Healthy Imports News and Information

A Wholly Foreign-Owned Enterprise (WFOE) is a common investment vehicle for mainland China based business. The unique feature of a WFOE is that involvement of a mainland Chinese investor is not required, unlike most other investment vehicles. WFOE's are limited-liability corporations organized by foreign nationals and capitalized with foreign funds. This can give greater control over the business venture in mainland China and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner. Such problems often include profit not being maximized, leakage of the foreign firm's intellectual property and the potential for joint venture partners to set up in competition against the foreign firm.

WFOE's are often used to produce the foreign firm's product in mainland China for later export to a foreign country, often through the use of Export Processing Zones which allow the importation of components duty free into China, to then be added to Chinese made components and the finished product then re-exported. An additional advantage with this model is the ability to claim back VAT on the Chinese manufactured component parts upon export.

WFOE's now have the right to distribute their products in mainland China.

Another recent variant (the Foreign Invested Commercial Enterprise FICE) of the WFOE has also come into effect, and are used mainly for trading and buying and selling in China. The registered capital requirements for a FICE are lower than for a WFOE as the FICE does not need to fund plant and machinery acquisitions.

WFOEs are among the most popular corporate models for non-PRC investors due to their versatility and unique advantages.

Such advantages include:

the ability to uphold a company's global strategy free from interference by Chinese partners (as may occur in the case of joint ventures )
total management control within the limitations of the laws of the PRC
the ability to both receive and remit RMB to the parent company overseas
increased protection of trademarks and intellectual property, in accordance with international law
shareholder liability limited to original investment
easier to terminate than an Equity Joint Venture
simpler establishment than a Joint Venture

The disadvantages of establishing a WFOE include the inability to engage in certain business activities and limited access to government support. It is important to note that regional differences in regulations in China can also apply.

Everything You Ought To Know About the China Beverage Market

The beverage market in China has greatly changed and developed in the last few decades. By looking at it's history we can gain a better understanding of how China has become home to one of the world’s most diverse beverage markets. This kind of knowledge is essential for any import company in China.

From the late 1970's to the mid 1990's, the Chinese beverage market was dominated by the fizzy drinks giants including Pepsi and of course Coca-cola. From 1996 until 2000 the influence of bottled water brands such as Robust, Wahaha and Nongfushangquan also quickly grew in importance.

The rate of growth in the number of players in the dynamic Chinese beverage market continued into 2001 with the immense popularity of Master Kong’s tea. Then the following year the various fruit juice drinks entered the market.

Consumer preferences have vastly changed over time and it is more difficult than ever for a new unknown product to successfully enter the beverage market.

Bottled Water

For example the bottled water segment is shared almost exclusively by the following six major brands:

- Nongfu Spring

- Master Kong

- Wahaha

- Uni-president

- Robust

- Nestle

In 2012 there was an increase of over 16% in the consumption of bottled water from the previous year up to an astounding 55.627 million tons. Despite this increase other less established brands don’t have much opportunity to find some market share in this particular market segment. But with the right product and appealing marketing an import company does have the opportunity to introduce something new into China.

Gas Drinks

This is a smaller market compared to water and has shown less growth. In 2009 gas beverages accounted for around 12.5 million tons of the beverages produced. Growth in this category is starting to shown signs of decrease especially because of changes in consumer habits.

Many people inChina are looking for healthier beverage options, which will mean soft drinks will eventually lose ground to more healthy alternative drinks. This will most likely take a long time, as soft drinks are still very popular especially with younger people.

Fruit Juice

Both fruit and vegetable juice is enjoying a rapid increase growth thanks to our fascination with healthier products. Many are predicting it reach 160 billion Yuan by 2015. These lofty figures are quite possible as more important companies in China shift to fruit beverages.

The current known statistics are quite interesting. In 2012 the volume of fruit and vegetable juice production rose by more than 16% from the 2011 figures to over 22.2 million tons.

Other Beverages

- Tea. There is a massive amount of variety amongst tea beverages with tens of thousands of brands vying for your attention. Though, the market leader is still Master Kong which in 2010 held about 50% of the market.

- Milk. This is hardly a new product type, but it has enjoyed more recent success because of an increase in Chinese middle class numbers. Robust and Wahaha are the biggest brands in milk beverages with a popular line of products aimed mainly at children.

The Future of Beverages in China

Until now the only notable categories have been water, soft drinks, fruit and vegetable juices and tea. But things are set to change with many new product types which have a great potential for future growth.

These new product categories include sports drinks, energy drinks and protein drinks. Gatorade and Mizone are leading the charge with in the sport drink section. The Red Bull and Lipovitan brands are the big players in energy drinks. Vegetable protein drinks are being heavily pushed by brands such as Wong Lo Kat and Jiaduobao.

As gas beverages continue to fall in overall market share, it is expected that healthier options will become a permanent part of the mainstream market. Analysts are predicting a steady growth of 8% in the China beverage market, which is in fact greater than the GDP growth inChina.

No matter which category or brand takes the lead in the future, it is clear that the increase in the size of the beverage market in China won’t be stopping any time soon.