Chinese Marketing Plan
How to Market USA Food Products in China
on a Limited Budget
Users guide to USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message ©

Leslie Lee

 

“Alibaba’s New Favorite Label: ‘Made in the USA’.” Link(English)

Link(English)
 

The USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message © communicates in an easy-to-grasp format the long-term legal and enforcement process guaranteeing safe quality food in the USA, from the 1906 Pure Food and Drug Act of the Progressive era of American History to the passage in 1996 of the Food Quality Protection Act (FQPA).

It eliminates the need for costly marketing strategies by tapping into the bottom- up, already existing market for safe high quality USA food imports.

Footnotes may be listed by date in chronological order, or by order of relevance to the information they refer too. Footnotes referring to a specific year may be from a source dated after that year. Any errors or omissions are mine alone.
Leslie Lee

OVERVIEW-SUMMARY

“Chinese consumers recognize the United States as a supplier of high-quality agricultural and food products that are both trusted and desired.” 1

“Differentiating U.S. products’ quality, safety, and value capitalizes on their reputation with consumers.” 2

Media catalyst for growth

Over the past several years health and food safety concerns have become favorite topics for the Chinese media, with even minor incidents reported nationwide. As incomes rise and consumers become more aware of environmental issues they are increasingly purchasing imported foods, which are generally regarded as safe and high in quality. USA food products in particular have benefited. 3

Q & A

Q) What’s the origin of the USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message © ?

The idea for a single, direct-to-the-consumer nationwide marketing message for
the 五色增勢藥方© was the result of participating in the FAS (Foreign Agricultural Service) Market Access Program through WUSATA in 1996-97 in Japan, Korea, Indonesia and Hong Kong.

链接Link(日本,韩国) Link (Japan, Korea)
链接Link (英文) Link (English)

The lesson we learned is that because it is a marketing expense reimbursement program tied to a pre-arranged budget, marketing expenses must be tightly controlled. For marketing on a limited budget to succeed in China it must be bottom-up, tailored to consumers own perception of USA food products.

Gourmet restaurants in Hong Kong featuring 5 color fruit and vegetable combinations.
香港
宝光素食
金光素食餐厅
功德林上海素食
普光齋
圓玄素食

Q) Given the size of China, how can marketing be done on a limited budget?

 

A) “China is incomprehensibly large. Promotions with limited budgets must target specific groups.” 4

First Time Nationwide Marketing on a Limited Budget

Carrefour & Wal-Mart American Food Festivals 2005-2006

Before 2005 USA food products had never been marketed on a nationwide basis. That changed in 2005 and 2006 when American Trade Offices (ATOs), partnered with Carrefour and Wal-Mart to promote USA food imports through American Food Festivals, at a time when both chains were racing each other to establish nationwide retail networks. The 2005-2006 American Food Festivals were immensely successful for USA, Carrefour and Wal-Mart.

Carrefour and Wal-Mart are the world’s two largest retailing groups. Internationally, Wal-Mart is number one and Carrefour number two. In China those positions were reversed, with French retailer Carrefour the largest overseas player in China and Wal-Mart a distant second. 5

In January 2006 Wal-Mart operated only 56 stores in China. By comparison Carrefour had more than 240 supermarkets and discount stores in China. Link (English)

The Specific Group

The biggest challenge the ATO’s faced in marketing USA food products on a limited budget was China’s huge size, a population of 1.3 billion compared to only 310+ million in the USA.

But with rising incomes empowering more consumers to not just try but use high quality imported foods on a continuing basis, a nationwide consumer market for imports was clearly emerging as a specific group, willing to pay for USA food imports perceived as safe high quality. 6

This gave the ATO’s two critical advantages.

First, all the international retailers in China, including Carrefour and Wal-Mart were aggressively pursuing this market. 7

Secondly, the market reflected a major switch from an economy based on exports to one driven more by consumers, and because it was consumer-driven, the American Food Festivals leveraged USA being the bottom-up #1 peoples’ choice food import, allowing them to successfully market USA nationwide without a large budget. 8

The American Food Festivals

Carrefour

The 2005 Carrefour American Food Festivals were the largest USA in-store promotions ever undertaken in China. In July, integrated on-site promotions including media exposure, were held in 32 stores in 11 cities, followed in September by promotions at 24 stores in 13 cities. 9

Carrefour claimed “ a whopping 25 percent sales increase in China for 2005,” while its global sales rose only 6.1 percent. 10

For the “immense success” of these promotions readers can refer to the following sources listed by year. Link (English)

