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By David Feder, Contributing Editor | 05/07/2008
The company then looked at both competitive and out-of-category offerings to determine trends that appeared to be emerging. Ideally, Spalding explained, a company should seek a trend or functionality it already is well positioned to compete with through both its intellectual and process capabilities.
“We look to expand brands that translate well emotionally, with benefits the consumer can Identify with,” he says.
Among the most difficult aspects of expanding internationally are understanding the regulatory differences and what is appropriate to say and claim on the package, according to Spalding. “Add translations to the mix,” he says, “and the complexities become a real challenge. We apply a very rigorous process, including both redundant legal and translation support. Imagine going into a country with language requirements and no one speaks the language in your company!
“Post-9/11, the border also can become quite a challenge,” Spalding continues. “Making sure appropriate declarations are made and all paperwork has been processed and vetted prior to crossings is critical.” He notes it can be a real benefit to seek help from outside agencies specializing in international transportation.
Distribution is always a challenge, Spalding points out. “Distributors are the conduit to your consumer and you must be on the shelf or it is all for naught. Pre-sell your way into new markets prior to setting it all up. Make sure once your products hit the marketplace they have a home. It's a good idea to have multiple customer trade lined up but,” he cautions, “nothing is sure until the ink is dry.”
The importance of well-constructed distribution channels is seconded by Jeff McLemore, product manager for Sunsweet Growers Inc. The majority of the company’s products still are processed and packed in its Yuba City, Calif., plant. But, as the world's largest handler of prunes, apricots and other dried tree fruits, the grower-owned cooperative handles production and distribution of more than one-third of the prune market worldwide.
Sunsweet directs a global network that provides products under the Sunsweet brand in more than 60 countries, making it a true global brand. “One key tip we employ when dealing with our overseas concerns is to establish good relationships by performing test marketing rather than simply rolling out over large areas,” says McLemore. “We also ‘overcommunicate’ rather than allow issues to get lost in translation.”
Another important but oft-overlooked technique McLemore suggests is to do the homework necessary to create and allow for realistic timelines when managing overseas operations.
A game of chicken
Tyson country manager Jim Rice signed documents setting up Tyson’s operations in China. While he hired a local management team, Rice remains in China and stays in contact with Tyson headquarters. You can’t run a Chinese plant from Arkansas, he says.
Tyson country manager Jim Rice visits a street market in China: When Kentucky Fried Chicken set up shop in China, the fast-food chain wanted a familiar partner like Tyson handling local sourcing of chicken.
, Springdale, Ark., understands global in a big way. The protein giant, with plants in 20 countries and an established presence on three continents, produces, processes and sells more than $25 billion poultry, pork and beef products a year. As with many companies, Tyson has a strong foothold in China and a decades-long track record in the rapidly escalating market there. Tyson Foods Inc.
“Compared to other opportunities, any country you could go to — even a substantial business in East Europe or South America — would be nothing more than a ‘rounding error’ compared to China,” says James Rice, vice president and country manager-China for Tyson.
Tyson is responsible for a substantial portion of U.S. chicken product exports to China. This includes about enough frozen chicken feet to give one to every man, woman and child in the world’s most populous country.
“China’s economic growth, at 10 percent yearly, ‘times’ the population base equals the greatest economic boom in the history of humankind,” Rice exclaims. “China moved 300 million people out of poverty and created 100 million middle-class consumers. Within 20 years China will have purchasing power parity equal to the U.S., and in 30 years will surpass it.”
Rice warns that, even if a company is a world leader in its niche, it soon will lose that lead by ignoring China. Tyson started working with China in 1991 exporting chicken and chicken parts to China. The company recognized early on that product considered waste, such as chicken feet and wing tips, were prized in China. In a normal business year for the poultry industry, one quarter of the profits is derived from exports to China, Rice notes.
The company quickly moved into building plants there, to serve both domestic and global needs. “Inside China, we have a processing facility for nuggets and patties for global customers, and a pork processing plant in Shanghai for primarily domestic consumption,” says Rice.
Tyson is starting a fully integrated poultry operation — “from egg to table” — outside of Shanghai. It will be the first built for operation at the highest hygiene level and will provide raw chicken in tray-packs, increasing average shelf-life of chicken from 24 hours to 14 days.
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