Attention to detail: how to get it right in China18th Sep '16
In the latest in our series on trading in Asia, Hazel Davis explains how food manufacturers can overcome barriers to entry
Company: The Kids Food Company, trading as Kiddylicious Trading in: South Korea, China Sector: Food and drink
Sometimes, slowly and patiently is best. Kiddylicious first met Chinese distributors in 2013, but the British baby-food company took another 18 months to get established there.
This was down to a variety of factors, including the language barrier, lack of understanding about the market and the sheer difficulty of getting everything through CIQ, the China Inspection and Quarantine service.
The company now has a distributor with specific experience in the sector, which commercial director Neil Mather says is key to avoiding teething troubles.
“You need one with good relationships with key buyers and who understands how to take your product through CIQ. For China, it’s all about being meticulous.”
Having struggled at the outset, by the end of 2015 the company signed a new agreement and entered the market within four months, launching in specialist baby outlets in Shanghai and Beijing.
Mr Mather says anything made for babies in China is heavily scrutinised, but on the flipside the Chinese have adopted many EU baby-food regulations, which are rigorous but ultimately work in favour of Kiddylicious. “There’s a big administrative workload but it’s worth it.”
Registering the company and selecting a suitable Chinese name – Tong Zhi Wei – caused a lot of angst, says Mr Mather. “You have to be very careful of what the translation is and that it’s not derogatory.”
‘You have to be getting the right level of support and regular feedback from distributors or you need to be willing to look elsewhere’
Kiddylicious’s origins go back 14 years. The Kids Food Company was launched by former Marks & Spencer food scientist Sally Preston in 2002. She had become disheartened by the lack of healthy food for children.
Her brand Babylicious was the first commercial frozen baby food available in the UK. The company launched Kiddylicious in 2009 and fast became one of the leading providers of baby and toddler snacks in the country, with lines such as Apple Fruit Wriggles and Blueberry Wafers.
Since then, says Mr Mather, it’s been growing at a rate of 35-40 per cent every year. The company, which now trades as Kiddylicious, has 17 staff – a figure that has doubled since 2014. Mr Mather, who joined as a consultant in 2008, says it looks set to keep on increasing; turnover is expected to be just under £9m this year.
Twenty per cent of this growth will come from the US, Scandinavia, Australia, China and South Korea.
The company expects turnover of £300,000 in China. “It’s a good start,” Mr Mather says. “It’s relatively easy to get initial orders and sales, but developing the brand beyond that is where the hard work begins.”
Kiddylicious had an easier time in South Korea, where it has been active since 2013, but there are different challenges. In South Korea local brands have more credibility, whereas in China it’s international. This means, Mr Mather says, you have to be more innovative. “Very soon after you launch a product, you’ll find a local supplier will copy it and they will have the obvious advantages.”
Sometimes, continues Mr Mather, there are ideas that aren’t relevant in the UK but succeed somewhere else.
Next year, the company is launching a new range in selected international markets with flavours including barbecue and cinnamon to suit local cultures.
Packaging can be an issue, too. In China, consumers and buyers want UK packaging because it gives the product credibility. In South Korea, bespoke packaging needs to be made.
In all this, Mr Mather says, trust and working with the right people is really important. “You have to be getting the right level of support and regular feedback from distributors or you need to be willing to look elsewhere.”