By 2006-2007 Nanjing, one of 14 key Emerging City Markets with “skyrocketing imports of US agricultural products” was a useful gauge to the continuing benefits for both USA and Carrefour. Link (English)

Under the title “Latest Consumer Trends Positive for U.S. Producers,” Carrefour claimed that “although imported items are less than one percent of SKU’s they constitute ten to fifteen percent of all sales,” and according to ATO Shanghai all major retailers in Nanjing interviewed stated that “the higher percentage of imported food items in their store, the better the sales.” 11

By 2008 Carrefour, was “raking in money“ promoting itself as selling safer food and according to its Chairman had a nationwide customer base of 2 million shoppers a day. 12

After 2008, 2 million consumers a day became a bottom-line nationwide targeting number for marketing USA food imports. Another way to say it is–if you’re unable to market to 2 million Chinese consumers a day don’t try to compete in and stay out of China’s Consumer Foods Market.

Wal-Mart

As early as 2004 Wal-Mart was so sure imports would be a growth center that it designated a vice-president to help suppliers solve problems and achieve success in China. 13

Wal-Mart’s American Food Festival kicked off in August 2006 with three grand opening ceremonies held simultaneously in Shenzhen, Shanghai and Beijing. ATO coordinated the two-week promotion which introduced over 250 SKU’s to Chinese consumers in 32 stores in 17 cities, including Beijing, Shanghai, Shenzhen, Taiyuan, Dalian, Shantou, Dongguan, Xiamen, Fuzhou, Jinjiang, Wuhan, Changsha, Nanchang, Guiyang, and Nanjing. 14

Sales Double

The expectation was that sales of USA food products would continue to increase 10% in the next 12 months, but as more USA food products came in and the pace of consumer spending on food increased, overall sales doubled. 15

As a rule, for any large hypermarket chain, food that is perceived as healthy, high-quality and safe drives the traffic that enables them to sell non-food merchandise also. As Wal-Mart’s CEO put it, the chain “couldn’t succeed in China if it didn’t carry food. But that isn’t as simple as it sounds. The products and quality have to be trusted.” 16

By the end of 2007 Wal-Mart was importing over 6,600 categories of USA products into China, marketed as “giving local consumers access to the same choice of high quality goods that American consumers have in the United States.” 17

Both the Carrefour and Wal-Mart promotions were done on limited budgets, but the real surprise was just how little money was spent to achieve such impressive results.

Wal-Mart paid only $U.S. 22,852 for the 32 store, 17 city promotion, and three ATO’s pooled resources for a total contribution of U.S. $8,302, “a minimal investment to conduct such an extensive national promotion.” 18

Conclusion:
By attracting a specific group of nationwide consumers, defined as those willing to pay for USA food imports perceived as safe high quality, the American Food Festivals showed that it was possible to successfully market USA food products nationwide on a limited budget.

After the 2005-6 Carrefour and Wal-Mart American Food Festivals, Chinese consumers consistently positioned USA food products as “high in quality, and manufactured with high safety standards,” and the payoff has been positive brand recognition and sales for Made in USA products. 19

By 2012 almost two-thirds of Chinese shoppers were willing to pay more for products labelled “Made in USA”. That same year, “U.S. exports of consumer oriented food products to China increased 20% and totaled a new record high of over US$2.3 billion.” 20,21

Overall, from 2006 to 2015 USA consumer-oriented exports grew 150 percent. 22

Online shopping and the specific group

Around 2014, when online shopping became a “tidal wave” trend,
Alibaba had already begun featuring Made in USA labelled products. According to chairman and founder, Jack Ma “‘ This is an incredibly important strategy for
the future of Alibaba’.”23, 24 Link (English)

Looking ahead, by 2030 an estimated 1 billion urban Chinese will account for about 90% of total national consumption. With the continuing rise in disposable incomes, this segment can afford to try imported food and beverages on a regular basis. 25

Long term, by using the 美国 100年无公害素质 从农场到餐桌的食物安全 nationwide marketing message © Take5 Colors Instant Vegetable Drink Mix© can be marketed to the projected 1 billion urban market, on a limited budget.

TIPS

Given China’s immense size here are some tips for marketers on how to use the USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message © for the 五色增勢藥方©. They apply to any USA food exporter.

Tip #1

The USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message © for the 五色增勢藥方© is applicable to consumers in any of the 14 key Emerging City Markets. Chongqing, Harbin, Tianjin, Wuhan, Qingdao, Xi’an, Shenyang, Hangzhou, Nanjing, Dalian, Ningbo, Kunming, Shenzhen and Xiamen.

