Andrew Kuiler on Chinese market trends
For many food companies, getting their products in front of Chinese consumers is the holy grail. But without knowing the consumer mindset or who the competition is the prospect can seem daunting, to say the least. Enter The Silk Initiative, founded in Shanghai in 2014 by Andrew Kuiler to deliver exactly these insights for brands wanting to trade with China.
Working with SunRice, A2, Mars and other major brands, The Silk Initiative does everything from market research to creating new product concepts specifically for the Chinese market. CEO Andrew Kuiler’s 20-year career covers product development for the likes of McCain to leading teams at multinational insights agencies looking after clients including Kraft, PepsiCo, Heinz and more.
At Global Table, he shared some of that knowledge on a panel about building Australian brands for success in China, including the future consumer mindset and what mistakes to avoid. Here’s what he had to say.
At what point in your career did you know you wanted to focus on China?
The turning point for The Silk Initiative was probably the free trade agreement signed by China-Australia [in 2014]. I thought “How can I reside in China and make full use of my skills in insight?”
I first went to Shanghai in 2000 and I realised that there were few folks like me there: foreigners that had their core competency in insight and marketing strategy that spoke Chinese. I’d studied marketing, I’d been on the client side and I first went to China in the late ‘90s to study. When I went back I thought “I really like it here. I’m not going to rush to go home. How can I use this toolkit to develop trade between Australia and China?” And it’s worked.
Do other markets, for example Thailand or the United Arab Emirates, excite you in the same way? Or is there something specific about China?
I think it’s because I know the culture well. My godparents are Chinese, so for me there was a lot of proximity to Chinese culture even from a very young age. They had migrated from Hong Kong to Ballarat in the late ‘60s, I think. I was really interested in China right through to academia.
The thing about China that’s always exciting is that there are so many problems to be solved all the time, that are, in fact, opportunities. I’m a problem solver; I think “Why is it that way?” And because China’s so huge I haven’t had much capacity to be excited about other countries, to be honest.
In your session you made the point that the clean and green Australian image is not the next wave of brand positioning in China.
We need to be way more sophisticated. We need to really understand the consumer, their lifestyles, how they’re changing, their aspirations, how brand benefits link with that. Is there a link or is there not? I do sometimes advise clients to think of other markets. Perhaps their first foray into Asia should be Malaysia or Singapore or Indonesia. Or have a test market in Japan, if there’s a really premium product that the Japanese will pay for and understand immediately. Sometimes the infrastructural issues around the brand – sales, distribution, all of that – can be a headache to deal with in China but maybe they’re easier to deal with in other markets. It’s not always about the brand or the consumer; it’s about the commercial feasibility.
Have you seen such clients come back to China, after launching in other markets?
We’ve only been around just under five years so it’s too soon to see that. But I’ve seen a lot of clients make mistakes and come back to us in two or three years. There are a lot of mistakes [to be made]. I think there’s a lot of naivete in the Australian business scene still, because our expectations are that trading and business partnerships [in China] will be ethically bound as they are here, or that there are laws that will protect us. There are guardrails [in Australia] to how you do business. But in China, it’s a free for all. The law is grey. Anything in black and white on a contract is still up for question or is negotiable. It’s sad to say but you kind of have to have a 24/7 operational mindset with your back up at all times. If you are naïve, you most certainly will get taken advantage of.
What’s one insight about the next wave of Chinese consumers that you think might surprise Australian food and beverage businesses?
Integration into the Australian lifestyle. I talked briefly about the sheer number of Chinese studying in Australia who want to perhaps stay here, who’ve had access to the cool inner urban lifestyles of the Fitzroys and the Collingwoods. Their mums and dads are going to auctions and they want to buy them a townhouse or a cottage off Smith Street. That’s happening now. They don’t want to live in high rises in Sydney and Melbourne; they want to integrate and enjoy those lifestyles that they’re seeing around them, not just be a foreigner in Australia. I think that has huge implications for their expectations when they go back to China of who they want to be: more independent and autonomous from mainstream thinking. They’re coming back to China with a different way of thinking, different communities of friends, more internationally minded.
The other insight is hyper-personalisation: having products tailored to their needs or brands that listen to their health and wellness regimes and expectations. Those are like the top three criteria now in terms of what Chinese consumers want from future brands.
How do you measure success at The Silk Initiative?
Our Big Hairy Audacious Goal is to be the most sought-after number one insight-led food and beverage brand consultancy in China. We are the go-to, the pillar of trust that clients can come to for insight in and concept out.
Day-to-day, it’s seeing something on-shelf. I saw a billboard at Melbourne Airport for Smart Nutrition from A2 and I was like, “That’s our brand! That was us.” We did all the insight brand development, the pack evaluation, the claims, and now it’s launched in Australia, not just China. For me, that was really gratifying.
What’s the most exciting thing that’s happening in Chinese markets now?
I think some of the ways people are interacting with digital is pretty cool. Chinese consumers are seeking a lot of knowledge and wanting really cool experiences. They are teaching the West in many regards in terms of innovation. There’s a lot of experimentation that’s taking place. It’s a very dynamic place, which I enjoy. Australia has the quality scene going on but we move pretty slow on things. The speed to which things can come around in China – there’s a buzz there.
Is there anything you’re seeing that concerns you?
The most recent thing has been indulgence. Food waste drives me crazy. The fact that people still demonstrate their wealth or their success in work if they’re out eating by over-ordering. I also think that this money-making culture has gone so far that the focus on individual to get ahead over others is now a big priority for a lot of people in many cities. That for me is bothersome as well. It comes with high market growth in a short period of time. And folks have to learn from that. There are some big ethical dilemmas right now that people are being made aware of and they’re questioning things, too. But that’s the other good thing: people are aware of it and there are sort of micro-campaigns and movements happening to try and eradicate that.
Is there an item that you’ve had to consciously remove from your shopping list?
I don’t buy any local seafood in China. I just don’t trust it. There are a lot of water pollution issues, a lot of fish farming issues, I’m not sure where it comes from or even what kind of fish it is. Red meat is another thing, mainly because it’s so cost-prohibitive. But seafood is number one. Unless it’s frozen and imported I probably won’t touch it. If I want protein, I have things like buckwheat and quinoa, more pulses or cheese.
What message do you have for the young people who are at Global Table this week?
Looking at things like food waste and food consumption, they can be real ambassadors at a grassroots level in their communities, making the right choices now. That’s probably the best thing they could do: educate one another. And I think they are doing that. From some of the messages I heard this morning onstage from the Teenovators, they are pretty connected.
Find out more about The Silk Initiative at thesilkinitiative.com.