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A common problem with a big pie is where to take the first bite.
Dani Jimenez, chief executive officer of Qualia Products Shanghai
Co, the Spanish olive oil company's China division, was looking for
ways to tap into the country's huge market.
Jimenez arrived in China six months ago and set up the China
division in Shanghai, which is the first overseas office for the
company. Small though it is (with annual sales of about $5 million),
the company is targeting the high-end market.
Jimenez intended to sell his oil to fancy restaurants and in luxury
shopping malls in China, and "not in the supermarkets", he stressed,
because its top quality will require a price higher than the market
average.
But it may well take some time before the Chinese people start
regarding olive oil as something both familiar and luxurious, just
as they did with good wine and perfume. And Jimenez knows that. "I
believe the Chinese people will learn to use olive oil and get used
to our products," he said.
Chinese customs data seemed to bear out this optimism. In 2011,
olive oil imports to China reached 32,000 tons, with an annual
year-on-year increase exceeding 60 percent over the past 12 years,
according to the data
The country is expected to become a major olive oil consumer by
2015, when its annual imports are estimated to jump to 160,000 tons,
or 5.3 percent of the world's total production, industry reports
showed.
China's annual domestic olive oil production volume stood at less
than 100,000 tons in recent years. But because of a lack of advanced
technology in olive cultivation and processing, it is of a lower
quality than imported products, industry analysts said.
"The imported olive oil was well recognized by Chinese customers,
especially in big, wealthy cities. Its sales in China are expected
to continue rising in the future," said Ma Wenfeng, a senior analyst
at Beijing Orient Agribusiness Consultant Ltd, one of the largest
consultancies in the industry.
Good market acceptance has paved the way for companies from other
southern European countries to come to the burgeoning market, which
became all the more attractive as the debt crisis in Europe and weak
economic recovery in the United States tightened people's purse
strings.
On his first business trip to China, Nikos Tomadakis, at the sales
department of the Greek company Iason Foods, said the company (with
products ranging from oil to soaps) has a broad strategy for
business expansion to other Asian markets, including Japan and South
Korea - and China can serve as the start pointing.
"Japan is a mature market for olive products but we would like to
start with China," he said.
Yet before deploying a comprehensive cross-border sales web, the
multi-stratum market in China alone will require some thoroughness
of approach. Imported olive oil has so far been mainly sold in large
first-tier cities such as Beijing, Shanghai and Guangzhou. Potential
buyers in some wealthy second-tier cities are still in need of
access to these kind of products, which represents enormous business
possibilities for companies. "We are looking for business partners,
particularly in China's inland provinces," Tomadakis said.
China's ballooning appetite behind the emerging middle class has
been detected by domestic trading companies with years of experience
in the market. They have changed their business strategy
accordingly.
"We used to export products made in China because of the low labor
and material costs," said Chris Christopoulos, brand manager with
Demi Trading Co, a Chinese company based in South China's Guangdong
province.
The company started importing oil products
into China two years ago and sales doubled over this period. "We
have great confidence in China's market," he added.
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