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How to Crack China’s Food and Beverage market: Getting Started

Thomas Graziani

  1. The Chinese market for imported food

Why should you care about exporting your F&B business to China?

Well, first of all, China is the largest Food And Beverage market in the world. It surpassed the U.S in 2011, reaching 560 billion USD in 2014.

The Chinese F&B market is also increasingly looking at foreign brands as a source of quality and trustworthy products, following a string of food safety scandals over recent years in China. A 2012 Pew survey found that 41% of Chinese people were deeply concerned about food safety, compared to just 12% four years earlier.

This trend is reflected in the numbers: China Food and Beverage import market is expected to increase more than 15% annually, and its projected valued by 2018 will be 71 billion USD.

But the first question you might ask is… What do Chinese customers want?

 

  1. What do the Chinese customers want?

According to the Australian Trade and Investment Commission, the following food categories are the most sought for by Chinese customers:

The top products such as baby food or milk powders are the ones which were at the center of food safety scandals in China. Seafood is also a major import, as it occupies a pivotal role in Chinese consumption patterns, especially during traditional festivals.

 

  1. Selling F&B in China online

You can try to sell to China using traditional distribution channels. However, if you take this path, things might very well get very very complicated very fast.

Here is a typical distribution chain in China. It is not simple.

Source: EU-SME Center

That’s a lot of stakeholders to handle in an extremely complex linguistic, cultural and regulatory context. The solution to this: sell directly to end customers via cross-border e-commerce channels

There are two ways you can attempt cross-border e-commerce in China.

Method 1: Direct & Social selling

This means selling outside an existing marketplace. You will have to generate your own traffic, most likely by partnering with bloggers.

This is the most efficient way to get started if you don’t have existing search volume or brand recognition. You can set-up your e-shop through WalktheChat’s cross-border e-commerce platform (disclaimer: I work for WalktheChat)

In general, whichever path you choose, there are rules to designing for China:

Example of China-friendly design

Option 2: marketplaces

There are plenty of marketplaces which enable foreign companies to sell in China.

These platforms have pro’s and con’s:

Summary for China e-commerce market entry:

 

  1. Taxes, customs and shipping

Taxes and customs can be a hassle for new companies trying to enter China. To avoid the complexity of the matter, many companies get started with directly shipping parcels to end users, which prevents much of the red tape associated with registering a company and brand in China.

In order to take your China supply-chain to the next stage, you might want request the services of companies specialized in cross-border shipping and custom clearance.

Australia

https://www.startrack.com.au/
http://www.blueskyexpress.com.au/

Europe

http://www.ufreight.com/
https://www.hermesworld.com/
http://www.b2ceurope.eu/

US

http://www.ufreight.com/
http://www.mxhaitao.com/
http://www.athaitao.com/
http://www.giantus.com/

 

  1. How to get started?

Entering the Chinese market can be a risky move if it isn’t done right. We generally encourage companies to first “dip their toe” running a few test campaigns on a proprietary cross-border store.

After having validated customer demand through sales, you can then start taking a more ambitious approach to investment, for instance by setting up a legal structure such as a WFOE in China in order to be able to hire local staff and expand distribution.

In the meantime, there are a few steps you can take to get started:

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