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Southeast Asia -- A Booming Market for U.S. Foods
By Dee Richmond
Trolling for new markets? Seriously consider Southeast Asia--the burgeoning markets of Singapore, Malaysia, Indonesia, Thailand and the Philippines. A sizeable population of 350 million consumers and a rapidly expanding middle class await.
In the past 4 years, U.S. exports of agriculture, fishery and forestry products to this region have more than doubled. Economic growth for most countries has averaged more than 7 percent per year.
ASEAN Countries Similar
The countries in the region share many similarities. The population is relatively young. More women are working and extended family living arrangements contribute to the disposable income of families. The number of Western-style supermarkets, fast food chains and other retail outlets has been expanding dramatically at the expense of traditional shopping and eating facilities. And, of course, food products must endure a hot, tropical climate.
All of these countries, in addition to Brunei and Vietnam, belong to the Association of Southeast Asian Nations (ASEAN). The association members have approved implementation of the ASEAN Free Trade Agreement (AFTA) to liberalize and increase regional trade. Most all import duties will be lowered to 0 to 5 percent by 2003.
Despite their shared attributes, marked differences prevail. For example, Singapore is a small market in terms of population, but the most affluent. It is dominated by Chinese consumers. In contrast, Malays make up the majority of the population in Malaysia where the Muslim religion affects consumption patterns. The most "Americanized" in terms of its food preferences is the Philippines as a result of the lingering influence of the former U.S. presence.
Getting Started
Perhaps nowhere in the world is meeting face-to-face more important than in Asia. While quality and price are important in import purchase decisions, they are secondary to personal interaction with business partners.
Initial visits to the market for product testing, price comparisons and regulatory intelligence are de rigueur. Subsequent trips to Southeast Asia-- at least twice per year--will allay the common complaints of supermarket operators that exporters often fail to supervise sales and distribution.
It is often a good idea to start in Singapore, the most affluent market in the region. Singapore serves as a gateway to the region. Singaporeans are sophisticated, know the markets and customs procedures of the region well and often have offices in other countries to help clear products. A significant amount of imports enter the region through Singapore. Shipments are then broken down and/or consolidated with other lots and moved to other countries.
Meeting Product Needs
Traditional foods of Southeast Asia are unlike those of the United States in terms of taste, portion size and food preparation techniques.
Taste testing is essential. U.S. foods are often regarded as too sweet or salty. Some American foods with sauces, such as those tasting of heavy cream or butter, have proven unpopular. In some cases, modifying the product with different flavors or ingredients may be necessary. Some flavors or ingredients may prove more popular in certain markets than others.
In Southeast Asia, shelf longevity is critical. Not only are shipping times long, but products may pass through many hands in the marketing channel and may turn over more slowly.
Packaging Plays a Key Role
In some Southeast Asian countries, few cold storage facilities and delivery trucks exist, few stores are air-conditioned and some stores turn off cold storage facilities at night to conserve energy.
Consequently, products should be packed and shipped for a hot and humid climate; strong outer and inner packaging may be needed to preserve products.
Like Americans, many Southeast Asians, particularly middle class and younger consumers, are image-conscious consumers. Name brands and attractive packaging are key factors in successful consumer product campaigns. Recent research in Indonesia found that the packaging of some American candy is too plain to support the image of an imported product with its premium price.
Package size is also important. While metric-size packaging is common and preferred throughout Southeast Asia, many U.S. products are imported in American sizes. Many local products--snack foods, confectionery and biscuits--are often sold in smaller packages than those available from U.S. suppliers. Smaller-size packages may make the product more affordable for some consumers.
Like their U.S. counterparts, many Asians are extremely price-conscious. However, some are willing to pay a premium for imported products, provided they remains reasonably priced and competitive with other imported items.
Build Product Awareness
While Asians are extremely brand conscious, U.S. exporters should not assume that their product is well-known in Southeast Asia.
The Southeast Asian market for foreign consumer-ready foods is relatively new; never assume that anyone knows how to promote, handle, prepare, or even consume your products. Consumer and trade education play a major role in promotion efforts. Educate the importer, wholesaler, retailer and consumer about your products.
Western-style supermarkets where consumers can sample new products offer good venues for promotion. Unfamiliar with the taste of many American foods, Southeast Asians will hesitate to buy relatively expensive foreign products for fear of disliking the taste after purchase.
These days, supermarket operators from Southeast Asia travel more. An increasing number of international retailers are entering this thriving Asian segment. As a result, worldly trends and developments are showing up in Southeast Asia. For example, the promotional budget must now allow for listing fees (slotting allowances), a relatively recent requirement, for new products at some of the major supermarket chains.
