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Effective Distribution to Reach Chinese Customers

Effective Distribution to Reach Chinese Customers. By: Mr. David Kuk Managing Director, DCH Logistics Co. Ltd. D ah C hong H ong Holdings Ltd. DCH Holdings was established in 1949 T otal turnover in 2011 : USD 6 billion

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Effective Distribution to Reach Chinese Customers

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  1. Effective Distribution to Reach Chinese Customers By: Mr. David Kuk Managing Director, DCH Logistics Co. Ltd.

  2. Dah Chong Hong 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

  3. 19% 58% 14% 9% Fruits & Vegetables • FRESH FRUIT • FRESH VEGETABLE • TOFU • BOILED VEGETABLE • MUSHROOM • AZUKI BEANS Seafood Our “Food Mart” Supermarket • DRIED SCALLOP • FROZEN SCALLOP • SCALLOP • DRIED ABALONE • MACKEREL • SAURY • DRIED SEACUCUMBER • CRAB • SHRIMP • OYSTER • FISH SURIMI • SARDINE • 10% Products are from Japan Frozen Meat INSTANT NOODLE Snacks & Grocery • Beef • FROZEN CAKE • TEA(GREEN/MUGI TEA) • JUICE • FROZEN INAKA SOBA • FROZEN PASTA • MISO • FROZEN RAMEN • KONNYAKU • SALT • DRY SOBA • PLUM LIQUOR • INSTANT NOODLE • JAPANESE NOODLE • SAUCE • INANIWA UDON • SANUKI UDON • COFFEE • GRILLED SCALLOP • SLIM TEA • JELLY CANDY • BLACK VINEGAR • CHOCOLATE

  4. 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 Retail Food Service Internet

  5. 4 Key Categories of Agency Partnership in China Confectionery Beverage Nutritional Food Service JA’s Apples

  6. DCH’s Promotion for Japanese Products In store Promotion & Display Exhibitions Truck advertisement Joint Promotion with JA & MAFF Promotion Events Sales & Exhibition Center in South China

  7. Nationwide Distribution Channel DCH Offices North: Beijing East: Shanghai Nanjing Suzhou Wuxi Xiamen South: Guangzhou Shenzhen Xinhui West: Chengdu Central: Wuhan Logistics Centers Hong Kong Xinhui Macao

  8. If any issue occurred and fail, goodscan be returned back to country of origin or HK Importation Flow into China A. General Products to Bonded Warehouse • Goods into bonded warehouse • wait for CIQ check and • Customs Clearance • Value adding services can be • Done inside bonded warehouse • Sourcing & liaise with suppliers in Japan • Documentation • Chinese Label Application • Lab Test Certificates • Goods arrive at China Port • Food Safety Testing if necessary • Ensure products quality Fire Wall for Imported Products Customs Clearance Sales andDistribution • Delivery • Multi Temperature • Point to Point • On time Repackaging Non-Bonded Warehouse (Multi-temperature)

  9. 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

  10. 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

  11. 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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