I’ve already referenced 14 key Emerging City Markets that represent a geographical cross section of East, North, South and Southwest regions. Link (English)

These cities are of course, only a part of the overall picture, for example Chengdu, with a documented history of successful USA food promotions is not included, but to assist marketers in China I have highlighted the key 14 cities when they appear throughout this piece. They are Shenzhen, Dalian, Xiamen, Wuhan, Nanjing and Qingdao, Hangzhou (in Carrefour “immense success” reference).

Taken together, consumers in these 14 cities share a willingness to pay for imports that are high in quality, and manufactured with high safety standards. Consider these 14 cities a pulse of China’s Emerging City Markets. 26

Tip #2

The USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message © for the Take5 Colors Instant Vegetable Drink Mix© fits Beijing’s 19-35 urban demographic, wherever they shop.

It makes sense to picture Beijing as a microcosm of China’s Consumer Foods Market, because in addition to Vanguard and Lianhua, China’s two largest retailers, all the international retailers have outlets in Beijing, with no clear leader in what is a fragmented market. 27

But from the consumer, bottom-up point of view the primary consumers for USA food products in Beijing are identifiable as a target demographic between the ages of 19 and 35. “These increasingly well informed, and educated consumers seek high-quality, safe, diverse and fashionable products.” 28

 

This demographic is different from the USA where key consumers tend to be aged 40 to 55. 29

Gourmet restaurants in Beijing featuring 5 color fruit and vegetable combinations.

北京
登品素食府
荷塘月色素食
净心莲
功德林
三生万物
国宾酒店,皇朝玉园餐厅
王府半岛酒店,京餐厅

Tip #3 Vanguard/Ole

The USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message © for the Take5 Colors Instant Vegetable Drink Mix© is a good match for Ole shoppers or those (they may be the same shoppers) attracted to Vanguard for lower prices.

Vanguard is a long time buyer of USA agricultural products, with the ability to move more volume than any other Chinese retailer. Vanguard operates over 5,000 stores with annual sales of US$16.5 billion (2014). 30

Ole 的创新

Ole update
In order to test the long-term strength of the consumer market originally developed by Carrefour and other international retailers, Vanguard developed its Ole stores and over the years, Ole shoppers have provided a consistent, positive revenue stream for Vanguard. Link (English)

To fulfill its mission of market development ATO organized major in-store promotions of American foods products at Ole stores as far back as 2005 and 2008. 31

25 day Beijing promotion
The 2008 USA food festival in seven Beijing Ole stores featured 500 various USA food products, including 150 that were new to the market. 32

By 2012, with continued success at introducing a wide variety of imported foods, Ole increased its direct overseas purchase of imports. 33

That same year, American Trade Offices launched a two week, nationwide USA food and drink promotion with the theme, ”Yes! America” that introduced 230 New-to Market products generating approximately $752,000 (RMB$4.5million) in sales. 34

Whether in modern retail formats like Ole or through on-line shopping, the main reason consumers keep buying Made in USA food imports is confidence in Made In USA quality and safety.

The USA-100 Years of Safe-Quality-Food Safety from Farm to Table nationwide marketing message© shows why that confidence is justified.

Footnotes 附注

1 Growth in U.S. Agricultural Exports to China,’’ USDA News Release No.0325.15 (Washington, D.C., November 20, 2015).

2 GAIN CH8912, p.4; CH8913, p.5; CH8816, p.38, (“ Sidestep Domestic Competition by Marketing U.S. Imports as High Value Products.”).

3 GAIN CH4824, p.9; CH6821, p.4,; CH7823, pp.4,10; CH8401, p.30; CH8819, pp.4,10; CH9403, p.41; CH0816, p.1; CH0801, p.1; China Country Profile, Food Export Association Midwest/Northeast 2015, p.6.

4 GAIN CH3823, p.5; CH4824, p.5; CH5823, p.6; CH6821, p.5; CH7823, p.5; CH8819, p.5; CH9812, p.8.

5 GAIN CH6403, p.2.

6 见-see:GAIN CH4824, p.1; CH6821, p.1.

7 见-see:“Wal-Mart moves aggressively in China’s smaller markets,” Honolulu
Star Bulletin, October 24, 2008.

