?
Companiesshouldstartbyacarefulmarketanalysisandthenotionsometimeandeffortneedstobespentinpursuingamarket,analyzingit,prospectingit,andcreatinginitialdemand.Infoodproducts,a3yearperiodisprobablytheminimumindicatedperiodtoexpectuntilsomemeaningfulresultscanbeobtained.Productpermits/approvalscantakealongtime(8monthsormoreinChina);sellingintosupermarketchainsmaymeanwaitingforayearortwoforanopportunitytobelistedintotheirplanograms.
Therearealsotheoreticallymultiplewaystopursueamarket.Asthisprojectwascomingtoanend,wewerepersuadedthatthemosttraditionalwayofpursuingamarketisprobablystillthemosteffective:findingalocaldistributor,ideallyonethatasenoughsizetobesignificanttocustomersbutnottoobigthatyourproductsgetlostamongstitsotherrepresentedlines.And,ofcourse,theyshouldhaveexperiencewithimports/customsandthelogisticsandsaleschannelsthecompanyistryingtopursue.
Finally,companiesneedtodedicatetimeeducatingthedistributoronitsproductsandalsolearningandadaptingfromtheirexperience.Companiesshouldsetgoalsandstrategiestogetherwiththedistributorsandbewiththemalongthewaytodebugproblemsandcreatetherightamountofpressureforresultstohappen.
Onlineisveryimportant.Infoodinparticular,onlineneedstoco-existwithbricksandmortarandthedistributorneedstobeabletoservicethissector.Companiesalsoneedtodotheirshareofthework(pleaseseequestionbelowaboutonline).
FAQWhatNYSinvestmentsshouldbeconsideredasmostproductiveinsupportingthegrowthofNYSFoodexports?
Thefollowingisasummaryofconclusionsdrivenbyseveralcomponentsofthisprojectbut,inparticular,theSurveywedidto151highexportpotentialcustomers.
IntheSurvey,thetwoareascompaniesseemstowantmorehelpwithwere:
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- Developingnewmarketsandovercomingtheorganizationalcapacitybottleneckmanyofthesepeoplehavetobeabletofocusonexports;
- Helpwithregulatoryandtariffissues-acentralizedsourceofinformationandhelponsurpassingsuchobstaclesincertainmarketsisageneralneed.
Infact,wefoundthatevenlargecompanieshavehadunderdevelopedeffortsinChina,allofthemlackingdedicatedHumanResourcesinChina.So,onecouldproposeamodelwhereastate-fundedprojectcould:
- Screenindustriesandmarketsforconcreteopportunities.
- Doanin-depthmarketanalysisonthemostpromisingopportunities.- FindtheNYScompaniestosupportthem.- Onceviableopportunitiesareidentified,thenextlogicalstepcouldbetofindalocal
partnerforthosecompaniesinthetargetmarketandstartabusinessrelationship.However,thatperse,wouldnotbeenough.Companieswouldneedtodedicatesometimeto:
- Screening,selecting,negotiatingandcontractingwiththepartner.
- Educatingthepartnerinrelationtotheproductline;establishwiththemastrategy
andgoals.
- Followthrough:o Providethemwithinformationasneeded
o Bridgeorderstoproductionandlogistics
o Debugproblemsastheyoccur.
Sothisiswhereweproposedtoestablishnotasalesforce(likeSST)buta“SalesManagementBridge(small)team”toinitiatetheseeffortsonbehalfofallthoseinterestedandbasicallyserveastheirliaisonwiththeChinesepartner,managingthemforaperiodoftimetobeestablishedandunderthesupervisionofeachcompany.Actually,webelieveeachcompanycouldorshouldsupportthiseffortatleastpartially.ThiswouldovercomethegapoflackofcompanyorganizationalresourcestotacklethismarketwhilehavingaviablesalespartnerinChinaorwherevertheopportunitymightbeandaviable
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producerinNYS.ThisSalesmanagementteamwouldalsoworkwithallNYSresources,namelytheUSDA,andalsotheChinesepartner,inovercomingtheregulatoryhurdles.Finally,andbecausealotoffederalandstatesupportisalreadyavailablewhiledisseminatedthroughdifferentagencies,itwouldbehelpfultohavethesemergetogetherorsomehowcreateaone-stop-shopforhelp.Ifthisisnotpossible,thestateshould,atleast,considerpromotingmoretheseagencies(likeitdidwith“StartupNY”)because,aswefoundoutinthesurvey,manyofeventheexportingcompanies,don’tknowmanyoralltheentitiesthatexisttosupportthem.
FAQ:Dotherewardsoutweightherisks?
Thestatehasexistingformulastocalculatethebenefitsofmarginalsales,investment,andjobs.Thereisnoneedtoreinventthewheel.
Ifanyoftheinitiativesaboveweretobesupported,itshouldberelativelysimpletoestimatepotentialbenefitsforreasonablegoalsoverarealisticperiodoftime.Inthequestionaboutwhichindustriestosupportweidentifiedthecategoriesthatseemtohavemoreleverageintermsofjobcreation.
