Australian businesses joining the procession of trade missions
through the Australian Pavilion at Shanghai's World Expo would do
well to take note of the catering, because it's courtesy of some of
our most successful hospitality entrepreneurs in China.
Kim Gilliland, executive director of the Australian Chamber of
Commerce (AustCham) in Shanghai, says food and beverage companies
are the fastest growing category in her membership base. They
include prominent restaurateurs such as David Laris and Michelle
Garnault as well as quiet achievers like Jackie Yun, whose Wagas
family of enterprises includes a 17-strong chain of cafes, a bistro
restaurant and a bakery retail concept store.
Australian importer Just
Beer is also making inroads, and co-owner Mat Ryan says the
most important lesson they've learnt along the way is that "The
market here is not 1.6 billion people [China's population].
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Steve Baker was lured to China in 2000 to launch Fuchun Boutique
Resort in Hangzhou and its sister restaurant in Shanghai.
"People think they can come in and just get one out of ten
people, but your market is not the whole place, it's just a portion
of it."
For Just Beer, that portion varies from region to region and
brand to brand. In Shanghai, they can barely keep up with demand
from foreigners for Foster's Pure Blonde, but up north in Harbin,
Cascade Stout is their best seller.
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Ryan, a CPA, moved to Shanghai in 2004 to fulfil a long-held
ambition to open a wine bar, so he already had experience in the
local hospitality market when he and fellow Australian Frank Li
came up with the idea for Just Beer after one too many nights on
the local rice brew.
At the time, Li was running his own sourcing company in Shanghai
after many years in the Australian hospitality industry, including
time at Foster's.
Both saw the opportunity to start a 'side venture' to fill the
gap created when Foster's and Lion Nathan withdrew from the Chinese
market a few years previously.
Their first shipment of VB, Crown, Cascade and James Boag's
arrived in June 2007. Six months later another Australian, Steven
Roadknight, who worked in wine sales before moving to Shanghai when
his partner was transferred there, joined the team as its third
partner and first full-time employee. A fourth partner, Jonathan
Tomlin, a New Zealander with seven years' experience running bars
in China, came on board in 2009 to run South China sales and
promotion.
Today, Ryan and Li are full-time with Just Beer, which now has
twelve staff, annual turnover of nearly AUD$500,000 and a very
bright future in a booming economy.
Like many successful entrepreneurs before them, the friends
credit their success to successful identification of a genuine
market need and a determination to capitalise on it with
old-fashioned research and hard work.
They've also had great success with a local graduate who joined
Just Beer eighteen months ago as business development manager.
"If you want to be successful in China you have to work with
local people," says Li, who speaks fluent Shanghainese and Mandarin
(his family migrated from China to Australia in 1981).
The Just Beer boys have also managed to avoid some of the more
common pitfalls associated with doing business in this part of the
world, such as the 'Rent a White Guy' phenomenon where Chinese
businesses 'partner' with Western entrepreneurs to lend credibility
to their ventures, before abandoning them unceremoniously once they
attract the investment and customer base they're looking for.
"It's a classic case of 'getting Shanghaied'," says Li.
He says it's a great reminder that while the local industry is
growing exponentially and demand for experienced operators is at an
all-time high, it's more important than ever to know exactly who
you're getting into bed with.
Playing by the rules
Just Beer now has a distribution network covering bars and
restaurants in 20 cities across China, and is one of the few
foreign-owned companies with a licence to import alcohol.
It's a process that involved two years of painstaking effort,
but the boys say they were never tempted to build 'guanxi' (a
Chinese concept loosely translated as 'social capital' or spheres
of influence) with local businesses or government officials by
greasing the wheel.
"We stay well away from that," says Ryan, as does Steve Baker of
Mesa Manifesto, the internationally-acclaimed restaurant and bar in
the heart of Shanghai's fashionable French Concession area.
Baker's road to Shanghai has been a long and winding one. A chef
by trade, he cut his teeth at the World Culinary Olympics and
London's famed Quaglino's restaurant before running fine dining
establishments in the US, Switzerland, Bermuda and Bali.
Baker was lured to China in 2000 to launch Fuchun Boutique
Resort in Hangzhou and its sister restaurant T8 in Shanghai, both
of which have been recognised in magazine publisher Condé
Nast's annual 'Top 50 Hottest Places in the World' list.
"Guanxi, for me, has nothing to do with anything cash-related,"
he says. "It's about building relationships."
Baker goes out of his way to initiate relationships with
relevant officials in the myriad local and regional government
departments that apply to his business, from labour bureaus to the
tax office, and works hard to keep the lines of communication
open.
He says he has always played by the rules but does sometimes
find it challenging to know exactly what the rules are,
particularly in such a rapidly-changing landscape. Clear answers
can be hard to come by, and regulations sometimes leave plenty of
room for interpretation.
"There are a lot of horror stories out there, but we've had a
great run all the way through. We don't cook books, we don't have
closed doors, everything's open to the government. We don't want to
pay chunky fines."
"They respect people like [Brazilian-American co-owner] Charley
and myself who've done the right thing for ten years."
The 2010 World Expo is running in Shanghai until October 31.
It has attracted more than 28 million visitors since it opened in
May. More information about business opportunities at the Expo and
in China is available at the AustCham Shanghai website: www.austchamshanghai.com.
Source: www.theage.com.au