I’ve been watching the news a lot on the Chinese recalls. 60% of food recalls this year in the US are of China products, the EU is even taking measures against China products and the US has some on recall now. From pet food, to people food, from baby bibs and toys to car tires, China produced products are on the top of the recall list or in some countries, banned list. The word on the street is, don’t buy China made products. So the obvious question any brand manager has to start asking is, is made in China bad for the brand?
China has a serious problem, don’t be fooled. The stories in the news are just the tip of the iceberg. But don’t expect China to fix it for you, for some, losing face is worse than admitting they have a problem and that can cost you. I’m sure if you were the CFO of Menu Foods and found out that your China supplier was selling you toxic ingredients, you would first be concerned for your loyal consumers, not with saving face. This is about protecting your consumers who believe in your brand and the promise that brand entails.
With the growing concern over China made products and ingredients, everyone is a potential target for brand erosion. Since it is hard to really know where all the ingredients of a brand come from, it is often left to the consumer speculation and when in doubt, don’t buy, is often the motto used. If you happen to be in an industry hit by a hug health recall, then you should be choosing to arm yourself against any brand share lose.
But the flip side to this equation is that too many companies have tried what is essentially a brand bait and switch with consumers. You’ve produced your product in the USA for years, with ingredients or supplies from markets well known for quality. Now, it’s all in China, that’s actually a completely different product and a different brand. Most companies don’t let that be known but that is their own fault in many respects if their brand and profits take a hit when the made in China consequences come to visit them. Sometimes, better profit margins in the short term, just are not worth it if you end up losing your market share or worse get sued and lose your market share, just ask Menu Foods. A lot of companies went to China without first doing their homework, just knew it was going to be cheaper. That mentality is really outdated as consumers are getting smarter and looking beyond the brand hype.
So far I have seen a few companies actually post that they do not source ingredients from China. They did this as they understood that their sector of the market could be impacted in a negative way and they took preemptive measures to ensure brand protection. I’d say they are doing the right thing. In fact if it were I running a consumer foods company, I’d source all my ingredients locally or buy local as much as possible, knowing that there was a sizeable and growing population that wants that kind of security knowing their products come from growers or producers that are bound by laws that are enforced and suppliers that can be found (currently some of the suspect companies in China, close shop and are never heard from, making lawsuits impossible). Now as the growing concern of China made products grows, think of the market share you can take from your competitors who don’t do this, that can translate into millions of dollars in revenue and potential new customers who otherwise would not have bought your product. You now have a bigger market share.
If you don’t think this is a concern, I suggest you get a summer intern to monitor the social networks, blogs or new sources that allow for people to comment on stories that are related to the China recalls and see that the majority of the responses are overwhelmingly in favor of non China made products or ingredients. I’ve been doing this ever since the pet food issue. At first it was really not there, one or two people mad as hell because their pet was vomiting, that was about it. Now, 80-95% of the posts I see are against buying China made products, from those that can be identified as US consumers. That can translate into a 15% market share that is essentially up for grabs in food goods or CPG’s, because they no longer trust their current brand and want someone who can promise them their products are made else where. Just this blog alone, for the past two months I have been getting daily search term hits on non China made vitamin C. People do not want vitamin C from China, if you are getting it from non China sources; you have potential market share gains at your ready!
You can’t change China, if China chooses to allow poor oversight of products, take your business elsewhere, you will gain customers if you do it right. Don’t expect China to go along with changing things, yeah, they are going to kill their former head in charge of safety but he’s just a fall guy for a system that just doesn’t work. That’s not your job to defend sourcing from China, it’s your job to deliver your brand promise and if your brand promise is quality, you need a new supplier! Then make sure you repackage showing that you do not source ingredients from China and I’m very sure you’ll see an up tick in revenue as the word gets out.
Moving out of China to local sources can be a winning move on your part. Your brand can take a huge up tick in PR, plus gain new customers who are more loyal because they have passion to be with a brand that is not sourced from China. This is a win win for the company that takes this route. The consumer trend is moving away from China made products, so jump on it before you competitors do.