Effective Distribution to Reach Chinese Customers By: Mr. David Kuk Managing Director, DCH Logistics Co. Ltd.
Dah Chong Holdings Ltd. • DCH Holdings was established in 1949 • Total turnover in 2011 : USD 6 billion • 3 core businesses: Motor, Food and Consumer products and Logistics. • DCH has 93 Food Mart stores in Hong Kong Advantages of DCH Food Mart stores • Wide Coverage in Hong Kong • Gate way to China • Blooming Tourism Market (42 million in 2011, 67% from Mainland China) • Competitive Price (NO tax and VAT) • Brand awareness Increased: Tourists buy and bring back to home countries
Seafood Our “Food Mart” Supermarket • 10% Products are from Japan Snacks & Grocery • FROZEN CAKE • TEA (GREEN/MUGI TEA) • JUICE • FROZEN INAKA SOBA • FROZEN PASTA • MISO • FROZEN RAMEN • KONNYAKU • SALT • DRY SOBA INSTANT • PLUM LIQUOR NOODLE • INSTANT NOODLE • JAPANESE NOODLE • SAUCE • INANIWA UDON • SANUKI UDON • COFFEE • GRILLED SCALLOP • SLIM TEA • JELLY CANDY • BLACK VINEGAR • CHOCOLATE Frozen Meat • Beef 19% 58% • DRIED SCALLOP • FROZEN SCALLOP • DRIED ABALONE • MACKEREL • SAURY • DRIED SEA CUCUMBER • CRAB • SHRIMP • OYSTER • FISH SURIMI • SARDINE 14% 9% Fruits & Vegetables • FRESH FRUIT • FRESH VEGETABLE • TOFU • BOILED VEGETABLE • MUSHROOM • AZUKI BEANS
DCH China • One of the Leading National FMCG Distributors in China • More than 20 years of experience in China • Providing services in more than 28 cities, selling directly to about 15, 000 stores • Focus on Food and Beverage • Having distribution channels of Retail, Food Service, Horeca, TVS, Internet, etc. Customers of Retail, Food Service and Internet Channels Food Service Retail Internet
4 Key Categories of Agency Partnership in China Confectionery Beverage Nutritional Food Service JA’s Apples
DCH’s Promotion for Japanese Products In store Promotion & Display Exhibitions Truck advertisement Promotion Events Joint Promotion with JA & MAFF Sales & Exhibition Center in South China
Nationwide Distribution Channel DCH Offices North: Beijing East: Shanghai Nanjing Suzhou Wuxi Xiamen South: Guangzhou Shenzhen Xinhui West: Chengdu Central: Wuhan Logistics Centers Xinhui Macao Hong Kong
Importation Flow into China A. General Products to Bonded Warehouse • Sourcing & liaise with suppliers in Japan • Documentation • Chinese Label Application • Lab Test Certificates • Goods arrive at China Port • Goods into bonded warehouse wait for CIQ check and Customs Clearance • Value adding services can be Done inside bonded warehouse Fire Wall for Imported Products • Food Safety Testing if necessary • Ensure products quality • If any issue occurred and fail, goods can be returned back to country of origin or HK Sales and Distribution Delivery • Multi Temperature • Point to Point • On time Repackaging Non-Bonded Warehouse (Multi-temperature) Customs Clearance
DCH’s Logistics Setup • DCH Xinhui Logistics Center in South China. • Xinhui Logistics center can act as a gate way for southern and western China market. • Bonded Warehouse → Not regarded as entering China Firewall for imported products No need to pay tax & VAT until selling in China market • Custom Clearance Good Relationship with local officials • Food Safety Testing • Foreign Product Exhibition & Display Center • International Repackaging Center → Material Sourcing, Package Design, etc. • Multi-Temperature Storage → Ambient, Air-conditioned, Chilled, Frozen • Multi-Temperature Delivery → GPS & Food Tracking and Tracing System
DCH’s Seamless Cold Chain Management • To ensure quality of chilled & frozen products Products from Japan Temperature Checking when Receipt Unloading & Warehousing at Air-conditioned Decks Goods stored in warehouse at right temperature GPS Goods arrive at supermarkets at right temperature with accurate record Warehouses: Temperature Detection & Keeping full record Whole Process: Temperature Control and Checking
Conclusion Hurdles Solutions 1. High Selling Price 1. Be competitive by lowering the cost through supply chain efficiency ; Shipping in Bulk and repack in China 2. Short Shelf Life 2. Improvement through latest food technology 3. Always Difficult for SME’s Products due to no economies of scale ; high entry costs like listing fee 3. Consolidation in Hong Kong → Form a basket of Japanese Products for shipment and promotion 4. Radiation Incident → Customers are lack of confidence 4. Certificate proving Radiation Free ; Seamless Food Tracking & Tracing System to increase customers’ confidence 5. Lack of Promotion Platforms 5. Setting up a long term sales & exhibition platform in DCH D. C. 6. Complicated Export Documentation ; Communication Problems 6. Work with a partner that has branch office in Japan (e. g. DCH Japan) 7. Lack of Experience in China Market 7. Work with a reliable & experienced partner
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