China and Us Business Etiquette - PDF

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					                                                                                                       Spring 2003

        INSIDE                   China: Business Etiquette
    Focus on ASIA                (Provided through the Shanghai Agriculture Trade Office, Foreign Agricultural
China Etiquette . . . . . 1      Service/US Department of Agriculture.)
InterBake China . . . . .2
                                 In the last issue of BEMA International we
Thai Trends . . . . . . . . 3
                                 devoted considerable space to the China
Australian Snacks . . . 4        market. In summary, it’s big, growing and not
European Union. . . . . 4        easy to enter. Increasingly, people realize
                                 that understanding and respecting Chinese
   Special Report:               culture is one of the keys to a successful
   Canadian Snack                business experience in China.
                                 Some fundamentals about Chinese
 Majority Of Canadians Eat       Culture
Snack Foods On A Daily Basis     Chinese culture can be seen as a set of core
According to Western Grocer      values that underlie social interaction. These
magazine, a recent Hain          core values tend to change only gradually – over generations rather than years. In
Celestial Group Canada survey    relation to organizations, four key features of Chinese culture can be identified
indicates that an overwhelm-     which (1) underlie social interaction within organizations; (2) differ from other
ing 95% of Canadian adults       cultures, notably Western ones though the differences are less with respect to
eat snack foods and 52%          other Asian societies; (3) have persisted over time; and (4) can be seen in China
indulge in them on a daily       as well as in Chinese communities elsewhere, although sometimes expressed
basis. Almost a quarter of       differently. These four features are:
respondents said they treat
themselves more than once a             (a). Respect for age and hierarchical position
day to their favorite salty or          (b). Group (rather than individual) orientation
sweet snack. Canadians’ busy            (c). The concept of face
schedules leave less time for           (d). The importance of relationships
healthy meals, and they,
therefore, are snacking more.    Chinese Business Etiquette
Today’s consumer is looking      1). Establishing personal relationships
for convenient yet nutritious    In business, relationships are important. Contracts are often specified in legal
snack foods. According to the    terms but rely on trust between the parties. When you begin to do business with
survey, Canadian consumers’      Chinese people, talk a little bit about your hobbies, your family members and
biggest concern is weight gain   yourself, before you broach the topic of business itself.
associated with eating snack
foods that are low in nutri-     2). Conducting business over a meal
tional value.                    Working lunches and dinners are common. It is the Chinese way to get to know
                                 associates a bit before the business relationship intensifies. Count on attending
                                 banquets arranged by your host. As a guest, you should return the favor if
feasible. If not possible on this visit, consider doing    loudly is not polite or suitable in China when people
so on your next trip or when your counterparts             meet each other for the first time. Be sure to take an
come to the U.S. But be sure not to miss the               interest in what your host has to say. Give your host a
opportunity. At meetings and banquets guests will          chance to bond with you, but expect your host to be
usually be seated in a fairly strict protocol order, so    more reserved in a business setting than would be the
allow your host to seat you. At a meeting it is the        norm in the U.S. However, your host’s behavior will be
custom to start with a few minutes of pleasantries         unexpectedly different if you are invited to a Karaoke
before launching into business. At a meal, wait for        lounge for an ice-breaking evening of singing and
your host to make the first toast before drinking.         drinking. When an impromptu event like this occurs, go
You may then offer a brief return toast if you wish.       with the flow, and hope for the best.
It is polite to drink with both hands when offering or
receiving a drink.                                         7). The concept of face
                                                           This must be the most sensitive and complicated topic.
(3). Bring small gifts                                     Chinese people are accustomed to burying strong
It is useful, but not absolutely required, to have         feelings and keeping expressionless faces, so losing
small gifts to reciprocate any gifts given to you          face is a humiliating experience – especially in a
during meetings or meals. Items that are represen-         business context. Losing face one time can mean
tative of the U.S. are best: items with your corpo-        losing business with that client or contact forever, as
rate logo (mug, pen, key chain, etc.), a book (with        an embarrassment such as this will not be forgotten
pictures) of the region where your company is              easily. So tone down the emotions if possible and
based. Chinese people are not used to opening              remember: raising your voice to solve a bad situation
gifts in front of others, so if your Chinese counter-      will generally only make things worse.
parts don’t open your gifts in front of you that
doesn’t mean they don’t like your gifts. Gifts
should be given or exchanged at the end of the
first meeting, or at the end of your stay in their city.

