The Way to a Consumer's Heart is Through the Stomach

2/8/2010 - American companies such as Smucker's Corporation have been importing produce from China for many years.  Over the past 15 that David Sutherland has been in China he has seen the quality of produce increase, as well as domestic demand for quality goods.




TCBN: Greetings everyone. I’m Michael McCune, and this is The China Business Network.

An engineer armed with an MBA and a few decades of work experience, David Sutherland has been working with Chinese suppliers of food and food packaging for over 15 years. With quality always top of mind, he spends a significant amount of his time on site with farms and growers to help them develop and deliver products that meet his clients’ quality & safety standards.

Thanks for having the time to speak with us today, David.

SUTHERLAND: My pleasure, Michael.

TCBN: So David, prior to coming to China, I know you worked at P&G on manufacturing processes and layer oversaw all Smucker’s quality product in US - two companies that take initiative seriously. Can you take us back first impressions moving to China in early 1990s and what state of affairs you found there and compare to China to what you were coming from in US?

SUTHERLAND: When I moved to China full time I was sent here by the Smucker company. And as you noted, prior to relocating here I worked from their corporate headquarters in Ohio where I was the director of corporate quality assurance. So it was January of 1994, so I just passed my 16th anniversary here.

Certainly looking back at 1994, one could see two things: tremendous opportunities potential, but a great deal of very hard work needed to be done to lift the standard, certainly going back to product quality. How do you lift those standards to match international expectations from what had been acceptable and the approach prior to that? That would be sum it up in one line: great potential but long road and lot of hard work was going to be necessary to get there.

TCBN: Let’s focus in a little bit on the farms and processing facilities that you visited on so many occasions. Can you share with us specifics about the type of quality evolution you’ve witnessed?

SUTHERLAND: It’s been, again, just tremendous seeing the transformation. First going in started with the farm at the agricultural level, getting that awareness that say, strawberries, working for Smuckers. A strawberry’s not just a strawberry. There are so many different varietals involved, all with unique flavor color profiles, and getting ones that are going to be at a higher lever. Very intricate work to first convince the farmers to change what they have been doing for the past 50 years or even longer – to get them to think in a different way, to try different things. Also, there’s just the challenge of agriculture worldwide, when you take a varietal and you move it around the world, it doesn’t always perform the same. Something that thrives in California may struggle in South America or Europe, or in China. You’ve got to adapt and be flexible with your growing process and growing conditions. But it takes time, and patience is really critical to getting anything done. Nothing happens immediately. Certainly when you deal with agricultural you’re dealing with 4-year cycles: you plant a test crop, you wait for the harvest. If you need to make changes, another year goes by.

Really good response, really good receptiveness to working with that. When it changes you can show people - yes this works, yes you will have a better quality product, and you as a farmer will make more money is met with tremendous enthusiasm and support. Then taking that up next level with factories, doing the same thing with them - getting them to change fixed practices and getting them to work with new ideas and procedures.

TCBN: When you look at these farms and factories, in particular I’m curious from a farm perspective, after all the time it takes to go through testing and evaluation, multiple seasons going by, once something is proven, is the adoption rate quite rapid? Or are there even issues in terms of trying to roll out something that’s been proven across multiple growers?

SUTHERLAND: No, the adoption rate is explosive. Once you’ve got a proven track record – when you put in a test plot of whatever the crop is (fruit, vegetable, orchards) – once you can demonstrate that it is going to deliver superior quality, superior financial returns to the farmer, the adoption rate is almost instant.

There is very, very strong support from the government, the agricultural bureau of the government and local agencies. It’s critical when doing these sort of things to have them intimately involved from Day 1. To see what you’re doing and be supportive of that because they’re going to be the key people to disseminate that information across a broad region. So once you’ve got something really working in the marketplace, it’ll just explode.

TCBN: Now does that work in the opposite direction? I know that in your time with suppliers over the years they certainly had their set of setbacks as we’ve seen different types of quality issues appear in the food chain in China. A lot of domestic international news reports on this. How do you see them responding to those food safety issues?

SUTHERLAND: That’s been … certainly just in the last few years here we’ve had a string of high profile, very serious contamination issues. There were some very, very serious results, particularly here in the domestic China market. The melamine in milk products, particularly going to children’s formula was particularly devastating. And of course, it ruins the image for the entire country. There are bad producers all over the world. In any market you’ve got shady operators who are going to cut corners, all about trying to make money than do things. It’s those few players, few operators, that destroy the reputations for everyone else. I work with very high quality, world class operators. They have state of the art facilities, good management now that study, work hard, listen. For them it’s been tough. It’s cost them business, cost them markets. But they know that they’ve got to work hard to regain the trust.

Oddly enough, I think, this is a phase China needed to go through. It’s the US back in the early 20th century when there were some horrific food safety scandals in the US that brought forth the birth of the FDA and food safety standards. That’s China now – is to really strengthen and really implement hard food safety standards. A real positive element, what’s really driving this, is not so much the international community, it’s the domestic consumer in China. They’re not going to put up with this. There was an attitude before: top quality product got exported. And so what left the country by in large very good stuff. And things that were substandard got dumped into the domestic market. Now the consumer here just won’t accept that anymore. They’re forcing and demanding change, and it is going to push these poor operators out of business. The net result will be better for everybody – better for the China consumer, better for international customers.

TCBN: looking out, is there new ingredients or new varietals on the horizon that are about to hit that adoption curve we talked about before, that we should look for coming from China, that we maybe didn’t think to source before?

SUTHERLAND: There’s some great things happening. There’s two unique things happening in the China market. On the one hand, a lot of products focusing on export trade are now increasingly the focus is on domestic market. China domestic market is obviously huge. Now there’s a lot of money here, and consumers have the resources and the interest to try many things. Raspberries, for instance -raspberries were planted solely as an export crop, but now they are moving equally into the domestic market. People are trying those. Blueberries is another one, staying in the fruit category.

A lot of nuts - there are some huge, huge developments going on out in Xinjiang province out in far west that I think are going to have impact pistachios, walnuts, almonds. Particularly pistachios – pistachios are California, but California’s been gold standard. California will remain gold standard on those products but at a premium price. I think China’s going to move in and really carve out a space. It takes up to seven years to have these have this in place, but China’s a very patient country. They’re not always looking for that immediate return and gratification. They’ve been working hard on it and it’s really close to hitting the market. When it does, the volume is just going to explode exponentially year by year.

TCBN: Wow. As we’ve learned for most sectors always explosive change in dynamism in all markets, and nothing closer to ourselves than food. We look forward to opportunities to check back in with you in the future, Dave, to catch up on new developments as they arise in the China Food and Ag sector.

SUTHERLAND: I look forward to it, Michael. As always, it’s good to talk to you

TCBN: Thanks for being with us, Dave. Take Care

SUTHERLAND: Thank you. 



Over a 30 year career in the FMCG business, David Sutherland has acquired a full range. Full range of work experiences including brand/business development, marketing, distribution, operations management, quality assurance, logistics, procurement/sourcing, and JV/contract packer negotiation and management. For the last 16 years, he has lived China where he has spent significant time in the fields and farms across the PRC working on quality food and food ingredient production. He can be reached at dsuth@netvigator.com.