There is no word for “tomato” in the Chinese language – one of the root words of fān qié means “originating somewhere else” – nor are tomatoes part of the traditional Chinese diet.
Neither obstacle has hindered a surging appetite for tomatoes in China. Not only has China risen to become the world’s largest tomato producer, its domestic demand has opened the door for tomato products exporters, including Thomas’ Utopia, which began expanding into the Chinese market in 2011.
Despite the evident growth opportunity, the move into China brought a unique set of challenges, says Bill Thomas, president and CEO of the Ontario-based tomato processor. “We saw that the market and the country were very different,” he explains, “and understanding both was important for our chances to succeed.”
While Thomas’ Utopia products gained a favourable reputation in North America mainly from meeting stringent organic standards, the label “organic” didn’t have the same pull in China, says Thomas.
He says, in China, where concerns about internal food quality and lack of regulations and control are growing, consumers are first and foremost looking for safe choices. And Canada’s reputation of having a clean environment and high safety standards created an advantage.
But it’s not enough to cater to customers’ sense of safety – their tastes also matter. “We had to adapt our products,” Thomas says. “For tomato sauces, we usually add spices like thyme but for our Chinese products, we substitute it with ingredients that are more traditional, like garlic, onion and ginger.”
Thomas adds that a new strategy came out of the Chinese custom of viewing food as medicine. “It’s been an important marketing aspect to draw on the growing data about the beneficial properties of lycopene, which supports the idea that processed tomato products have anti-cancer properties,” he says.
This kind of learning curve is part of what Sonia Vieira, EDC Advisor for the Agricultural sector, calls “doing your homework.”
“Companies looking to export have to make sure they really understand the export market,” she says. Questions that need to be asked include: Who is your competition? What is the product demand? What are the relevant market trends, cultural differences, regulatory issues, required certifications, etc.?
“There is a lot of legwork to get ready to export to a different country,” she adds. In addition to research, she suggests gathering market intelligence and market testing to help ensure a product’s success.
Strengthening export connections can lay the groundwork for Canadian companies to “take advantage of the growing international opportunities for their products and services,” explains Vieira, who notes that EDC aims to help domestic firms identify prospective partners.
For Thomas’ Utopia, export opportunities play a key role. While a focus on organics helped the company secure a market niche in Canada and certain areas in the U.S., to expand beyond a certain volume, it had to set its “sights a little wider,” Thomas says.
He believes that lessons learned in China will be useful for breaking into another market where a rising emphasis is being placed on high-quality food: Africa.
“We are specifically looking at Nigeria, a country that grows a lot of tomatoes but currently has no facilities for processing them,” he explains. “We see a lot of products of lesser quality going into Africa and know that many consumers want something better.”
Thomas adds that there is a sense that “Africa is what China was 10 years ago” – in other words – a market ready to boom.
While the company has seen proof of demand in Nigeria, it has been challenging to identify partners for building a distribution infrastructure, says Thomas.
EDC also recognizes the difficulty for Canadian companies to find a starting point in emerging markets, says Vieira. To offer support, the organization “leverages 16 international representations around the world with the vast majority in emerging markets” she explains. “Through matchmaking activities, we help make introductions between Canadian exporters and foreign buyers. We also work with financial institutions to ensure that customers can access financial solutions best suited to their needs.”
Access to funding has been another hurdle faced by Thomas’ Utopia in its African pursuits. “If you’re talking to Canadian banks about funding for exports to Africa, they’re pretty much closing the door before you finish your sentence,” says Thomas, who suggests that this leaves companies to find private investors or government funding.
Through an EDC connection, Thomas’ Utopia opened a channel of communication with the World Bank, says Thomas. “Having a partner who knows the risks can cut a lot of agony for Canadian businesses.”
He explains that the World Bank is not only familiar with African markets, it is also keenly interested in helping advance international partnerships that offer jobs and stability to developing nations.
“There is a strong social responsibility aspect to doing business in that part of the world,” Thomas says.
Vieira believes the development aspect is not the only benefit. “The big concern is how to feed the world in 2050 with the world’s population expecting to grow to around nine billion; increasing food production is key,” she notes. “Canada can play a very large role since it is rich in resources.”
Maximizing Canadian food producers’ potential can be part of the solution, Vieira says. “We want to make sure Canadian companies are export ready.”
Export tips from Bill Thomas, Thomas’ Utopia
- Be prepared to adapt. In North America, Thomas’ Utopia products are known for meeting organic food standards. In China, the company leverages Canada’s reputation for food quality and safety. Thomas’ Utopia has also tailored its seasonings to suit Chinese tastes.
- Patience is a virtue. Like others, Bill Thomas believes Africa is a market ready to boom. While the company has seen proof of rising demand, it has encountered challenges including finding partners to help build a distribution infrastructure. Working with EDC and local Canadian Trade Commissioner Services can help build partnerships.
- Find the money. While conventional Canadian lenders were reluctant to help fund Thomas’ Utopia expansion into Africa, EDC helped Bill Thomas connect with the World Bank, which has been supportive.