World meat industry news

Companies exporting agricultural products, aimed at a long-term presence in foreign markets, strive to increase the efficiency of work in priority areas and ensure closer connections with partners and consumers. The tasks of increasing export volumes and opening new sales channels require additional efforts from suppliers in organizing export supplies and promoting their products.

Consolidating in target markets and ensuring a long-term presence abroad was one of the topics discussed at the V Annual Strategic Session “Russian Agroexport 2023–2024: Trends, Challenges and New Opportunities”, organized by the Federal Center “Agroexport” on December 7. Among the tools for strengthening presence, industry leaders named the opening of a representative office (a separate division abroad that represents the interests of a legal entity and protects them) or a branch (a separate division that carries out all or part of the functions of a legal entity, including the functions of a representative office).

Creating an office allows you to conduct negotiations and build contacts directly on the sales market, quickly monitor changes in legislation and demand, as well as organize marketing campaigns and receive feedback from consumers. This is especially true in the field of sales of finished branded products, where competition is the highest and good knowledge of the market and the specifics of promotion, control over the sales process and closer communication with the buyer are necessary.

Among the most promising destinations for Russian food supplies is China. During 2023, a number of domestic manufacturers of agricultural products decided to localize, develop their own infrastructure and distribution in this market. Thus, the Russian Fishery Company created a regional distribution network in China, EFKO increased the number of distributors, Baikal Aqua rented warehouses and formed inventory, and EkoNiva, KOMOS GROUP, Target Agro, Belevskaya Confectionery company opened offices in China.

“Today, targeting the Chinese market is promising due to the huge number of potential consumers. We already have experience interacting with Chinese partners, understand the nuances of the work and want to continue promoting our products on the market of this country,” says Andrey Shutov, managing shareholder of the KOMOS GROUP agricultural holding. The company discovered the Chinese market, starting with the export of milk, dairy products and ice cream. This product category is still a priority today. Also, KOMOS GROUP is currently awaiting accreditation of the Udmurt poultry farm for the export of chicken meat to China. Immediately after receiving the documents, it is planned to begin shipments, for which packaging material has already been prepared and a customer base has been formed. In addition, the company hopes to launch export sales of pork.

According to Andrey Shutov, opening an office solves several problems at once. This is simplification of documentary export procedures, establishment of uninterrupted supplies of components, packaging materials and equipment in difficult external conditions, as well as assistance to other companies wishing to enter the Chinese export market with their goods. “And an important point is that the employees of our foreign office will be able to quickly provide up-to-date information about all changes so that we can quickly make business decisions regarding exports,” he emphasizes.

For the Belevskaya Confectionery Company, the main tasks of its own office in China are control over customers, as well as the development of various sales channels. “Often, direct export shipments are sent to wholesale importers, and, as a rule, it is difficult to take into account local players - small shops, coffee shops, Internet sites. “Small” channels are almost impossible to develop when you are in your own country: they require the presence of a manager in the local market, as well as the presence of a constant renewable stock of products. We sell a product with high added value, and our goal is to develop our own brand, especially in electronic channels and social networks,” explains Natalya Belyashova, development director of the Belevskaya Confectionery Company Group of Companies.

On November 1, the Target Agro group opened an office in Beijing. The company exports soybean oil, soy lecithin, soybeans, and corn to China; in the near future it plans to establish supplies of barley and other grain crops. “The Chinese branch was created to reach end buyers of agricultural products, bypassing the chain of intermediaries and traders. We had the idea of opening an office a long time ago, and current trends have only accelerated this process,” says Alexey Novoselov, commercial director of Target Agro.

However, creating your own divisions abroad makes sense if the company already has deep  and accumulated expertise in exporting: the manufacturer knows how to produce a product and how to design it, has accreditation and good knowledge of the foreign market and its consumers, Shutov draws attention. “Of course, an important factor is many years of sales experience in a given territory, because opening an office simply in a beautiful mirrored building, without absolutely understanding the market, is a futile task,” says the managing shareholder of the KOMOS GROUP agricultural holding.

“Opening an office is a serious, conscious decision,” confirms Natalya Belyashova. – It requires certain costs, so it’s not worth creating an office right away when entering a new market. In addition, it is important to evaluate the specifics of sales in a particular region. If there are many small and different customers who would like to purchase small quantities, then the company can satisfy their request only if the goods are physically available on the territory of a foreign country. If supplies are limited to wholesale partners, then opening an office in such a country may not be practical.”

In addition, when opening a company abroad, it is important to take into account sociocultural differences. “We recommend doing this with the direct participation of representatives of the country where it is planned to open a branch. Ideally, the managing director of a new enterprise should be a local resident who understands the specifics of your business and preferably has a circle of business connections,” recommends Novoselov. According to him, opening a foreign representative office or branch certainly carries certain risks for the company, but with a competent approach it can more than pay for itself.

When a company supplies its products while located in Russia, it is dependent on its Chinese partners, adds the business consultant, sinologist, and best-selling author of “Ni Hao! How to do business with Chinese partners" and "China for business: Subtleties of interaction with Chinese partners and consumers", Associate Professor at the Graduate School of Translation of Moscow State University. M.V. Lomonosov Konstantin Batanov. “If you sell through a distributor, then you must understand that most likely you are not his only supplier, which means he will not attach much importance to the development of your brand in China. In addition, you will periodically hear that your selling prices are too high, and you will be forced to believe it,” Batanov points out. Another advantage of opening your own structure in China is the opportunity to form a Russian-Chinese team, which will allow you to combine the advantages of Chinese and Russian approaches to organizing a business and can open up new ideas for effectively gaining a foothold in this market.

Let us recall that China has become a leader among countries importing Russian agricultural products in 2022. This year these positions have been strengthened. Based on the results of 11 months of 2023, the volume of food supplies from Russia to China increased by 58% in value terms and 2.5 times in physical terms. The greatest growth was demonstrated by sunflower oil (4.3 times growth, up to 816 thousand tons), rapeseed oil (2.3 times, up to 1.3 million tons), dairy products (2.3 times, up to 8.4 thousand tons), confectionery (2.2 times, up to 49 thousand tons), frozen fish (2.2 times, up to 999 thousand tons).