Nada Young is Asia market director for Incite, an international trade services firm that represents food and beverage brands in the Southeast Asia, Hong Kong and Taiwan markets, where she spends 10 months of each year.
What factors do small New Zealand companies need to consider when looking for an offshore distributor?
In the markets we work in, super premium is usually reserved for the likes of Single Malt. If you're not in that category, then the truth is, there are only a few markets in the region that are relevant to you. The rest just do not have sufficient purchasing power to sell volume.
Simple things like shelf life - unless it's fresh, a shelf life of 12-plus months is best - resistance to heat stress, attractive packaging, promotional support and, if you're going into retail, a willingness to pay expensive entry costs are fundamentals.
Price is obviously key. Without economies of scale, some of our food and beverage producers find they are just not competitive in a global market and their cost structure often needs revisiting before they can be successful in Asia.
Where and how can companies go about finding good distributors?
Finding a good in-market partner is one of the biggest hurdles for any exporter. It can take years to build up a reliable network of importers and distributors in each market.
Working backwards can be helpful. A good place to start is to find out who distributes your competitors' products or who the major players are in similar categories to your own. This is not a desktop exercise; you have to be on the ground, surveying the retail outlets or talking to hotel food and beverage managers to find out who their best suppliers are.
Then, it's a matter of creating a compelling pitch to convince the buyer that the opportunity will be profitable. At this point it's worth remembering that you're competing on a global scale in Asia. From the US to Chile, literally everyone is trying to get into Asia, so it's important to leverage your advantages - for example, our Free Trade Agreements and our reputation around food safety and '100% Pure'.
Once a company has found a good distributor, what can they do to ensure the relationship remains productive?
I find this is a matter of motivation and one of the best ways to motivate is to create excitement and momentum. If your aim is to be number one in the category, then share your long-term plans with your partner. Get to know the sales team, as well as the managing director, so all levels of the company are onboard. Help them develop the tools they need to sell your product.
Above all, visit them regularly. Like any long distance relationship, keeping the flame alive requires constant attention.
What are some of the common pitfalls people fall into in this area?
Developing new export markets requires absolute commitment. It takes time and requires prudent financial support. You can't expect to win the race if your horse isn't well fed and trained to run.
This is not about throwing money at the problem. I've seen very well-funded brands fail because they didn't first establish there was demand for their product.
Sure, you may need to run at a loss in the early stages, but it's important to strike a balance between investment and your return on that investment. Asia doesn't offer quick, easy sales. It takes time and, at the start, even the largest importers and distributors will still want to order by the pallet rather than by the container.
Another major pitfall is export compliance. If you can't obtain the appropriate export documentation, then there is little point in developing new markets until this is resolved.
Do you have any other advice for small business owners looking to go down this path?
Most Kiwis I know would prefer proactivity to boardroom pontificating. We like to do everything ourselves, which I think is part of the reason we're so innovative, but it can hinder our growth. In particular, it can take longer and cost more to go it alone. My best advice is to make sure you have people on your team that have the experience and expertise required to realise your export potential.