(4). Bring name cards
                                                                 InterBake China 2003
Name cards are an essential part of living and                     May 14-16, 2003, Guangzhou, China
doing business in China; carry a good supply. It is
                                                           InterBake China is one of the country’s largest industry
polite to accept and offer cards with both hands.
                                                           trade fairs. It began in 1997 and is held annually.
                                                           Exhibitors include bakery equipment, packaging equip-
(5). Learn some greetings in Mandarin
                                                           ment, ingredients and bakery products. According to
If you can summon up a few Chinese greetings
                                                           the organizers, InterBake 2002 attracted close to 400
during your first meeting it will be helpful in setting
                                                           exhibitors from 7 countries. In 2003, InterBake China is
the mood for a good relationship. Some examples:
                                                           expected to gather more than 500 exhibitors in a 28,000
                                                           sqm. hall, with 50,000 trade visitors expected.
        Nin hao - How do you do?
        Wo hen gaoxing ren shi nin - Nice to meet
                                                           In 2002, 40% of visitors were looking for bakery or
                                                           packaging equipment and 36% were looking for
        Xiexie - Thank you
                                                           ingredients, stuffing or additives.
        Qing zuo - Sit down, please
        Zai jian - Goodbye
                                                           For more information contact:
(6) Pay attention to the small details when meeting
for the first time
                                                           Mrs. Solenn Brénéol
Shaking hands and exchanging name cards is the
                                                           International Sales Manager
common way to begin a first meeting. Don’t be too
                                                           Tel: 33 1 49 68 54 04
demonstrative, such as making a strong hand-
                                                           Fax: 33 1 49 68 54 11
shake or hugging your Chinese counterparts; this
will most likely cause embarrassment. Laughing
                                             Thai Baking Trends
Thailand’s open trading environment has stimulated the extensive use of imported ingredients by its local food
processing industry. This has enabled the industry to experiment and introduce a wide range of new processed
products to the market, e.g. prepared frozen foods.

Changes in the retail sector away from small grocery stores and towards
supermarkets and hypermarkets have driven changes in the processing
sector. Currently there are approximately 100 branches of international
hypermarkets in Thailand.

Consumer expectations have also changed significantly. Faced with an
increasingly diverse range of products, quality and price, consumers have
become more demanding. In response to increasing consumer expectations,                     THAILAND
large food retailers, especially international companies, are demanding
higher quality standards from Thai food manufacturers.

The above push from retailers and the rapid change in consumption patterns
has led Thai food processors to adopt newer production methods (and
equipment) to meet the changing and diverse needs of the population.

The snack foods industry is also benefiting from the trend toward Western
foods. The increasing popularity of mini-marts and convenience stores are
the driving force in the snack foods market. There are over 15 large manu-
facturers and a large number of small firms supplying snacks to the local
market. Several of the larger manufacturers are increasing exports to other
Asian countries, Europe and the U.S.

The fast food and convenience food industry is expanding rapidly, both in the number of companies entering the
market and in the number of outlets. Most of the major international fast food companies are represented in
Thailand, including McDonalds, Burger King, Pizza Hut, KFC, 7-Eleven, etc. The rapid growth of the fast food
sector is stimulating many businesses, including bakery products.

Most ingredients used internationally are now being used in Thailand’s food and feed industries. In comparison
to more advanced countries, the amount used is still relatively small, but there are good opportunities. The
following higher value products are presently moving well in the market:

   •   Emulsifying, foaming, stabilizing and thickening agents. These products are used in production of frozen
       foods, bakery products, ice cream, evaporated milk and confectionery products. The amount of these ingredi-
       ents used has increased proportionately with local and export demand in these market segments.
   •   Synthetic colors, flavors and fragrances for confectionery products, snack foods, baked goods and instant
       noodles as examples. Most synthetic colors and flavors are now imported in prepared form, but buyers look
       for more local semi-processing in the future.
   •   Soy lecithin. Soy lecithin can substitute for egg yolk, which has traditionally been used as an emulsifier in
       cakes, doughnuts, and cookies.
   •   Preservative-free ingredients that provide extended shelf life. Local food processors say that the stability of
       this type of product could greatly reduce the amount of waste and cost in using traditional local ingredients.