WebelieveasmallteamsuchastheoneweproposedabovecouldhaveaprolongedtremendousimpactontheNYSF&Bindustrygivenenoughtime.
Wealsobelievethatsupportingonlineefforts(seenextFAQ)couldgoalongwayandshouldbeparalleltoa“boots-on-the-ground”effort(brickandmortarisstillveryimportantinfood).
FAQ:Howtoapproachonline?
ThefollowinganswerhasafocusontheChinesemarketbutmanyinsightscanbeextrapolatedintoanymarket.
ChinaisthelargestonlineretailmarketintheWorldhavingsurpassedtheU.S.acoupleofyearsago.FoodandBeverageisalreadyakeysegmentthereforonline.
Webelievethefollowingeffortsshouldbeconsidered:
- Createan“open”portalforNYScompaniestopromotetheirproducts.Basically,aneasyenoughplatformwhereeachcompanycoulddevelopapageandinsertitsproducts.NYScouldsupportwithsomegenericguidelines(seeinsightsabouttheon-lineretailsection)andChinesetranslation.
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- Forselectedlargecompanieswecouldsupportorco-paymore“professional”
marketingeffortswithsomeweb-designsupportandsomepromotionaleffortssuchasSearchEngineOptimization(SEO).Remember,NYisapowerfulbrandbutnottopofmindforfoodproducts.MostChinesearenotlookingforNYSproducts.WhatneedstohappenistoworkonSEOsothatwhentheylookforfoodproductstheNYSproductsappearonthetopofthelistofsearchresults.Thentheybecomeanaturaloption,particularlyinacountrywiththefoodsafetyconcernstheChinesehaveaswellastheincreasingdesireoftheincreasingmiddleandupperclassesforqualityinternationalproducts.
Ontheotherhand,indevelopinganonlinestrategy,wefoundthefollowingimportantguidelines:
• CleanandminimalisticwebsitedesignspreferredintheU.S.andothercountriesarenotreceivedwellbyChineseshoppers,whopreferacrowdedandcompactwebsite,whichgivesthemtheimpressionofa"high-energy”shoppingatmosphere.
• Shoppersalsoprefertoopenuplinksinnewwindowsforfastercomparisonofpricesratherthanswitchingbackandforthbetweenpages.
• Companiesshouldwritealotoftexttodescribeproductsandservices,eveniftheyhavegreatpictures.Searchenginesrecognizetext.Themorethetextthehigherthechancesofbeingfound.
• Textshouldbeimprovedastimegoesbyandcapturingandmaintainingthecustomer’sattention.Itshouldbewrittenasifitwasanovelorfictiontokeepinterest.
• Chineseshoppersareextremelypricesensitive–sales,deals,andpromotionsare
greatcrowdpullers,andthereislittletonobrandloyalty.The‘timeismoney’concepthasn’treallycaughton,andbuyersrarelypaytheextratogettheirwarestoarrivefaster.
• Logisticsisessentialfore-commerce,andthird-partydeliverysystemshavebeenfoundtobelacking.Afterfindingthatmorethan60%ofcustomercomplaintsreceivedwererelatedtoproblemsindelivery,yihaodianrespondedbybuildingtheirownlast-miledeliverysystem.
• Trialanderrorwillgiveeachcompanytherightexperiencetohavegoodeffectivepromotions.Asmuchtimeaspossibleshouldbespentinthisprocess.
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• Companiesshouldtrytohaveasmuchoriginalcontentaspossibleiftheycaninvestinsearchengines.
• Productinfoshouldberefreshedasmuchaspossible.
• Smallcompaniesshouldaskfriendstoreviewproductsanddositeclicks!
• Productsshouldbedescribedusingasmuchaspossiblethestandardnameknown
tothepublicandusedbyothercompanies.Standardnameswillgetfoundbysearchenginesmorefrequently.
• Companiesshouldhiregreatcontractors.Theyaregoingtoneedexperthelpinareassuchas“search-engineoptimization”toattractcustomers,inpackagedeliveryandinmanufacturingiftheyarelaunchingaproduct.Companieswillimproveyourchancesofsuccessiftheyselectcontractorscarefully.
• Companiesshouldnotplanonmakingmoneyrightaway.
• Companiesshouldexpecttobeimitated.Intellectualpropertyshouldbeprotected.
FAQ:WhatarethekeytrendsaffectingFoodconsumptioninChina?
ThefollowingtrendswereidentifiedbyastudypreparedbyProf.ZhangyueZhouetalfortheAustralianGovernmentDepartmentofAgricultureinApril2012–“FoodConsumptionTrendsinChina”:
- Corndemand,includingimports,willincreasedrivenbyfeedproductionandincreasedmeatconsumption.
- Importsofhigh-qualitybeefandlambareexpectedtoincreasetomeetthedemandsofhigh-endhospitalityindustries,foreigners(expatriatesandtourists),andwealthylocalconsumers.
- PorkimportsarelikelytorisebutthisisunlikelytohavemajorimpactsonChina’sporkmarketgiventhatChina’sdomesticoutputissohigh,beingabout50percentoftheworld’stotalproduction.
- ItisalsolikelythatChinawillincreasepoultrymeatimports.However,Chinaisexpectedtobeself-sufficientinitseggsupply.