The U.S. Government makes available branded promotional funding through the State Regional Trade Associations (SRTGs). These funds can be used to help cover the cost of trade fairs, advertising, in-store promotions and other market development activities in Southeast Asia. Contact the appropriate SRTG to obtain more information on this program and application procedures.
Know the Local Laws
Know and follow the food laws of the countries. A local agent can assist with this. In some cases, it is better to let the agent deal with the local government authorities.
The three Ps--persistence and patience, mixed with liberal amounts of politeness--are essential for good business relationships. Fast, high-volume sales are not the norm; several visits to a market may be required before closing a sales transaction.
And, unlike the United States, initial orders tend to be small.
Contacts and Services
A visit to the Agricultural Office of the U.S. Embassy in each country can provide many of the services needed to get started in Southeast Asia. The staff can obtain hotel reservations; provide market reports and contact lists; and provide briefings on the market situation, government import regulations and upcoming promotional events.
U.S. Government Offices
Singapore
U.S. Agricultural Trade Office
Dale Good, Director
Bernard Kong, Marketing Specialist
Tel.: (65) 737-1233
Fax.: (65) 732-8307
Malaysia
Agricultural Trade Office
U.S. Embassy, Kuala Lumpur
Lloyd Fleck, Agricultural Counselor
Mary Keong, Marketing Specialist
Tel.: (60) 248-9011
Fax.: (60) 242-1866
Indonesia
Agricultural Trade Office
U.S. Embassy, Jakarta
Margie Bauer, Director
Tel.: (62) (21) 344-2211
Fax.: (62) (21) 380-1363
Thailand
Agricultural Trade Office
U.S. Embassy, Bangkok
Peter Kurz, Agricultural Counselor
Scott Sindelar, Agricultural Attache
Tel.: (662) 205-4000 ext. 2241
Fax.: (662) 255-2907
Philippines
Agricultural Trade Office
U.S. Embassy, Manila
Kathy Ting, Agricultural Counselor
John Wade, Agricultural Attache
Tel.: (632) 895-9536
Fax.: (632) 890-2728
Foreign Government Offices
Singapore
Ministry of the Environment
Food Control Department
Chia Hong Kuan, Head
Tel.: (65) 732-7773
Fax.: (65) 731-9843
Primary Production Department
Dr. Chua Sin Bin, Director
Veterinary Public Health & Food Supply Division
Tel.: (65) 222-1211
Fax.: (65) 220-6068
Indonesia
Department of Health
Directorate for Food and Beverage Control
Jalan Percetakan Negara 23
Jakarta Pusat
Dr. Ading Suryana, Head of Food & Beverage Control
Tel.: (62) (21) 380-1363
M.L. Registration Information
Tel.: (62) (21) 425-3856
Fax.: (62) (210 425-3856
State Ministry for Food
Bulog Building 2
Jalan Gatot Subroto 49, 4th Floor
Jakarta Selatan
Dr. Noer Soetrisno - Food Marketing
Dr. Mulyo Sidik - Food Safety
Tel.: (62) (21) 525-0075
Fax.: (62) (21) 525-6855
Thailand
Food and Drug Administration
Food Department
Tel.: (662) 591-8460-2 ext. 123
Fax.: (662) 591-8460-2
Customs Department (for tariffs)
Tel.: (662) 249-0436 ext. 1306
Fax.: (662) 591-8460-2
Commercial Contacts
American Chamber of Commerce in Thailand
Tel.: (662) 251-9266-7
Fax.: (662) 255-2454
AgriSource Company Ltd
Tim Welsh, Managing Director
Tel.: (662) 652-1082
Fax.: (662) 253-5858
(Represents U.S. Dry Pea and Lentil Council)
American Soybean Association
James W. Echle, Regional Director
Tel.: (65) 737-6233
Fax.: (65) 737-5849
D. Richmond & Associates Pte Ltd
Dee Richmond, Managing Director
(Southeast Asian SRTG Representative)
Tel.: (65) 738-7550
Fax.: (65) 479-7565
Lieu Marketing & Associates Pte Ltd
Richard Lieu, Director
Tel.: (65) 273-2366
Fax.: (65) 273-6866
(Represents a large number of fresh produce, nut and dried
fruit and wine cooperators)
Peka Consult, Inc.
