Russian Products Need to be Made More Recognizable in East Asian Markets

1 july 2016

Exports of Russian unprocessed and processed agricultural products to East Asian markets is a most relevant topic today, noted the Head of the Department for International Cooperation of the Analytical Center Denis Ershov, opening a seminar where foreign trade experts and practitioners discussed the prospects of exports to China and Vietnam. “For some categories of goods we have reached saturation in the domestic market and exports may become the main driver in the development of the agricultural sector. In addition, we are currently seeing East Asian countries beginning to remove trade barriers and opening up their markets,” the expert said.

Mr. Ershov noted that at the end of last year when China opened their market for several types of grain, Russia got a chance to become the main supplier of grain to China, grabbing a market share from the US and Canada. Fish and sea foods are a promising type of product for the Chinese market and there is also hope that negotiations about meat exports will be successful. As for Vietnam, the main driver in that market is the rising demand of the emergent Vietnamese middle class and the free trade agreement that should go into full effect at the end of this year. In addition, the expert noted that for some categories of goods zero tariff rates will apply.

The managing director for the implementation of priority projects of the Russian Export Center Mikhail Mamonov believes that today the East Asian markets hold the most promise. “First of all, the middle class is expanding there, and the purchasing power of households is on the rise,” the expert said.  “Secondly, the relative depreciation of the ruble makes our goods more competitive in markets outside Russia. Thirdly, consumers are getting very much interested in quality and environmentally clean goods, especially when it comes to groceries and Russia can easily offer very competitive options in this department and thus we can carve out a good niche for ourselves.

“We cannot really seriously compete with anyone if the Chinese consumers simply have never heard of our products."

Mikhail Mamonov

Russian Export Center

To increase sales of Russian groceries in China and Vietnam the Russian Exports Center plans to hold 3 groups of events this year. They are planning to create a Russian national pavilion at the largest trading venue Tmall Global owned by Alibaba Group. Then Russian groceries are going to be promoted through offline events involving B2B meetings between Russian producers and exports, on the one hand, and the largest Asian wholesalers and retailers, on the other. The third area that efforts will be going into is recognizability of Russian goods abroad. “We cannot really seriously compete with anyone if the Chinese consumers simply have never heard of our products. So now we are working on a project to create a single umbrella brand for all Russian products and then promote it in the new Chinese media and social media networks,” Mr. Mamonov explained.

The Head of Strategic Marketing at "Cherkizovo" Group Andrey Dalnov has a similar opinion. “We do not know much abut our Chinese consumers so it is a tall order to make products that will enjoy demand there,” he admitted. It is important to appreciate the tastes of the target audience and to know what combinations of colors and numbers are most attractive to them and this is where state support is needed, without which exports are impossible, Mr. Dalnov is sure. “We want for the efforts to open up foreign markets for us to continue as well as efforts to provide information and analytical support and to develop import infrastructure,” he said.

“We want for the efforts to open up foreign markets for us to continue as well as efforts to provide information and analytical support and to develop import infrastructure.”

Andrey Dalnov

"Cherkizovo"

During the discussion, the experts noted that strict sanitary standards restrict access to the largest markets, such as the meat market, for Russian products. No Russian company is certified to export meat to China and yet these companies have dozens of competitors, specialists point out and suggest introducing stricter sanitary standards in Russia to make them compatible with East Asian sanitary standards so our companies can offer their products in East Asia without having to make any extra efforts to get certification.

The seminar also looked at the logistical capabilities and transport routes for delivering products to China and Vietnam, customs clearance issues, product certification and veterinary supervision. Special attention was devoted to accessing the Chinese market via online platforms.

Program