A Long Way from Georgia: Poultry Merchandising in China
The loading dock at
Panyu, about 80 miles from Hong Kong, is a busy place, even during a
summer typhoon. Forklifts fly back and forth, carrying cargo to waiting
trucks, and making sharp turns that force you to jump out of the way.
Brokers move quickly around the floor, while buyers, cash tucked into
black shoulder bags, inspect the merchandise, ask questions, and
calculate their offers.
All around stand huge towers of
frozen poultry--Tyson, Gold Kist, Sanderson, Cagle's, and of course,
Wayne Farms--in fact, it's hard to find a U.S. producer that's not
represented.
 |
| Merchandising Manager Betty Tsui is responsible for marketing Wayne Farms and Sanderson Poultry throughout China. |
The world's largest
distribution center for imported poultry, Panyu handles about 47
million pounds of product a month, mainly the paws, wing tips,
drumsticks, gizzards and mid-joints that are prized by Chinese
consumers. Some of this poultry is sold directly on the Panyu platform
and destined for local distribution in surrounding Guangdong province.
The largest part is sold by phone in container-size lots, transferred
by barge from Hong Kong to Panyu, and then reloaded onto trains or
trucks for distribution throughout the country.
In all, about 90 percent of China's total poultry imports are shipped through the port of Panyu.
Since 1997, Asian Industries
Merchandising and Wayne Farms have worked together in this important
market, selling about 7 million pounds of Wayne Farms poultry a month
under an internal "joint-venture" agreement. AI Merchandising is also
the exclusive marketer for Sanderson products (about 3.5 million pounds
a month) and a distributor for PSF and Lundy's pork in China.
Merchandising Manager
Betty Tsui notes that the main achievement of the joint venture has
been to eliminate the layers of middlemen that were previously involved
in sales and distribution. "Before we started working together, the
poultry would go from Wayne Farms or Sanderson to a U.S. broker, then
to a Hong Kong broker, and then to a Panyu broker," says Betty. The
Panyu broker would then sell to the final customer--generally a large
wholesale distributor covering a particular region or city in China.
Today, by contrast, Wayne
Farms and Asian Industries have eliminated these intermediate steps and
sell directly to customers throughout China. This arrangement increases
overall returns and improves access to a key international market.
At the same time, it gives
Wayne Farms an important outlet for parts of the chicken that are not
consumed in the United States, and thus helps maintain acceptable
prices for parts that are purchased and preferred by U.S. consumers.
"Our presence in China,
market knowledge, and access to customers gives us a competitive edge
in this business and improves the company's overall results," notes
ContiGroup Chief Operating Officer Vart Adjemian. "This is demonstrably
the best example of what can be achieved when our units work together
and support each other."
All Paws Are Not Alike!
Although most customers look at price
before brand or company name, they know quality and often make fine
distinctions based on the plant of origin. Wayne Farms customers, for
example, will distinguish between Union Springs P912 paws (all from
male birds and thus larger and more consistent in size) and Dobson P445
paws (from a mixed line of males and females and thus smaller and less
consistent).
It sounds like a minor difference, but it's a crucial one for Chinese consumers, and one they're willing to pay for.
"A lot of this involves
local preferences," explains Betty. "People in Xi'an prefer jumbo paws
and people in Jiangsu prefer medium. Our job is to understand these
preferences and to keep track of changes in buying behavior. We then
identify the markets that are likely to pay the best prices for a
particular product and make contact with key customers in those
markets."
In general, customers
purchase a specific product--wing tips from Laurel, paws from Union
Springs, etc.--and then have the exclusive right to sell it in their
home market for a month, that is, until another container of the same
product arrives from the United States.
The goal is to keep
customers from competing directly with each other, thereby limiting the
flow of product into a particular region and maintaining the highest
possible price. "We've had good results with this strategy," says
Betty, "and look good in Agristats [export price ranking] compared to
most other companies."
Providing Customer Feedback
In addition to making sales, Betty
checks on product quality, conduct surveys, follows up on claims, and
provides Wayne Farms with feedback on everything from the shape and
condition of packaging to freshness, water content, and changes in
scheduling and transport costs.
At the same time, she makes
regular visits to customers and conducts trade seminars to provide
information and educate people about American poultry products. Poultry
Merchandising has also developed Chinese names and slogans for both
Wayne Farms and Sanderson. (For the record, Wayne Farms has received
the slogan "American heavy broiler producer," --essentially a quick way
of identifying the company for Chinese customers, says Betty).
All this work is of course
carried out on a shoestring, as befits a business where margins are
counted in pennies. Betty has an office in Hong Kong, but most of her
time is spent in China, and much of her work conducted by phone. As we
drove back to Hong Kong, she had at least six different phone
conversations--talking with customers and office staff, conducting
sales, and monitoring receivables and cargo deliveries to different
buyers.
In early July, Betty had
just taken over as Merchandising Manager, and was looking for an
apartment in Panyu to cut down her travel cost from Hong Kong. She was
also working to solidify relationships with key Wayne Farms
customers--not really a problem given her energy, market knowledge, and
past experience on the Sanderson account.
"I like this job," she says,
and you can tell she means it. "I like the trading and the
excitement--the fact that we're providing a direct link between U.S.
producers and our customers here in China. We're here to bring them
high-quality poultry and a stable source of product for their markets."