Effective Distribution to Reach Chinese Customers

By: Mr. David Kuk Managing Director, DCH Logistics Co. Ltd.

Dah Chong Hong Holdings Ltd.• DCH Holdings was established in 1949

• Total turnover in 2011 : USD 6 billion

• 3 core businesses: Motor, Food and Consumer products and Logistics.

• DCH has 93 Food Mart stores in Hong Kong

Advantages of DCH Food Mart stores

• Wide Coverage in Hong Kong

• Gate way to China

• Blooming Tourism Market (42 million in 2011, 67% from Mainland

China)

• Competitive Price (NO tax and VAT)

• Brand awareness Increased: Tourists buy and bring back to home

countries

Seafood

• DRIED SCALLOP • FROZEN SCALLOP • SCALLOP• DRIED ABALONE• MACKEREL• SAURY • DRIED SEA CUCUMBER• CRAB • SHRIMP • OYSTER• FISH SURIMI• SARDINE

Fruits & Vegetables

• FRESH FRUIT• FRESH VEGETABLE• TOFU• BOILED VEGETABLE• MUSHROOM• AZUKI BEANS

INSTANT NOODLE

Snacks & Grocery• FROZEN CAKE • TEA (GREEN/MUGI TEA) • JUICE • FROZEN INAKA SOBA • FROZEN PASTA • MISO • FROZEN RAMEN • KONNYAKU • SALT • DRY SOBA• PLUM LIQUOR• INSTANT NOODLE• JAPANESE NOODLE• SAUCE• INANIWA UDON • SANUKI UDON • COFFEE • GRILLED SCALLOP • SLIM TEA• JELLY CANDY• BLACK VINEGAR• CHOCOLATE

58%

9%

14%

19%

Frozen Meat• 10% Products are from Japan

• Beef

Our “Food Mart” Supermarket

DCH China • One of the Leading National FMCG Distributors in China

• More than 20 years of experience in China

• Providing services in more than 28 cities, selling directly to about 15,000 stores

• Focus on Food and Beverage

• Having distribution channels of Retail, Food Service, Horeca, TVS, Internet, etc.

Customers of Retail, Food Service and Internet Channels

Internet

RetailRetail Food Service

4 Key Categories of Agency Partnership in China

JA’s Apples

Confectionery

Beverage Nutritional Food Service

DCH’s Promotion for Japanese Products

Joint Promotion with JA &

MAFF

Exhibitions

Truck advertisement

In store Promotion & Display

Sales & Exhibition Center in South China

Promotion Events

Nationwide Distribution Channel

Logistics Centers

North: Beijing

East: Shanghai Nanjing Suzhou Wuxi Xiamen

South: Guangzhou Shenzhen Xinhui

West: Chengdu

Central: Wuhan

DCH Offices

Hong KongMacaoXinhui

Importation Flow into China

Fire Wall for Imported Products

A. General Products to Bonded Warehouse

• Food Safety Testing if necessary• Ensure products quality

• Goods arrive at China Port

• Goods into bonded warehouse wait for CIQ check and Customs Clearance• Value adding services can be Done inside bonded warehouse

• If any issue occurred and fail, goods can be returned back to country of origin or HK

RepackagingDelivery• Multi Temperature• Point to Point• On time

Sales andDistribution

Customs ClearanceNon-Bonded Warehouse (Multi-temperature)

• Sourcing & liaise with suppliers in Japan• Documentation • Chinese Label Application• Lab Test Certificates

DCH’s Logistics Setup

• DCH Xinhui Logistics Center in South China.

• Xinhui Logistics center can act as a gate way for southern and western China market.

• Bonded Warehouse → Not regarded as entering China Firewall for imported products No need to pay tax & VAT until selling in China market

• Custom Clearance Good Relationship with local officials

• Food Safety Testing

• Foreign Product Exhibition & Display Center

• International Repackaging Center → Material Sourcing, Package Design, etc.

• Multi-Temperature Storage → Ambient, Air-conditioned, Chilled, Frozen

• Multi-Temperature Delivery → GPS & Food Tracking and Tracing System

Products from Japan

Goods arrive at supermarkets at

right temperature with accurate record

Unloading & Warehousing at Air-conditioned

Decks

Goods stored in warehouse at right temperature

Whole Process: Temperature

Control and Checking

Warehouses: Temperature

Detection & Keeping full record

Temperature Checking

when Receipt

GPS

DCH’s Seamless Cold Chain Management

• To ensure quality of chilled & frozen products

Conclusion

1. High Selling Price 1. Be competitive by lowering the cost

through supply chain efficiency ; Shipping in Bulk and repack in China

Hurdles Solutions

2. Short Shelf Life 2. Improvement through latest food technology

3. Always Difficult for SME’s Products due to no economies of scale ; high entry costs like listing fee

3. Consolidation in Hong Kong → Form a basket of Japanese Products for shipment and promotion

7. Lack of Experience in China Market

7. Work with a reliable & experienced partner

4. Radiation Incident → Customers are lack of confidence

4. Certificate proving Radiation Free ; Seamless Food Tracking & Tracing System to increase customers’ confidence

5. Lack of Promotion Platforms 5. Setting up a long term sales & exhibition platform in DCH D.C.

6. Complicated Export Documentation ; Communication Problems

6. Work with a partner that has branch office in Japan (e.g. DCH Japan)