8 GAIN CH5823, p.1; CH6821, p.1; CH7823 p.1; 8819, p.1; CH0816, p.26;
CH12806, p.26.

9 GAIN CH5815, p.5; CH5827, p.6.

10 GAIN CH6804, p.30.

11 GAIN CH7806, pp.3,4.

12 Agence France-Presse (AFP) May 1, 2008; Jin Duoyou, “ Still Raking in the Money: Carrefour Continues Its Expansion in China,” Beijing Review.com.cn April 1, 2008; Michael Oneal, “ In China, shoppers are becoming savvier. Growing middle class flexing new might voting with their feet,” Chicago Tribune September 21, 2007; “Carrefour tries to sell its food as safer in China,” New York Times, July 31, 2007; Carrefour: Sustainability Report, Promoting Socially Responsible Commerce Practice and Performance in 2002, p. 14; Carrefour, Annual Report 2001, pp.16-17, 22-3.

13 GAIN CH4405, p.17.

14 GAIN CH7602, pp.1,2; CH7821, p.41.

15 Guiterrez Joins Wal-Mart China Expansion Celebration,” USA Department of Commerce Press Release, December 10, 2007 & China Daily, December 11, 2007.

16 “Wal-Mart Reinvents itself in China,” Logistics Today January, 2006.

17 ”Wal-Mart Celebrates 100th Store in China,” China Retail News, December
14, 2007.

18 GAIN CH7602, p.5.

19 见-see: GAIN CH7821, p.11; CH8816 p.10,; CH0801 p.26; CH0816, p.25, CH12806, p.25; GAIN (no number) 12/31/14, p.14.

20 见-see: “U.S and Chinese Consumers Willing to Pay More For ‘Made in USA’ Products,” (Boston Consulting Group, November 15, 2012);

21 China Country Profile, Food Export Association Midwest/Northeast 2015, p.2.

22 “Growth in U.S. Agricultural Exports to China,’’ U.S.D.A. News Release No. 0325.15 (Washington, D.C. 11/20/2015).

23 GAIN (no number), China 2014 Retail Report, p.3.

24 Leena Rao, “Alibaba’s New Favorite Label: ‘Made in the USA’,” Fortune,
January 1, 2016, p.76.

25 GAIN CH9403, p.41.

26 见-see:GAIN (no number), China 2014 Retail Report, p.3, “ Emerging city market consumers are becoming ever-more important with increasing buying power and access to imported foods,”

27 见-see:”GAIN CH0816, pp.35-37; GAIN 12806, p.35; GAIN CH166008, p.19.

28 GAIN CH9404, p.5.

29 GAIN CH9404, p.5.

30 “Chinese Agricultural Investment Opportunity,’’ September 14, 2010 NASDA (The National Association of State Departments of Agriculture); GAIN CH166008, p.12.

31 GAIN CH5624, pp. 8,9.

32 GAIN CH8816, p.28.

33 “CRV’s Ole Promotes Overseas Direct Purchasing,’’ December 24, 2012 CCFA (China Chain Store & Franchising Association).

34 GAIN CH11858 (“Yes! America” 16 pages)

References 参考文献

Global Agriculture Information Network (GAIN)
全球农业信息网络

Standardized formatting. Listed by number
标准格式。按数字排列。

GAIN Report Number: CH8912 USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, Supermarket Destinations in Southwest China 2008.

GAIN Report Number: CH8913 USDA Foreign Agricultural Service China, Peoples Republic of, Agricultural Situation Chengdu: Untapped Emerging City Market 2008.

GAIN Report Number: CH8816 USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, ALL China Annual Report 2008.

GAIN Report Number: CH4824 USDA Foreign Agricultural Service China, People’s Republic of, Exporter Guide, Mainland China Exporter Guide 2004.

GAIN Report Number: CH6821 USDA Foreign Agricultural Service China, People’s Republic of, Exporter Guide, China Exporter Guide 2006.

GAIN Report Number: CH7823 USDA Foreign Agricultural Service China, Peoples Republic of, Exporter Guide, China Exporter Guide 2007.

GAIN Report Number: CH8401 USDA Foreign Agricultural Service China, Peoples Republic of, HRI Food Service Sector 2008 Annual 2008.

GAIN Report Number: CH8819 USDA Foreign Agricultural Service China, Peoples Republic of, Exporter Guide, China Exporter Guide 2008.

GAIN Report Number: CH9403 USDA Foreign Agricultural Service China, Peoples Republic of, HRI Food Service Sector Annual Report 2009.

GAIN Report Number: CH0801 USDA Foreign Agricultural Service China, Peoples Republic of, RETAIL FOOD SECTOR 2010.

GAIN Report Number: CH0816 USDA Foreign Agricultural Service China, Peoples Republic of, China Retail Annual Report 2011.

