5 tips for doing business in China
In 2014, China imported close to 884,000 metric tonnes of alfalfa and by 2016, imports increased to more than 1.46 million metric tonnes. One Canadian with extensive experience working in China says there are opportunities for Canadian forage producers to have a share of the market, but the business atmosphere requires some study.
Robert Watson is general manager of Alta-Agricorp, a joint venture of the genetics company Alta Genetics in China. Watson has worked in China since 1997 and offers several tips to Canadian producers working to break into the Chinese import market:
When visiting China, be respectful. Visitors aren't expected to know all of the customs on a first visit, but make an effort. “China is a very forgiving culture,” Watson says. “As long as you’re doing things with respect, and you’re listening to people and you ask lots of questions, they will embrace you, and they will welcome you. They are wonderful hosts.”
When Chinese delegations visit Canada, be a good host. “Don’t just drop them off at the hotel when the meeting is over,” Watson says. “Communicate with them, find out what they’re interested in and make arrangements for them to do all that kind of stuff.”
Local representation is important when producers start looking at who to partner with in a foreign country like China. Relationships are critical, so producers should make sure goals are aligned, business progresses at a comfortable pace and there's no unneeded pressure. Watson says to producers need to complete due diligence and look at all available opportunities and partnerships.
Customer loyalty can be a big challenge in China. Watson says there are very large dairies in China with multiple sites that rarely source product from a single provider. “We find it can be a challenge no matter how much service you give those big customers, no matter what good a job you do with them, to get them to work exclusively with you,” Watson says.
Negotiations will be tough, he says. “Some of these big customers do tenders every year, which also gets into lower costs, and lower cost supplies,” says Watson. “But then, I’ve also seen cases where you’re asked to bid on a very large amount and in the end, you end up supplying a very small amount at the same price you would have supplied the big quantity before.”
The embassies can be very helpful to introduce producers to potential partners and facilitate business contacts in China. Watson advises producers use those resources rather than reinvent the wheel.
Opportunities exist for Canadian forage producers to export to China, but there is a learning curve to doing business there.
Article by: Trudy Kelly Forsythe