Saturday, July 17, 2010

So Now What?

Last week, I left for a trip to Guizhou’s countryside. The purpose: to find a compelling story in the region that would entice consumers of organic products in the United States to a buy Guizhou- produced organic tea. The results of the trip are as follows:

a) Guizhou’s countryside is gorgeous (see pictures)
b) The farmers and tea companies are poorly organized
c) The farmers were a bit better off than I expected- while not rich by any means, not entirely destitute either
d) The indigenous minority cultures were not really involved in the tea-growing process (a hopeful CSR angle)
e) The tea is of good quality, with special health attributes (natural Zinc and Selenium), but has little name recognition, even in China
f) The tea companies in the region are more concerned with building market share in China than exporting to the rest of the world.

The conclusion was that there wasn’t a clear cut-and-dry CSR story that I could use to build a brand around. In other words, for Guizhou organic tea to be competitive, it needed to stand mostly on its own merits.

As such, I can’t say I blame the locals for wanting to stay domestic. After all, when considering that the initial investment costs for exporting to a foreign market, from obtaining international certifications to finding a domestic partner, are prohibitively expensive, it makes it highly unlikely that a loosely-organized and resource- poor band of farmers and tea companies could hope to make a dent in the rapidly developing US market.

Nonetheless, I can’t help but feel that the region is missing out on a great opportunity, which would also allow them to also avoid intense domestic competition from the more established Chinese brands from Yunnan, Zhejiang, Guangdong, etc. During my research phase, I found that the market for US tea (dollar-wise) is surprisingly(!) not significantly smaller than that of the China market. While the China market is growing faster than the US market, the US market is still in heavy development mode, with more and more consumers slowly shifting toward healthy products, and knowledge of the health benefits of tea quickly developing.

Therefore, my revised goal is to help the farmers, tea companies, and government to collaborate and form co-operatives in order to achieve a more cohesive market approach. While co-operatives have the advantage of saving on input costs through group purchases, I believe their biggest advantage lies in their ability to devise a unified marketing image and message which it can promote to the masses. The branding of Guizhou tea as a uniquely different, high-quality, great-tasting drink laden with special health attributes will be the key differentiator in whether or not they can export to other markets.

We will see how effective these efforts will be. After all, getting organizations to work together with minimal government interference is difficult in a country whose governing body, for the last 5,000 years or so of history, can loosely be described as ‘hierarchical’ and ‘bureaucratic.’

God help me.

1 comment:

  1. Rob,

    Great blog!
    Hope you are gearing up to be back in AA.
    Thought you might like this article. It's about tea industry in China.

    See you soon!