Local presence key to Chinese market: AAK

04-Mar-2011 - Last updated on 04-Mar-2011 at 12:05 GMT

As the world’s most populous nation with a strong economy, China is an attractive target for food manufacturers and their suppliers - but they cannot operate effectively in the region without a local presence, according to Torben Friis Lange, AAK vice president and business area president.

Speaking to FoodNavigator.com from China, where the fats and oils specialist AAK has just established its Shanghai base, Friis Lange highlighted, “fast feedback, elimination of language barriers, local knowledge and awareness of local tastes” as just some of the benefits of having a sales team on the ground.

“It’s no longer a case of international companies taking products in, western companies are now sharing the market with local Chinese companies,” he said. To keep pace, “you need to communicate with people and you can’t do this from a distance, you need to be in the market and part of what’s happening.”

There is enormous value in a global infrastructure but it must be carefully applied, he said. “Bring in knowledge but adapt it to local behaviour and desires...The most efficient approach is to act with global knowledge but carry out business locally.”

Quality counts

A huge assortment of products proliferate the chinese market but, he said, this does mean quality is compromised. In fact, “consumers are very demanding of high quality products, so manufacturers need high quality ingredients.”

“This emphasis on quality means there is a willingness to buy speciality ingredient instead of going with commodity products.”

Consumer trends

As well as a big snacking trend, Friis Lange identified strong demand for healthier products. He sees trends from Europe and the US taking shape in China and expects them to take off rapidly in the region. “Consumers are looking for products with reduced saturated fat, for example, and low or no trans fatty acids. “

Market view

China is set to be the largest grocery market in the world, worth an estimated €1,042bn by 2010, according to international food and grocery analysts IGD. The region is predicted to continue its strong growth and overtake the US in 2012 to take the top position – putting the US in second place. This change in positions is largely attributed to the impact of the prolonged recession in the US and quick recovery in China.

Commenting on the recently announced figures, Joanne Denney-Finch, chief executive, IGD said; “In 2015, the combined grocery markets of Brazil, Russia, India and China will be worth more €2,194bn...Many retailers and manufacturers have already built a strong presence in these countries, but for those that haven’t, it is vital that they incorporate the BRIC markets into their strategic planning in order to sustain business growth.”