▲ High-end supermarkets in Thailand have set up self-service salad bars offering natural, healthy ingredients to target high income customers.
In 2016, when the global economic growth rate dropped to a new low of 2.6% and the economic growth rate of Taiwan was merely 0.7%, the growth rates of Vietnam, the Philippines, and Malaysia all exceeded 5%, and Indonesia was able to sustain a 4.8% growth rate. Compared to the rest of the world, which has been unable to pull out of the recession, Southeast Asia suddenly looks like a rising star.
First, Know What to Sell
The most direct reaction of consumers in these fast-growing countries to their newfound prosperity is to enjoy good food. People are choosing imported food items over similar, domestically produced products, and are increasingly willing to try exotic cuisines.
As pointed out by Commerce Development Research Institute Director Kang Gengfu, who has studied Southeast Asian markets for years, “the trick is to find out how to transform the characteristics of food ingredients to create products that will be in demand in the Southeast Asian region.” Take Indonesia, the country with the largest number of islands in the world, for example. People there are used to eating freshly caught fish. The idea of exporting frozen grouper from Taiwan to Indonesia is just not going to work. However, other fish-based products may be possible. Products containing collagen, for instance, have become very popular skincare items. Unfortunately, most collagen available on the market is extracted from pigs, and in Indonesia, where over 80% of the population is Islamic, religious restrictions forbidding the use of pork products are a deeply rooted tradition. For this reason, suppliers in Taiwan have begun extracting collagen from fish scales to avoid clashing with the Muslim taboo against eating pork.
▲ Collagen drinks extracted from fish scales are cosmetic products that Indonesian buyers are looking.
The Key to Successful Sales
1.Know your market
Southeast Asian countries have different cultural backgrounds, import regulations, and quarantine conditions. In Singapore, consumers have strong buying power and identify with Taiwanese food products, but import regulations are strict. Inspections in Thailand are not so rigorous, but in an attempt to encourage foreign producers to set up plants locally, the government imposes high import duties on food products. Indonesia is a huge market, but import regulations are complicated. Registration with the Indones ian Food and Drug Administration (BPOM) is required before food products may be brought into the country. At the same time, in both Malaysia and Indonesia, where Muslims form the majority of the population, food importers also need to acquire Halal certification, and certification in one country is not necessarily accepted in the other.
2. Price and shelf life are key considerations for buyers
When choosing products, agents for Southeast Asian buyers prefer products at affordable prices in order to be able to market them through greatest number of sales channels. Even with products popular among the general public, competitive prices, a large enough profit margin for distributors, and a shelf life of at least twelve to eighteen months or more are all factors that buyers take into account.
3. Be realistic when calculating marketing channel costs
The cost of a consumer food product after it enters the sales channel will include tariffs (ten to fifteen percent, depending on the product), distribution costs (ten to twenty percent), marketing channel costs (fifteen percent) and slotting fees (US$75per item per store). Normally, the first six months after a product is put on the shelf is the agent’s observation period. Some marketing channels give the agent a five to ten percent discount, and some agents set seventy percent as the sales target.
4. Use careful brand management
If the products of an established brand just sit quietly on the shelf after once they have been exported, it
will be difficult to attract consumer interest. If sales are slow, the agent will develop the impression that
the products are not easy to sell and the business relationship will probably come to an end after a few
trials. Therefore, it is important to help agents market your products. Today, agents not only sell products, they also make an effort to work with the brand owner to develop the market. If brand owners are able to provide local agents with marketing materials or even discuss market positioning, marketing strategies, or future plans with them, they will be better able to handle product promotion. As in Taiwan, marketing through social networks is a common tendency in Southeast Asian countries. If Taiwanese exporters can provide agents with special product reports from the media, sales of their products overseas will be more successful.
Words & Photos｜TGA Consultancy Team