Editor's note: Recently Engredea Director Len Monheit joined a team from New Hope Natural Media to present Engredea Market Quickstart, which gave Chinese ingredient suppliers and dietary supplement and functional food manufacturers an overview of the North American market and insights into doing business here; Here is Len's overview of the presentations, which took place in Shanghai and Beijing:
It was slide 5 that got everyone’s undivided attention, and from there, we never lost it.
Patrick Rea, Editorial Director of Nutrition Business Journal had already warmed up our Chinese audience with an overview of the natural and nutritional industry, and had even talked about American channels of distribution. Into this fertile ground, I stepped up to try to get our attendees better prepared for the reality of doing business as a Chinese ingredient company in the United States.
The scene was our first Engredea Market Quickstart in Shanghai, an event intended to bring North American industry experts to China to talk in honest terms about factors influencing success in the market specifically for Chinese ingredient suppliers. The slide 5 in question was an article in Functional Ingredients magazine, entitled ‘Does Made in China Matter to supplement consumers?’ It started off by saying, “Most Americans believe supplement-style nutrients are sourced in America – and say they would change their buying decisions if ingredients came from China.” Yes, I had the attention of the 35 Chinese ingredient company executives.
The reality is that well over 60 percent of ingredients in our industry do come from China, a situation that’s not likely to change any time soon. So we had a colossal disconnect with our market, a disaster in the making, and one that we, as New Hope, were in a unique position to address and change for the better by teaching foreign companies some of the tips, practices and behaviors that would increase their chance of success.
Introducing Market Quickstart
The premise behind Market Quickstart is that by providing the top tier of Chinese ingredient companies with access to industry experts and veterans in an intense curriculum, we could prepare them for educated engagement in the North American marketplace. We would invest, and present topics such as regulatory issues, channel and distribution strategies, branding and marketing, how to engage with the media, tradeshow practices, supply chain management, trade association benefits, social media and the unique New Hope Advertising Standards program. Attendees would receive a certificate of completion and would be welcome to engage these experts and others as they developed and enhanced their North American presence.
To Shanghai and Beijing
Six of us headed to China last month for the first Market Quickstart, a day and half in each of Shanghai and Beijing, sandwiched around a trip to Hong Kong to participate in Natural Products Expo Asia and Nutracon Asia. Our colleagues on the ground, the Chinese Chamber of Commerce for the chemical industry, CCPIT greeted us early in the morning of the event, manning the registration desk as we anticipated the arrival of our 35 attendees. Our students filtered in and by 9:00, we had briefed the translator, two computers (one in English, one in Chinese) were functioning, and our exercise in cross-cultural nutrition industry education had begun. The next day and a half passed in a blur, with Patrick Rea’s opening presentation being followed by my opener on ‘navigating the market’. The afternoon began with Steve Taormina, Executive Director of New hope’s Advertising Standards Group outlining current regulatory issues and the advertising standards program. Next up was Ed Wyszumiala, General Manager of NSF International’s Dietary Supplement Programs’, explaining the importance of product quality and how to prove it, with day one concluding with my second presentation of the day, ‘Regulatory compliance – an International View’. Interspersed in the presentation were discussion slots for open questions or more typically, one on one engagements as we grabbed whatever translator was accessible within earshot. And the questions came quickly, real business cases and challenges, providing insights into both international realities and domestic issues. We got as much as we gave.
Day Two began early with Kendal Norris, Show Director of Engredea talking about the execution of a successful trade show as an exhibitor. I was up next talking about interacting and communicating with the media and the market – not just New Hope, but all media including effective use of social media. And closing the curriculum was Steve Hanson, principal of GRIP IDEAS, discussing ‘Marketing your International Business’, with a focus on brand development and strategy.
Following the sessions, we continued the one on ones, took the requisite pictures, and departed for the airport, for our Hong Kong events. The exact schedule was repeated six days later in Beijing to an even more engaged although smaller audience. In the process, we located innovative technology, companies with pride and character, integrity, and a sincere desire to do the right thing.
Factors for success
In evaluating the factors of what was such an evident success, you’d have to say that ‘brutal truth’ from the start helped shaped the event. We came in with a genuine desire to see these companies successful, and tried to provide tools to do that at every opportunity. We identified resources and best practices, gave specific examples, and in general, were there to offer service and support on an industry rather than a New Hope basis.
What we learned
The insights we gained from the two Quickstart sessions were overwhelming. In addition to the above, the challenges of describing a marketplace from a philosophical and cultural position were huge, and that is what we, as presenters faced at the outset. The disconnect between perception and reality struck us in several places. Understanding just how patient and appropriately persistent one had to be was a shock to many attendees. Developing a channel strategy was an eye-opener, and the entire discussion about distribution had attendees taking furious notes. In many instances, we were struck by the differences in North American versus Chinese marketplaces, with channels, media, trade associations being a few of the largest differences. For instance, consumers in Shanghai are increasingly using the internet to avoid venturing out into that city's gridlocked traffic. It is far more (cost) effective for a driver in an SUV to pile in the neighborhood's healthy food purchases in one trip. Of course we know that the MLM channel is totally different in China despite the presence of familiar players like Amway and Nuskin. And trade associations without active government involvement (read direction) are relatively unknown, so explaining the advocacy role of a North American trade association was a real challenge. Yet I’m really pleased to say that walking away with half a dozen leads to pass along to these North American trade associations is a milestone of which I’m personally extremely proud.
As Patrick Rea described it in his blog, "being first in China often means finishing last,” talking about ‘arrow catchers’. The way it was actually described to me was that Chinese companies really feared trying new things. They wanted to see real success stories to understand the process and then emulate that as a gateway to success, totally content with following these trailblazing leaders.
Why New Hope?
So why did we do this? First of all, to recognize a disconnect and take steps to correct it. Asian sourcing is a cornerstone of this market. Instead of criticizing it or moaning about lost jobs, the process should be nurtured so that the best organizations with the best practices (and products and technologies) can be brought to potential and market. Secondly, our market of the future, in many cases, is Asia and an understanding of culture, philosophy and nuance goes a long way. Thirdly, when we say we as an industry can change the world, it’s not only North America we’re talking about (or should be talking about). And finally, it’s about smart business.