GAIN Report Number: CH3823 USDA Foreign Agricultural Service China, Peoples Republic of, Exporter Guide Annual 2003.

GAIN Report Number: CH5823 USDA Foreign Agricultural Service China, Peoples Republic of, Exporter Guide, China Exporter Guide 2005.

GAIN Report Number: CH9812 USDA Foreign Agricultural Service China, Peoples Republic of, EXPORTER GUIDE ANNUAL, Opportunities in a Growing Economy 2009.

GAIN Report Number: CH6403 USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, North China Retail Update 2006.

GAIN Report Number: CH12806 USDA Foreign Agricultural Service China, Peoples Republic of, China Retail Report 2012.

GAIN Report Number: CH5815 USDA Foreign Agricultural Service China, Peoples Republic of, ATO ACTIVITIES reports, ATO Shanghai Promotional Opportunities Report 2005.

GAIN Report Number: CH5827 USDA Foreign Agricultural Service China, Peoples Republic of, Market Development Reports, Hangzhou: A City For All Seasons 2005.

GAIN Report Number: CH6804 USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, All China Retail Annual Report 2006.

GAIN Report Number: CH7806 USDA Foreign Agricultural Service China, Peoples Republic of, Market Development Reports, Nanjing: An Emerging City Market in China’s Heartland 2007.

GAIN Report Number: CH4405 USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, North China 2004.

GAIN Report Number: CH7602 USDA Foreign Agricultural Service China, Peoples Republic of, ATO ACTIVITIES reports Wal-Mart Great American Food In- Store Promotion 2006.

GAIN Report Number: CH7821 USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, All China Annual Report 2007.

GAIN Report Number: CH8816, USDA Foreign Agricultural Service China, Peoples Republic of, Retail Food Sector, All China Retail Annual Report 2008.

GAIN Report Number: CH12806, USDA Foreign Agricultural Service China, Peoples Republic of, China Retail Report 2012.

GAIN (no report number), USDA Foreign Agricultural Service China, Peoples Republic of, Retail Foods, China 2014 Retail Report 2014.

GAIN Report Number: CH166008 USDA Foreign Agricultural Service China, Peoples Republic of, Annual Retail Report 2016.

GAIN Report Number: CH9404 USDA Foreign Agricultural Service China, Peoples Republic of, Market Development Reports, Beijing Market Update 2009.

GAIN Report Number: CH5624 USDA Foreign Agricultural Service China, Peoples Republic of, Promotion Opportunities, ATO Guangzhou Promotion Opportunities Report FY2006.

GAIN Report Number: CH11858 USDA Foreign Agricultural Service China, Peoples Republic of, “Yes! America” All-China ATOs 1st National Supermarket Promotion wit 2012.

Additional sources. Listed by date.
额外资源。 按日期排列。

Carrefour. Annual Report 2001, pp.16-17, 22-3.

Carrefour: Sustainability Report. Promoting Socially Responsible Commerce Practice and Performance in 2002, p. 14.

“ Wal-Mart Reinvents itself in China.” Logistics Today January, 2006.

New York Times.“ Carrefour tries to sell its food as safer in China,” July 31, 2007.

Michael Oneal. “ In China, shoppers are becoming savvier. Growing middle class flexing new might voting with their feet.” Chicago Tribune September 21, 2007.

Guiterrez Joins Wal-Mart China Expansion Celebration.” USA Department of Commerce Press Release, December 10, 2007

China Daily, December 11, 2007.

“ Wal-Mart Celebrates 100th Store in China.” China Retail News, December 14, 2007.

Jin Duoyou. “ Still Raking in the Money: Carrefour Continues Its Expansion in China.” Beijing Review.com.cn April 1, 2008.

“ Wal-Mart moves aggressively in China’s smaller markets.” Honolulu Star Bulletin, October 24, 2008.

“ Chinese Agricultural Investment Opportunity.” September 14, 2010 NASDA
(The National Association of State Departments of Agriculture).

“ U.S. and Chinese Consumers Willing to Pay More For ‘Made in USA’ Products.” Boston Consulting Group, November 15, 2012.

“ CRV’s Ole Promotes Overseas Direct Purchasing.’’ December 24, 2012 CCFA (China Chain Store & Franchising Association).

“ Growth in U.S. Agricultural Exports to China,’’ USDA News Release No. 0325.15. Washington, D.C., November 20, 2015.

China Country Profile. Food Export Association Midwest/Northeast 2015, pp.2,6.

Leena Rao. “Alibaba’s New Favorite Label: ‘Made in the USA’,” Fortune, January 1, 2016, pp.74-79.