Life is sweet in Asia
Chambers is the Export Division of Fosters Traditional Foods Ltd. We are based in Market Harborough and since being founded in the early 1970s we have built a strong and successful reputation, supplying traditional British confectionery and fine foods in the UK, and now also to 26 countries around the world.
Chambers British Confectionery and Fine Foods facts and figures:
Fosters Traditional Foods Ltd started nearly 40 years ago, when it sold quality bakery products from a single van in Market Harborough, where it is still based today.
Chambers is the export division of Fosters Traditional Foods Ltd, producer and supplier of Traditional British Confectionery and Fine Foods such as biscuits, cakes, preserves, pickles, chutneys and gourmet soups.
Fosters also manage and distribute other manufacturers brands in the UK
Chambers currently exports to 26 countries across 6 continents
The company has a total turnover of £15m of which £1m is represented by exports. Since 2009, the growth in exports has seen this side of the company’s activities increase from 2.3% total sales to 6.6%. This is expected to increase further to 8.3% by the summer of 2013.
We have had success in three Asian countries; starting in China four years ago we have now reached annual sales of £270,000. After this followed Korea where in three years we have secured annual sales of £50,000 and just last year we started trading in Japan with £28,000 generated there to date. These three countries alone will account for 28% of company exports in 2012-13.
We started to look for business in Asia in 2009 when European and North American economies were starting to stagnate. Despite these continuing to be important exports markets for us, we also wanted to explore new opportunities in the growing markets of Asia.
At this time we were receiving a lot of interest from potential Asian distributors both via our website and also through our presence at major international trade shows such as ISM, held in Cologne. Many of our enquiries were coming from China where increased domestic demand for imported specialities and a growing population with disposable income meant authentic British products were becoming highly sought after.
Clearly the opportunities abounded in Asia however, the trick for us was to find a trusted network of distributors across the continent who could convert these into sales, and guide us through the cultural, social, economic and political landscapes of each country.
To help us in the process of selecting a distributor in each market, we used the UK Trade and Investment’s distributor questionnaire/checklist to gain a better insight and understanding of each one’s capabilities and resources, before making a decision on who to work with. I would always recommend you seek expert advice in this, as experience taught me that you can never be too careful.
I received an email from a seemingly interested Chinese contact, which on gut instinct, followed by further investigation turned out to be a scam. Such was the plausibility of the approach that I have heard of other companies who had actually booked their flights to meet this fake company in China!
Working with our appointed agent in China, Anderyee Beijing Commercial Co Ltd, we started to put together a portfolio of traditional British confectionery products we thought would appeal to Chinese consumers. Before we could do any trading we had to satisfy Chinese Customs Regulations by providing samples, specifications and ingredient information to our distributor to ensure they were completely compliant.
Once this was done, we also had to negotiate prices with our distributor. It is important to remember that China is a vast country and distribution within the country is multilayered, with each layer requiring a margin. It can certainly take time and persistence to get into the supply chain and in addition, the value of a particular item may be perceived differently in China, compared to its value in Europe.
After initially sending over a few pallets, the regular orders soon started coming in. It wasn’t all plain sailing though. Payment methods proved to be a challenge for us at first. Our distributor initially wanted to work on a letter of credit system, which we duly did for our first order. However, this way of payment is complicated for a small business like ours, especially on low value orders. On sizing up the risks and doing the necessary credit checks, we proposed an alternative 50% upfront and 50% on receipt of goods arrangement. Our distributors were happy with this, having seen our offer as an equitable solution, which was easier for both parties.
I see my Chinese distributors at least twice a year, once at ISM and then during a visit to China for a major food and drink show in Shanghai in May, when I usually spend a week with them. I know that they really value the time we spend together and as is the business etiquette there, I always take them a small gift from the UK.
Visiting Asia can be expensive for small businesses, however there is always help at hand. We’ve benefitted greatly from working with UKTI, especially with our brilliant International Trade Adviser, Sharon McCarthy. Without her we couldn’t have had such success in Asia; she has been with us all the way, from planning through to connecting us with UKTI experts in the markets, and directing us to any financial support available to assist in market visits.
We are now experiencing real success in China, with consistent, long-term orders coming in, helping us to plan our purchasing and production schedules more effectively in the UK. We’re in discussions to see what other products from our range might be added to our Chinese portfolio. China is expected to continue to grow – and therefore remains an important export opportunity for British SME’s. We expect to double our turnover in China in the next 2-3 years.
In building our business in Korea and Japan, we have also taken the distributor route, as this is the most effective model for a SME such as ours. Currently in Korea we are selling our traditional Victorian and Elizabethan decorated small tins of aniseed and peppermints which are doing well in the duty free and gift markets. And in Japan we are currently exporting our lemon curd.
It really is very exciting to see traditional British confectionery products on the shelves in Asia, where quality, authentic British products are actively sought out by consumers. Asians have an enormous respect for the British; they like our product quality and the way we do business. As the markets continue to grow there, export opportunities for British companies who sell authentic, high quality products will continue to flourish.
Andy’s top tips for doing business in Asia:
Meet your customer face to face – people buy from people. Make the effort to visit China and meet your customer/distributor – this will help you understand both your customer and also the market and its culture
Have regular communication – it helps build stronger business relationships
Stay open minded – each Asian country is different. What works in one, won’t necessarily work in another.
Be patient and set yourself realistic goals. It takes time to develop sales and distribution.
Do your homework and don’t be afraid to ask for help. Research the prospective customer, the market and the country – UKTI is a great place to start.
Be resilient. Sometimes things go wrong. For example, it might be labelling errors leading to delays and issues at customs. When faced with such issues we have always looked for an equitable solution that is fair to both sides and helps build the sense of partnership inherent in the relationship with a distributor.
When visiting an Asian market, make sure you’re prepared – research and plan your trip as much as possible beforehand, so if something goes wrong you can easily fix it.