How an American company is changing the face of distribution in China
by Fernando Lopez - Executive Editor - FoodBizDaily.com
Note from the author: In more than 25 years dealing with companies in the food and beverage international trade I learned to admire the ones that do not cut corners and approach the job from the correct perspective. Companies that understand the need to work all the sales channels, create new distribution opportunities and provide value to manufacturers and retailers at the end point. In an industry where fly-by-nights are an undesirable reality, international traders that are professional, reliable and efficient are to be recognized. That’s why I invited Mr. Flank Yglesias, Golden Dragon Holdings CEO for the interview that follows.
Mr. Yglesias, Mr. Lu GM of CNGF Supermarket & Mr. Cuenca
July 31 2009 - If you thought food distribution in China was based on a “cookie cutter” approach, with no room for innovation, think again. Golden Dragon Holdings is an American company with a familiar Chinese name that is rewriting the game plan for distributing food products in China.
How is Golden Dragon’s angle different from their competitors? We ask GDHI’s CEO Mr. Frank Yglesias the man behind this new vision, to share his perspective.
FY: We wanted to take a holistic approach to food distribution, by incorporating aggressive marketing and selling strategies to expand our distribution power.
FBD: How do you distribute products in China?
FY: In essence, we have created a hybrid approach to the supply chain model. After 1 year of market research in China, our data identified a series of deficiencies in the typical way products are distributed. It is very simple to place products on the shelves in the Chinese’s supermarkets; it is another issue to sell these products. Your average distributor in China will just focus on distributing a product, if it sells or not, it is not their priority. On the other hand, the manufacturer is solely responsible for the advertizing and promotion of the product to increase sales revenue. The manufacture must also understand the demographics and consumer habits to effectively sell the product. It becomes very difficult for your average US food manufacture, to understand the complex Chinese market and culture. This is why our model is succeeding because it incorporates a mixture of DSD (direct store delivery), marketing and good old fashion American entrepreneurship.
FBD: How do you evaluate a product for the Chinese market?
FY: Taking on a new product is a very difficult and time consuming task. The average cycle is about 6 months before we come to the conclusion that a product is feasible for distribution in China. We have developed a 5 step methodology to evaluate a product:
Step 1- Uniqueness
The uniqueness of the product for the Chinese market
Step 2- Taste
How does the product taste? We will never sell any food that we do not like to eat ourselves
Step 3- Partnership
A firm understanding of the Chinese market and commitment with the manufacture, is key for a successful venture
Step 4- Consumer Feedback
We gather data by conducting taste evaluations and product brand design. Consumer acceptance of the product essential.
Step 5- Product Placement and Sellability
Is the product placed in the correct demographic area to increases sale revenue?
Is the MSRP price acceptable for the market?
FBD: What demographic region and retail outlets carry your products?
FY: At this time our current demographic region is Beijing. Beijing’s population is over 18 million, which includes a large Ex-pat population. Our retail outlet strategy is divided into 3 areas;
1- Middle-class type supermarkets and specialty convenient stores
We have found that these stores even though they are small compared to large hypermarkets, sell imported products faster and better, since they cater to a middle-class and ex-pat community.
2- International Hotels
Hotels typically have a small convenient store in the lobby for their guests to purchase goods. Additionally we are studying the placement of gourmet chocolates and coffees in the mini-bars located in each quest room.
3- International Restaurants
We have a hands-on approach to working with restaurants that sell our wines. We focus on educating restaurant personal on how to best server and sell our wines to consumers.
FBD: What is the future of GDHI?
FY: Our goals for year end 2009 are to have under our distribution channel over 200 retail stores. Establish a marketing, advertisement and promotional guiding principle to incorporate our current and future products. We see 2010 and 2011 GDHI deep inside the trenches in Beijing, placing promoting and pushing our products in our retail outlets. Our goal for year end 2011 is to have over 500 convenience stores, 50 Hotels and 100 restaurants in Beijing. 2012 will be the year we take on Shanghai and by duplicate our success in Beijing and merge it with the uniqueness of Shanghai.
FoodBizIntel®
Golden Dragon Holdings, Inc.
Address: 3/F Beijing Kerry Centre , 1 Guang Hua Road Chao Yang District Beijing 100020 China
Telephone: 86-10-65997906
Fax: 1-888-263-GDFB (4332)
About Golden Dragon Holdings, Inc.
Golden Dragon Holdings, Inc. (GDHI) is a USA publicly traded company that owns and operates Golden Dragon Food & Beverage Import & Export Company of Hong Kong, Ltd. (GDHK) in central Hong Kong. Golden Dragon Holdings, Inc. has agreements with USA food manufacturers. GDHI acts as a buying agent for GDHK, negotiating vendor contracts and services with USA food and beverage industry partners.