Leading seafood exporter Sealord is seeing a significant increase in sales volumes into China. On a recent visit to Shanghai, CEO Steve Yung was asked about the challenges of this massive and still largely untapped market.
How different is the China market from other markets?
We went to a focus group with some Chinese chefs. What we're after at Sealord is to create a brand but not necessarily a consumer brand. We're more interested in a B2B brand, in the food service channel. We wanted to get their thoughts on how they would cook the fish; what they would use it for. The main takeaway was a reinforcement of the tried-and-true elements you need to do well in food service. The Chinese are no different. You have to provide them with three elements: a proposition around quality, service and value. And the value can end up as a consumer value in terms of value for money.
There's a lot of work that needs to go into each of those pillars - what is quality to a Chinese chef in an A-tier, B-tier, C-tier restaurant? The same with service and the same with value.
How is business for Sealord in China?
We've been quite successful in China. One of the best products is whole fish. For Chinese chefs, the value proposition is that it comes from a clean and green source and it is unadulterated and untouched. Our view, the New Zealand view, may be that we have to do something to the fish, to provide fillets for example or do further processing, but for the Chinese the value is in the whole fish. This trip has been useful in terms of us taking to the next step of understanding just what quality service and value mean for China, versus what it means for New Zealand, Europe, Australia or the United States. So while I believe those basic tenets of food service are correct, with every country you go to, the relevance of them for the local market is very important.
How important is e-commerce to you here?
This is the first time I’ve been to China in four years. I am staggered at how quickly China is changing. So something we were doing 10 years ago may well be irrelevant today. E-commerce is very interesting, where you have a challenge being created, a disruption of the market, and where you now have the beginnings of a B2C distribution channel. It's a relatively new phenomenon and China could be leading the world in that.
I was also interested in e-commerce in terms of delivery and the ability of Chinese companies to deliver very small units to the consumer’s door. That is possible today because of lower labour costs in China, but I wonder how long that will be sustainable given that China is changing so fast, and the wealth of the country and of its citizens is also changing. In the not-too-distant future labour costs may make that prohibitive.
What are your plans for Sealord in China?
We want to put a resource into China, to be a little closer to the market and get a first-hand understanding of how fast things are changing in China and what that means.
With this pace of change, if you get it right, you can be very successful. If you get it wrong, you will be unsuccessful. I don't think China is easy. Just because it is large and growing doesn't mean it is easy. It is quite a sophisticated market.
This article was first published in the Exporter Magazine
Sep 26, 2016