Kafi Kurnia, Senior Consultant
Tel.: (62) (21) 739-5071 722-1720
Fax.: (62) (21) 625-2211
(Represents a number of fresh produce cooperators)
U.S.A. Poultry and Egg Export Council
Margaret Say, Director
Tel.: (65) 737-1726
Fax.: (65) 737-1727
U.S. Feed Grains Council
Wes Robinson, Director
Tel.: (60-3) 255-9826
Fax.: (60-3) 256-2053
U.S. Meat Export Federation
Eric Choon, Asean Director
Tel.: (65) 733-4255/6
Fax.: (65) 732-1977
U.S. Wheat Associates
Mark Samson
Vice President for South Asia
Tel.: (65) 737-4311
Fax.: (65) 733-9359
Washington Apple Commission
Representative Malaysia/Singapore
DLG Communications Sdn. Bhd.
Chen Hui Cheng
No. 8C (3rd Floor) Jalan Angsoka
Off Jalan Nagasari
5200 Kuala Lumpur
State Regional Trade Associations
Eastern U.S. Agriculture & Food Export Council (Eastern
states)
Beth Pomper, Program Director
Tel.: (717) 731-6017
Fax.: (717) 731-6019
Mid-America International Agri-Trade Council (Mid-America)
Christopher Shyers, Program Director
Tel.: (312) 944-3030
Fax.: (312) 944-1144
Southern U.S. Agricultural Trade Association (Southern states)
Scott Hansen, Executive Director
Tel.: (504) 568-5986
Fax.: (504) 568-6010
Western U.S. Agricultural Trade Association (Western U.S.
states)
Alexa Hamilton, Program Director
Tel.: (360) 574-2627
Fax.: (360) 574-7083
The author is the owner of D. Richmond & Associates Pte. Ltd., Singapore. Phone 011-65-338-3812; fax: 011-65-338-3813; Email: drfood@pacific.net.ag.
Association of Southeast Asian Nations
"By the year 2020, ASEAN will be one of the five largest economic powers in the world, after NAFTA, EU, China and Japan," according to H.E. Dato' Ajit Singh, ASEAN secretary-general.
The Association of Southeast Asian Nations (ASEAN) was formed 30 years ago by Indonesia, Malaysia, Thailand, the Philippines and Singapore.
Brunei and Vietnam have joined the original five, and there are discussions on admitting Burma, Cambodia and Laos this year.
Although there is much disparity among the nations, they have a common desire to integrate economically. The original purpose was to strengthen regional cohesion and self-reliance through economic, social and cultural cooperation. In a growing climate of regionalism elsewhere in the world and because of a growing complementarity of their economies, an agreement was reached in 1992 to form a free trade area known as the ASEAN Free Trade Area (AFTA).
Singapore is a motivating force in the ASEAN movement. The country has also played a significant role in a push to develop AFTA by the year 2003.
AFTA is viewed by trade and industry officials throughout Southeast Asia as a vehicle to improve regional competitiveness before the Asian-Pacific Economic Cooperation's (APEC) goal of full regionalization takes effect. For APEC's developed countries, this occurs by 2010, and for undeveloped countries, 2020.
Top Ten Reasons Why U.S. Exporters Should Explore the Southeast Asia Market
1. Southeast Asia accounts for half of the projected "Top Ten Markets" of the future.
2. Southeast Asia is home to 500 million people with a youthful population that is exploring and developing western foods and tastes.
3. Southeast Asia's food and agricultural product market is forecast by some to triple to $60 billion in the next 14 years.
4. By the end of this century, in just one generation, per capita GDP in purchasing power parity terms will have increased from less than $1,000 to almost $10,000.
5. Southeast Asians recognize and appreciate American food quality and safety.
6. Southeast Asia's imports of U.S. agricultural, seafood and forest products averaged an annual growth rate of more than 20 percent during 1991-96.
7. Southeast Asia has some of the world's most exotic beaches--Bali, Lombok, Penang, Pangkor, Cebu, Phuket--attract tourists with a taste for high-value U.S. foods.
8. Southeast Asia's trading centre, Singapore, has an English speaking population and is a zero tariff gateway to the region. It is heralded as a taste test/showcase center with ethnic and cultural variety.
9. The market is in its infancy and Southeast Asia is coalescing into one single, regional market under the ASEAN's AFTA initiative.
10. Southeast Asia market exploration is easy. Six FAS/Field Offices are there to assist you in Bangkok, Hanoi, Jakarta, Kuala Lumpur, Manila, and Singapore.
