US companies developing a taste for China
Source: Agencies |
June 11, 2012, Monday
|
Print Edition
Print Edition
THERE are no bad ideas inside Kraft Foods' biscuit research lab in China, according to director Maggie Wang. Not even the chewing gum Oreo cookie a colleague asked her to bite into one day.
Instead of creamy white "stuff" in the centre, a glob of gum was sandwiched between a pair of Oreo's iconic dark chocolate biscuits.
"The taste was ok. The problem was that you could not swallow it," said Wang, a Kraft food scientist with two decades of experience in the biscuit industry.
Investment may be powering the Chinese economy but experiments like the gum cookie - which, for better or worse, never made it to stores - are a reminder that consumption is rising sharply. That means it is vital for food companies to get the right products into the market, particularly with demand dimming in the United States and Europe.
A survey published earlier this year by the American Chamber of Commerce in Shanghai showed that for about three in five of its member companies, the top priority is producing or sourcing goods in China for the Chinese market.
"The stereotype is we're exporting jobs and everything's being manufactured with cheap labor and sent back, and that's not the case at all," said Kent Kedl, managing director of China and North Asia for the consultancy Control Risks, which collaborated on the survey.
China overtook the US as the world's biggest new car market three years ago and became the top grocery market last year.
KFC, one of the first Western fast food restaurants to hit China in the 1980s, has long been a pioneer, with offerings like rice porridge with preserved egg.
Many Western companies resisted going local when they first came to China, in part because they believed their brands would automatically succeed. That mindset has changed.
"It's probably quite hard to find examples of people who don't localise," said Paul French, chief China analyst at market research firm Mintel.
BMW developed stretch sedans in China because the wealthy like to be chauffeured. Wrigley's sells cucumber-mint gum and Haagen Dazs mooncakes are a hit.
At the Kraft R&D facility, researchers dabble with seasonings such as "Chicken Feet With Pickled Chili."
About 95 percent of the ideas that are floated never make it to market, Wang said. But the trial and error can pay off.
Blue jeans giant Levi Strauss & Co introduced its Denizen brand, launched in Shanghai in 2010 and designed to fit Chinese body types, to the US last year, for example.
In 2006, Kraft created a rectangular Oreo wafer cookie that soon became a best-seller in China. Now it's being spiffed up for a return to the country where it got its start 100 years ago.
Instead of creamy white "stuff" in the centre, a glob of gum was sandwiched between a pair of Oreo's iconic dark chocolate biscuits.
"The taste was ok. The problem was that you could not swallow it," said Wang, a Kraft food scientist with two decades of experience in the biscuit industry.
Investment may be powering the Chinese economy but experiments like the gum cookie - which, for better or worse, never made it to stores - are a reminder that consumption is rising sharply. That means it is vital for food companies to get the right products into the market, particularly with demand dimming in the United States and Europe.
A survey published earlier this year by the American Chamber of Commerce in Shanghai showed that for about three in five of its member companies, the top priority is producing or sourcing goods in China for the Chinese market.
"The stereotype is we're exporting jobs and everything's being manufactured with cheap labor and sent back, and that's not the case at all," said Kent Kedl, managing director of China and North Asia for the consultancy Control Risks, which collaborated on the survey.
China overtook the US as the world's biggest new car market three years ago and became the top grocery market last year.
KFC, one of the first Western fast food restaurants to hit China in the 1980s, has long been a pioneer, with offerings like rice porridge with preserved egg.
Many Western companies resisted going local when they first came to China, in part because they believed their brands would automatically succeed. That mindset has changed.
"It's probably quite hard to find examples of people who don't localise," said Paul French, chief China analyst at market research firm Mintel.
BMW developed stretch sedans in China because the wealthy like to be chauffeured. Wrigley's sells cucumber-mint gum and Haagen Dazs mooncakes are a hit.
At the Kraft R&D facility, researchers dabble with seasonings such as "Chicken Feet With Pickled Chili."
About 95 percent of the ideas that are floated never make it to market, Wang said. But the trial and error can pay off.
Blue jeans giant Levi Strauss & Co introduced its Denizen brand, launched in Shanghai in 2010 and designed to fit Chinese body types, to the US last year, for example.
In 2006, Kraft created a rectangular Oreo wafer cookie that soon became a best-seller in China. Now it's being spiffed up for a return to the country where it got its start 100 years ago.
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