"China is very squeamish": how Russian companies can enter the PRC market - an interview

Pavel Vishnevsky, Executive Director of EASTEX, spoke to the editorial board of WorldFood Moscow exhibition of domestic and imported food products, he told the Made in Russia editorial board about how domestic producers can establish contacts with Chinese importers and start selling their products in this country, and also shared what difficulties Russian exporters encounter when supplying to China.

- Tell us about your platform. What functions and tasks does it fulfil, and for whom was it created?

- We have been involved in export and import operations for a long time, and have been working with China since 1999. At first we opened our own office there, helping our brand owners to produce goods in China. Then the trends changed, at which time the state's interests turned towards exports from Russia to China.

Our group includes the Chinese international trading company EMD Trading, which deals with distributors and chains. So we can see that Chinese consumers are interested in Russian goods, in ecologically pure products.

Requests come to us from Chinese distributors asking if we can help them with importing from Russia, for example, biscuits or other goods. They are often interested in our vodka and other food products. We help them with deliveries.

For more efficient work we decided to create the EMDMarket portal for Russian producers or brand owners who aim to work on the Chinese market. For convenience, the portal is in three languages: Russian, English and Chinese. It is already actively used on the Chinese side to expand their range of wholesale distributors, retail chains and chain stores of the format "at home". EASTEX, in our turn, along with a full range of services in logistics and customs clearance, acts as another guarantor of the deal because we are an accredited partner of REC. In other words, the supplier and the customer can be sure that one party will get the money and the other will get the goods for that money.

This is how our platform was born for Russian manufacturers and Chinese distributors, who are also hosted on our platform to choose goods from Russian brands that we have represented.

- How many Russian partner companies do you have today?

- We are currently working with about 20 companies. These are producers of foodstuffs - honey, water, bread products, for example. We are not yet moving towards technology and equipment.

- What do company owners have to do to get on your platform?

- You have to have your own product, your own brand. But we recommend finding out first whether the Chinese consumer is interested in such products. To do this, the manufacturer gives us a small batch of goods, which we send to China. There the focus group tests this product not only for its taste but also evaluates the packaging, namely how much it appeals to the consumer, what it is associated with. Among the most trivial nuances we have black colour, while theirs is white. Such things should also be taken into account. We help with this too: we offer the creation of a corporate identity, if the client needs it, including translation into Chinese.

A focus group can also tell us how sweet or, on the contrary, salty the product is and so on. We then voice these recommendations to the manufacturer, and the client makes a decision.

To summarize, we are ready to help exporters at all stages - from brand identity development to shelf placement in retail chains in China, both in offline stores and on online platforms.

- How much will your services cost for the entrepreneur?

- Until the end of the year, we offer free placement. After that, the client will be able to choose a package that suits him or her best, with prices ranging from $800 to $1,500. Some (packages - editor's note) we will help with accommodation and promotion, and the maximum package includes translation of the packaging, product promotion in China.

A Customer can purchase a maximum package which provides for product placement on Alibaba, Tmall, or in special groups according to product categories, some are for biscuits, others specialise in meat and so on. The goods of Russian producers are also placed there, and Chinese distributors can get acquainted with these goods and then buy them from our warehouse or directly from the company. In the second case, we can act as a logistics guide and help with customs clearance and the delivery of the cargo.

- Tell us about your work during the pandemic year?

- On the whole, we were not so much affected by the pandemic, because Chinese partners were still showing interest, everyone moved online and enquiries through online venues persisted. At the end of last year, we had a small increase of 5% over 2019. Now demand is even stronger.

- In your opinion, what barriers prevent Russian producers from entering export markets?

- Difficulties often arise due to increased control over the quality of goods. In some cases there are problems. For example, we have already encountered difficulties during the supply of honey due to the requirements of supervisory authorities in China.

There is also a fight going on here. For example, Russia sends fish, and China says that the quality is not up to par. Russia responds by doing the same with Chinese products. This kind of struggle sometimes occurs for exports and imports. Of course it affects the supply.

The pandemic has left its mark in this sense. For instance, now it is practically impossible to import frozen products, only through certain entry points. The same with frozen dough, we used to send it through the north, now it can only be sent through Shanghai ports. Problems arise, then they are solved at the state level and shipments are resumed.

We also often see that the customer declares his readiness to export, but when we start to inspect the product, it turns out that it does not correspond (to the requirements - Ed.).

China is very squeamish these days. If you hear that an imported product is of high quality in China, you can believe it, it is true, because the inspection is quite tough on China. If the product does not meet any criteria, it will either be returned or recycled.

So as not to get in that situation we always tell our customers - you have to send a small batch first for testing, to get feedback, to make sure the parameters meet the Chinese standards. We understand very well that for any company it is very expensive to lose a whole container of cargo. And it's our credibility, too.

One of the requirements of the Chinese side is the shelf life of products. It must be 90 days. That is the minimum.

So, when I talk to the technologists now, I immediately tell them about the need to adjust to these terms. The thing is that when we supply goods to China, at least two thirds of shelf life should be left, and a month before it ends all the goods will be withdrawn from the chains and returned.

Interviewed by Ksenia Gustova