Vietnam Hosts Food & Hospitality Week '97
Ho Chi Minh City will host Vietnam Food and Hospitality Week '97 from November 5-8, 1997.
As local spending power rises and tastes become more cosmopolitan within a consumer market of 78 million people, Vietnam presents a tremendous opportunity for suppliers of top quality food, beverages and catering equipment. Vietnam has held an average GDP growth rate of 8.2 percent from 1991-1995. In addition to the local market, tourism is rapidly expanding with foreign visitors to Vietnam increasing ten-fold during 1988-1996.
Vietnam Food and Hospitality Week '97 is Vietnam's third international trade exhibition of food products, services, equipment and food processing machinery, packaging and technology for the restaurant, hotel catering and food industries. Along with an expanded USA pavilion, this year's show is expected to attract over 200 exhibitors from around the world that will also include pavilions from Australia and France.
For further exhibition information contact:
Angela Chiang
Export Promotion Services Agency Co., Ltd.
#1205, 283/62 Sukhumvit 55 Road
Bangkok 10110 Thailand
Tel: (662) 712-7257 - 64
Fax: (662) 712-7266
or
Ross G. Kreamer
Agricultural Affairs Office
United States Embassy
7 Lang Ha Road
8a Dinh District
Hanoi, Vietnam
Tel: (84-4) 843-1500
Fax: (84-4) 843-8932
Email: aghanoi@bdvn.vnmail.nvd.net
Internet Access to Southeast Asia Market and Country Information
Access Asia Homepage
(www.accessasia.com)
Access Asia is a commercial home page that provides a collection
of web links by country and category. It covers all of the
Southeast countries. Its categories include business, government,
news, maps, geography and tourism.
ASEAN
Information Superhighway
(gil.ipswichcity.qld.gov.au/~bchana/asean.html)
Contains numerous links to the ASEAN member nations, potential
members and New Zealand and Australia.
Asian
Trade Promotion Forum (www.jetro.go.jp.atpf/index.html)
This homepage is constructed to cover activities, economic and
trade information and the schedules for exhibitions obtained by
19 trade promotion organizations of the Asia-Oceania regions with
the intention to promote trade. The ATPF (Asian Trade Promotion
Forum) is a conference at which Asia-Oceania trade promotion
organizations assemble once a year to exchange their views and
cooperate in business with each other for the promotion of
internal trade.
By linking up with the servers covering information about each country and area, these trade promotion organizations facilitate the exchange of information within Asia-Oceania regions. It also offers comprehensive information useful to firms or individuals who are thinking of trade expansion and direct investment in those areas.
Association of Southeast
Asia Nations (www.asean.or.id)
The information is divided into four major sections. The first
section covers the history of ASEAN and contains economic and
social indicators for each member country. The second section
focuses on developments in the political arena and includes the
basic political documents signed by member countries, as well as
the press releases from the ASEAN ministerial meetings and the
ASEAN regional forum. The third section touches on ASEAN's
activities in economic cooperation, with emphasis placed on the
ASEAN Free Trade Area (AFTA). It also provides information on the
trade and investment policies of member countries. The last
section contains the ASEAN calendar of activities and a the list
of ASEAN publications.
Singapore's Trade
Development Board (www.tdb.gov.sg)
The Singapore's Trade Development Board (TDB) Globalink home
page, provides links to :TDB corporate information, Singapore
business, international business, trade information services, and
a business information locator.
U.S.
Department of Commerce
(www.stat.usa.gov/bems/bemsase.html)
STAT-USA's home page for the ASEAN. Why is the ASEAN a Big
Emerging Market?
U.S.
Information Agency's Homepage (www.usia.gov/regional/posts/posts.htm)
Links to U.S. Embassy and U.S. Information Service home pages, by
country.
AsianNet (www.asiannet.com)
Advertised as AThe Center of Asian trade on the World Wide Web.@
AsianNet's directories contains comprehensive URL collections for
various countries in Asia, including the Philippines, Indonesia,
Malaysia, Singapore and Thailand. Each country has directories of
four major categories: business, government, education, arts and
culture. Special homepages for individuals and organizations are
listed under the country they are located in.
Asia One (www.asia1.com)
An Asia newsstand and business center managed by the Singapore
Press Holdings, a leading publishing and printing group in
Southeast Asia.
Nanyang
Technological University Library (www.ntu.ac.sg/ntu/lib/asia-n.htm)
A homepage with extensive links maintained by Singapore's
Nanyang Technological University Library. Provides a link to Asia
and Singapore news and newspapers on the Internet, by country.
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