- Chinawillneedtoimportdairyproducts,chiefly,milkpowderandwhey
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- Increasingdemandforfoodsofpremiumqualitydrivenbyincreaseddisposable
incomecoupledwithsmallfamilysizeaswellastheriseofpopulationfromforeigncountrieslivinginChina.
- Increaseddemandforforeignproductsdrivenbytheaboveandanincreasinglyeducatedyoungerpopulation.
- ConsumptionofAlcoholicbeverageshasplateauedinruralareasandactuallydeclinedinurbanareas(althoughdatadoesnotincludeout-of-homeconsumption).
- China‘sentiredemographicspectrumisjumpingaboardthefunctional/fortifiedbandwagon,withtheonlynoticeableabsenteesbeingthosefromruralbackgrounds,especiallyintheunderdevelopedwesternregionsofthecountry.China’sFunctional/FortifiedMarketisgrowingat17%peryear(Euromonitor)
A2013study(“ConsumptionTrendsChina2013”–MECChina,CIC)involving1200consumersin12tieronetotierthreecitiesrankedthefollowingconsumertrends(thesedon’tapplyjusttoF&Bproductshencewearehighlightingthosethatdo):
- #1–PayforSafety-Afterrepeatedfoodsafetyissues,shoddyworkmanship,andfakeproducts,consumersarewillingtopayapremiumforasenseofsafetyintheirconsumption.Also,moreandmorepeoplearebuyinginsurance(namelypropertyinsurance);theybuyorganicfoodalbeitatahigherprice;andpostonmicroblogsaboutroadsafetyandfood.
- #8–Grayhaircraze-Accordingtotheresultsofthe6thNationalcensus,13.26%ofChineseare60yearsoldandabove,and8.87%are65andabove.Theserepresentrespectiveincreasesof2.93%and1.91%sincethelastcensus.ThedegreeofaginginChinesesocietyisfarabovetheworldaverage.AndseniorsinChinatodaynolongersaveeverypennyliketheoldergenerationsofthepast.Theyhaveplansandnewideasforthegoldenyearsoftheirlivesandarewillingtospendmoremoneyonpleasureandahigh-qualityretirement.
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FeedbackRegardingthisESDProgramCCEwasveryfortunate,andisveryappreciative,tohavehadtheopportunitytoproposeandthenleadthisexportdevelopmentproject.WehopethatESDasthefunderagreesthatdespitesomeseriouschallengestheinvestmentoftaxpayerdollarshasresultedinthecreationofimportantknowledgeandcapacityinastrategicallyimportantareaofeconomicdevelopmentopportunityforoneofNewYork’smosttreasuredindustrysectors–agriculture,foodandbeverages.WeverymuchencourageESDtoconsiderCCEasapartnerinfutureventuresofthistype;ifgiventheopportunitywehopetoagainjustifyyourconfidenceinus.Shouldtherebesuchfutureopportunitiestoexploremarketaccessforagriculturalproducersinspecificregions,itmaybewisetoensurethatthoseorganizationsthatknowNewYork’sfarmsandfoodandbeverageindustriesthebestbebroughtinearlierintheprocess,toprovidegreaterconsistencyandabetterfinishedproduct.Asarticulatedelsewhereinthisreport,relianceonSafeSourceTradingasaprimarydriveroftheprojectcreateddifficultiesinpartbecauseoftheirlackofexperiencewithNewYorkagriculture.
Perhapsmostimportantly,we’dliketoemphasizethataprojectlikethiswillwitheronthevineifnotprovidedconsistentsupportandfunding.TheExtensionsystemwillcertainlycontinuetosharethelessonslearnedwithinterestedproducersandagriculturalextensioneducators,butthevalueofthematerialdevelopedinthecourseofthisproject,includingthedatabaseofmarket-readyproducers,willchangeovertimeabsentanongoingfundingsource.
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AcknowledgementsItwouldbeimpossibletoacknowledgeallofthecontributorstothisproject,buttheywouldincludethemanyExtensionstaffersacrossNewYorkStatewhosharedideas,feedbackandsupport,aswellasthedozensofag,foodandbeverageproducerswhometwiththeteamandsharedtheirenthusiasm(andsometimeswiseskepticism)withus.IwanttospecificallyacknowledgeChrisWatkinsandRonBunce,theExtensionleaderswhocouldhavesaidnototheprojectandchosetosayyes;LeeTelegawhomadethefirstphonecallabouttheproject;theagencyfolks(NewYorkStateAg&Markets;USDA;FDA;etc.)whoseexcellenceintheirregulatoryroleisoneoftheprimaryreasonswhytheChineseareseekingoutNewYork’sfoodandbeverageproducts.IspecificallywanttothankPhilFinster,NadeenLyndaker,andEricBertheau,whoseproductsweresuccessfullyshippedtoChinaasaresultofthisprojectandtheirunbelievablepatience.AndfinallyIhavetoacknowledgemycolleaguesMicheleLedouxandMartyBroccoliaswellasLuisGatofortheirdoggedcommitmenttothisprojectthroughallitstwistsandturns.