Overseas branch about more than just money

For several years now, the Dutch export business has witnessed a growing share of emerging economies. In 2012, a survey showed that the most important new markets for Dutch exporters were outside the EU. Especially the BRICS countries scored well. Several Dutch and Belgian produce companies now have an office in one of the emerging economies. But what is the added value of a subsidiary in these countries? Corné van de Klundert of Origin Fruit Direct and Kerim Taner of Univeg Group talk about their ventures in China and Brazil respectively.

Officebuilding in the Chinese city Shanghai.

The Origin Group was founded in 2006 to market the products of a large South African grower in Europe. In addition to an office in Europe, Origin Fruit has offices in Chile and China. "We are part of a South African parent company," says Corné. "South Africa already exported to Asia, but in 2007 the parent company decided to open an office in China." A year later, the office was duly opened. From the office in Shanghai, mainly citrus and grapes are imported, but also lower volumes of top fruit and avocados for the Asian market. "We focus mainly on imports from South Africa, but in recent years we have more import from North and South America."

Brazilian adventure
Univeg, head quartered in Belgium, has a large network of offices worldwide. Since 2002, the company has operated a subsidiary in Brazil that focuses on the export of limes and cloves: Univeg Katope Brazil. Last year, the Belgian company opened a second office in Brazil. Univeg Trade Brazil focuses on the import of fruit and vegetables through the worldwide network of Univeg offices. Univeg Trade Brazil is located in São Paulo, Brazil UNIVEG Katopé operates from the more northern city of Salvador. Additionally, Univeg has a grape plantation in the South American country. The harvest of this plantation is sold on both domestic and foreign markets.

The Salvador office has only five employees. The branch produces about $ 20 million annually, mainly from export to Europe. Univeg Trade Brazil in São Paulo is run by one person, sporting annual sales of roughly $ 8.5 million, chiefly extracted from the domestic market. Univeg Trade Brazil focuses on Brazilian retailers, particularly in the north east and north of the country.

Chinese resemble Europeans
Often-heard complaints about overseas markets, such as different work ethics and the time it takes to build relationships with Chinese traders, didn’t cause any major problems for Origin Fruit. "Of course, Chinese people have different habits," says Corné, "but we had already done business in China for several years already, so we were familiar with local customs. In general, I am positively surprised by the way of working in China. They work much smoother, and are more professional than we often give them credit for in the West." Corné points out that building a good relationship with customers in Europe also takes a lot of time. In that respect there is little difference between Europeans and Chinese.

Brazil: a lot of potential in retail
"We firmly believe in the potential of the Brazilian market, and the increasing consumption of fruit and vegetables," says Kerim Taner. "In addition, the country has a unique climate and there is plenty of land available to grow quality products. We want to strengthen our position in Brazil as a grower, packer, exporter and importer by building lasting relationships with Brazilian retailers."

The (originally Belgian) company mainly sees opportunities in the growing retail sector in the South American country. "Univeg's range of products from South America and Europe and the global network result in a well-integrated product flow to Brazil."

So in addition to financial results, having a subsidiary indirectly yields many immaterial benefits. "I think we have better access to customers in the Chinese market, we can better respond to developments in the market and we have a better understanding of price movements, allowing us to respond quickly," says Corné. That is not to say that China always produces successfully. The Asian market, like any other market, is prone to fluctuations. The South African citrus season, to name just one of many recent issues, proved difficult in China. Other problems, like Black Spot on the European market and turmoil in Russia, put the citrus market under pressure. "As a result, China was seen as a good alternative, which in turn put pressure on prices."

More information:
Origin Fruit Direct
Corné van de Klundert
E: corne@originfruitdirect.nl
W: www.originfruitdirect.nl

Univeg
Kerim Taner
E: kerim.taner@univeg.com
W: www.univeg.com