This year, participants at the Winter Fancy Foods Show may encounter representatives from the California Center. This exciting Chinese-American company with offices in Shanghai, Chengdu, and Chongqing as well as Northern California will be assiduously making contacts with suppliers, observing trends, and potentially sourcing U.S. products for the Chinese market.
The company was founded in 2012 by “Business Empress” Margaret Wong, a Board Member of the California Chamber of Commerce and President of McWong Environmental and Energy Group and McWong International, Inc. with more than 30 years doing business between China and the U.S.
“The California Center has essentially three businesses. Food and Agriculture; Education; and Sports, Media, and Entertainment to promote authentic lifestyle of California and the U.S. in China. In Food and Agriculture business, we have the product aspect—including trading, exporting, marketing, supply-chain management,” says Program Director Lei E. "Additionally, we have a culinary aspect involving training and education on food, wine, and the culinary arts, and another aspect involving product development, supply chain development, research, and investment—everything required to educate Chinese consumers and help U.S. companies enter the Chinese market.”
The California Center navigates the complexities of bringing U.S. products to market in China. From complying a complicated tax and tariff system, branding and product regulations, advertising, and logistics, the California Center provides integrated business solutions to companies looking to broach the Chinese Market.
What had been, in the past, a very difficult if not impossible market to access—particularly for fresh food companies who have less-than-perfectly shelf-stable product—has become increasingly inviting to exporters, and demand for genuine products—from California in particular and the U.S. in general—has grown enormously in the past few years. So, how exactly does the California Center use its expertise and education to promote and distribute product?
“Essentially, our goal is to be a ‘one-stop-shop,’ promoting goods online via e-commerce and social media and simultaneously approaching buyers and wholesales in retail and foodservice,” says Lei. But how does an American product gain a foothold in the expansive Chinese market?
“We use e-commerce and online channels to promote U.S. brands in China,” explains Lei. “The Government in China allows for what is called ‘cross-border e-commerce.’ There is a limited quantity of products that each consumer in China can purchase through cross-border e-commerce platforms with no tariff and reduced tax.”
These products must be manufactured in the U.S.; registered trademarks in the States, filed with China Customs, and the sales must be authorized by the products’ producers and trademark holders. The center helps brands meet these requirements and develop a market-entry strategy. Once products have met the requirements, the California Center uses online channels to promote products, build demand, and eventually leverage that demand to sell its products to Chinese retailers and foodservice companies en masse.
“Online direct sales is just a door opener. For food, the majority of sales may not be happening online. But e-commerce platforms are still an important benchmark for marketing. In the U.S., for example, consumers will go to Amazon to look for product descriptions and benchmark prices—even for products they intend to buy in-store. We don’t expect to have tons of sales online, but e-commerce is a great avenue for product education, to tell a brand’s story.”
Once these benchmarks are in place, the California Center works to distribute goods to both traditional avenues for food sales like retail and foodservice, and also via China’s robust consumer-to-consumer social media channels.
While in the U.S., social media company’s like Facebook have made somewhat tepid attempts at building direct and consumer-to-consumer sales channels, Lei explains that social media is a thriving commercial platform in China.
“For some categories, social media sales have already surpassed e-commerce sales and even offline sales in China. Particularly with high-end products, social circle sales are the major portal—from nutritional supplements to fine wine and imported seafood and beef.”
While China announced last January that it would remove restrictions on the importation of rice and beef from the U.S. to meet booming demand, a year later, the USDA and China’s Ministry of Agriculture have yet to implement an import-export process. The market is opening slowly, and the California Center is looking to expedite the process and provide companies with an immediate foothold.
And with China’s rapidly-growing middle class at some 400 million people already, and set to surpass the U.S. population in only a few years, Lei explains, the Chinese market may be one avenue for growth that American producers can’t afford to pass up.
“The purchasing power in China is growing like crazy,” Lei notes. “A few years ago, when we approached Chinese supermarkets, their number one concern was cost—is the product cheap? Nowadays, they don’t even discuss prices, as long as the product is authentic, from the U.S., and has a good brand with a story to tell, they know consumers will buy it. Authenticity, lifestyle, food safety, health, and uniqueness have become more important with consumers. And many American products simply don’t have competitors in China.”
For more on exciting developments in this emerging export market, stay tuned to Deli Market News.
