Having more than 1,377 million potential consumers is, undoubtedly, a great motivator for any company. That's why China has become one of the favorite destinations for export.
According to Jesus Valdes Diaz de Villegas, an academic from the Department of Business Studies at the Iberoamericana University, China is an ideal country for the small and medium enterprises (SMEs) from Mexico because it has been forgotten by the big companies, which prefer the United States.
"The market is much more profitable for SMEs, because they go there for niche sectors. If their products are accompanied by an innovative concept that offers a high value for the Asian population, they will enter the market without a problem," stated Jose Pedro Carreon Gutierrez, director of the Department of Economics and International Business at the Tecnológico de Monterrey.
What Mexico is trying to do is to replicate the success stories of companies such as Coliman, a business from Michoacan that exports avocado to China and that has taken advantage of the country's food demand. Since 2014 it has been ranked as the third biggest national exporter of avocados to China. "In the last year, the demand for avocado, specifically, has increased. Mexico's product has become popular, this is an advantage," says Ignacio Moreno, the company's controller.
However, entrepreneurs must take into account that there are differences between the East and the West. For example, "the Chinese customer wants to receive avocados that are completely green, but the Mexicans know that one should consume this product when it becomes darker and softer. The Chines see this as a defect, they think the fruit isn't suitable for eating," said Ignacio Moreno, adding that the dark avocado was sold at half its price in Chinese supermarkets."The challenge is educating people on how to eat this fruit, and that takes time," he said .
Thus, conducting a market study to know their potential customers, and the generation of commercial networks, will help entrepreneurs avoid wasting time and money. The SMEs seeking to conquer China should not make the mistake of keeping all their profits and selling without help. It is advisable to seek ways of positioning themselves, such as through a joint venture or with a local partner, agent or broker, that distributes the product or through-commerce.
Japan opens doors
According to the Comptroller from Coliman, they were able to enter the Chinese market because, after years of having had a business relationship with Japan, "a businessman from Hong Kong met us and asked us to ship him our product. It was in this region that we sent our first container, from there it was distributed to Shanghai and Beijing," he said.
The company currently distributes Mexican avocados directly to Shanghai, Cato, and Beijing, China's biggest fruit markets, to guarantee that the fruit gets into the right hands.
The goods are transported in special packaging to preserve their color and consistency, so that they look as if they had just been harvested. Ignacio Moreno said the fruit was sent refrigerated in a controlled atmosphere, with less oxygen and a higher volume of CO2. "It's like the avocados were hibernating," he added.
Coliman ships its fruits via maritime transport which, according to the World Bank, has a cost of $823 dollars per container (20 feet or 33.20 cubic meters), which makes it the cheapest in the market. However, it takes the fruit around 21 days to reach its final destination.
Once the goods arrives to Asian soil, the Chinese importer has to pay a 25% tariff to get the product out of customs, said Ignacio Moreno, adding that this requirement made them compete with the Peruvian avocado, which doesn't have to pay a tariff in China. However, thanks to their good quality, Mexican exports in 2015 increased to 13,200 tons, 1,725 of which were shipped by Coliman.
To allow the product's entry to China, Asian authorities require importers have a commercial invoice, a certificate of origin (specifying what country the fruit comes from, the supplier's data, the product's value, and its description), the date of production and packaging (in case of raw material), a customs declaration and, in the case of Mexican agricultural products, a customs code from the Chinese importers to certify the goods.
According to Claudia Esteves, ProMexico's coordinator for Asia and the Middle, "even though the trade relations between Mexico and China are increasing, there is still much to do and much to learn to generate confidence among the Mexican and the Chinese business sectors."
Entrepreneurs must "have a knowledge of the country, a business plan, be clear about what they want and can achieve, and they must think in the long-term, as it's impossible achieving all at once. That's the most important thing," said the official.
Source: mexicoxport.com / With information from elempresario.mx