However, ingredient suppliers should note the following concerns. Buyers report that U.S. ingredient exporters
are generally less competitive in terms of price, and delivery time when compared to ingredients from Australia,
Canada, and China. Long lead times for ordering U.S. ingredients is another disadvantage perceived by Thai
buyers. Delivery typically takes 2 months for U.S. ingredients compared to one month from Australia and
                                Australian Snack Food Market Tidbits
                                The Australian snack food sector is dominated by:
                                • Arnott’s’ Biscuits and Snackfoods are manufactured by Arnott’s Campbell’s and
                                generate U.S. $308 million plus in sales;
                                • Kellogg’s’ Cereal and Nutritious Snacks are manufactured by Kellogg’s Australia
                                and generate between U.S.$205-230 million in sales;
                                • Uncle Tobys’ Cereal, Bread and Nutritious Snacks, an Australian firm, manufac-
                                tured by Goodman Fielder, generates sales between U.S.$128-154 million; and
                                • Smith’s Snack Foods manufactured by Smith’s Snackfood Co generated between
                                U.S.$51-77 million in sales.

Approximately 10 percent of products sold in supermarkets are imported, a share that has not changed signifi-
cantly over time (Food and Beverage Importers Association, 2002).
Leading information providers in the sector suggest there is growth potential and opportunities in the Australian
market, particularly in the nutritious snack segment for U.S. exporters of ingredients or those offering licences
to manufacture.

Important Trends Include:
• Consumers tending to eat a number of smaller snacks during the day rather than the three full meals, with
cash rich, time-poor consumers contributing to demand for snacks that are easy to buy, store and eat;
• Growing market for nutritious snacks with launches of products such as lunch box ideas for children and
ideas for health conscious, but short of time, adults. For example, Kellogg’s is advertising its “Be Natural Snack
Bars brought from the Healthy Snack People”, which targets the growing market for healthy young adults;
• Targeting nutritious snacks towards time of day snacking and demographics. For example, Lowan Whole
Foods, a processor of nutritious snacks, is focusing on ‘AM eating occasions’ and capitalizing on the ‘grazing’
phenomenon. Its products are segmented according to eating occasions, demographics, variety and taste.
Uncle Toby also launched a U.S. $1.5 million campaign in 2001 for a new range of adult breakfast snacks,
toast, oat bars aimed at women between 18-54 years seeking a healthy, low fat snack.
• Consumers swinging between brands to find the right product amidst
a continually growing number of offerings. The lack of brand loyalty in the
nutritious snack market is resulting in significant investments in promotion
and product development. For example, Kellogg’s is investing U.S.$1.5
million in television promotions of K-Time (breakfast bar) positioning it as
a ‘guilt-free snack’.

  EU Confirms 2004 Entry
  Date for 10 New Members
  On Dec. 12-13, European Union
  leaders confirmed the entry of ten
  new member states from Central
  and Southern Europe beginning on
  May 1, 2004, increasing the size of
  the free trade community to 25 members and approximately 450                             James Forsythe, Chairman of the Board
  million consumers. The new member countries will be Cyprus, the                                  Dennis Gunnell, Chair,
                                                                                                  International Committee
  Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,                         Robert Hirsch, President & CEO
  the Slovak Republic and Slovenia. As of the date of membership,                               Harold Zassenhaus, Editor
  these countries will adopt EU tariffs, regulatory policies, technical
  standards and other business laws that encompass some 80,000
  pages of text.

                                    NEW ADDRESS:
                   825 Green Bay Road, Suite 120 • Wilmette, IL, 60091
 Phone: 847-920-1253 • Fax: 847-920-9886 • E-mail: • Website:

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