How can small to median sized company entry the China Consumer packed goods industry with cost effective approach and ride the explosion wave of eCommerce growth?

1. E-Commerce Marketing for US
Food Business in China
Mandy Xi
September 2014

2. Executive Summary
To drive online sales through understanding and marketing to the online
The Market
of E-Commerce Space
OBJECTIVE
consumers in China
The Consumers
of E-Commerce Space
The Marketing
through E-Commerce
Channels
Tmall flagship store Online comments insights
2
Aggregate all channels

3. The Market
3
The Market
of E-Commerce Space
The Consumers
of E-Commerce Space
The Market The Consumers The Marketing
The Marketing
through E-Commerce
Channels
Tmall flagship store

4. The China Market Landscape
City GDP
Modern Retailers
2nd
3rd
and more
Online Retailers
1st Tier Cities
4 Cities
16 mn HH
$10,250/HH Income
2nd Tier Cities
23 Cities
38 mn HH
$8,553/HH Income
Modern retailers are strong in big cities, yet they have limited coverage.
Online Retailers is covering the whole China, especially meeting the needs
of the rising middle class in smaller cities.
The Market The Consumers The Marketing
4
Source: Euromonitor / iResearch / JLL
1st
16 mn HH
38 mn HH
236 mn HH

5. The Retailing Channel Projection
Sales Value by Retail Channel
in billion dollars
Online Retailers
Modern Grocery Retailers
Tradition Grocery Retailers
31.39%
4y CAGR
7.61%
4y CAGR
1.04%
4y CAGR
Modern Grocery Retailers
Tradition Grocery Retailers
While Modern Retailers will continue growth as penetrating the market,
Online retailing will grow exponentially
Source: Euromonitor / iResearch
The Market The Consumers The Marketing
Online Retailers
5

6. China Modern Retailing Space
23 Big Grocery Retailer Company Sales Share 2013
3.3%
2.1%
1.6%
1.3%
1.0%
0.5%
0.7%
0.8%
Total Retailer Sales
39.5%
15.5%
The grocery modern retailing space is highly competitive and
fragmented
23 Biggest Grocery Retailers
Other Retailers
6
The Market The Consumers The Marketing Source: Euromonitor

7. China Online Retailing Space
7
Online retailing space is huge and an ever-growing market for
Source: Euromonitor / iResearch / Eguan
300 million
Online Shoppers
$ 7.7 billion
Food and Drink
(2.5%)
$ 1 billion
Imported food
(13%)
$ 307 billion
Total online Sales
(2013)
imported food
The Market The Consumers The Marketing

8. China Online Retailing Space Landscape
Online Retailing Brand Share
45.1%
14.0%
1.6%
1.8%
32.1%
2.0% 3.4%
Tmall
JD
Suning
Yihaodian
Vipshop
Amazon China
Others
B2C
C2C B2B
Tmall
“Alibaba’s IPO… will rank as the largest-ever
technology debut in the United
States.” – Reuters 9/8/2014
8
Tmall is the biggest E-commerce platform for online retailing
Source: Euromonitor The Market The Consumers The Marketing

9. Tmall Overview
Onsite stores
(52,000 Flagship)
 Tmall qualifies Businesses
 Sales heavily driven by festival promotions
 Tmall provides big data services for business
American Cherry Campaign 2013:
2 weeks, 42 cities, 168 tons cherry,
$ 2.5 million sales
Source: Tmall / Ebrun
No.1
Online Retailing
Platform
86,000+
The Market The Consumers The Marketing
9

10. Tmall Flagship Store Example - Pricing
Flagship
Store Price
￥150 ￥198
Flagship Stores cap the wide price range
Having a flagship store on Tmall will allow brands to normalize
the price range
The Market The Consumers The Marketing
10
Lowest Price Highest Price

11. Tmall Flagship Store Example - Messaging
Associate the elements with functions
Scientific facts and health benefits
Build brand story through pillars
Heritage, Taste and Quality
Tmall flagship store is a efficient venue for brand messaging
11
Source:Tmall The Market The Consumers The Marketing

12. The Consumers
12
The Market
of E-Commerce Space
The Consumers
of E-Commerce Space
The Marketing
through E-Commerce
Channels
Online comment insights
The Market The Consumers The Marketing

13. The Online Consumers
E-Commerce
Skeptics
Price
Choppers
34% 26% 24% 16%
Age 15-24 30-40 26-39 >40
Concern about
quality
Sensitive to
price
300
million
Online Shoppers
Since 2010, health has consistently ranked as the 2nd biggest
concerns for Chinese Consumers
E-Commerce
Dependents
High
Potentials
Segmentation
% of Online Shoppers
Preference to online shopping
Income level
Online shopping frequency
Reason buy or not buy Have low
income
Purchase
for family
High
Medium
Low
13
Income
Health
Targeting
Positioning
Tasty Healthy Safe USA Premium
The Market The Consumers The Marketing Source: Nielson China

14. Consumer Insights from Online Comments
Reviews Break Down
97%
Positive
Brand A
Taste
66%
40%
16%
8%
95%
Positive
Brand B
Quality
5% 4% 3% 2%
Value
Taste On Promotion Good Value Good Packaging Authentic/Imported Healthy Fresh Zipper
14
The Market The Consumers The Marketing Source:Tmall / YHD / Womai

15. Key Insights
Value Quality
For Whom?
Kids Other
Family
51% 49%
How to eat?
Taste
15
71% 81% 37%
Consumers love the
Sweet and Sour taste
Consumers are
satisfied with the
current price value
Consumers are
satisfied with the
packaging, especially
with the Zipper
feature
25%
Consumers value the
Authentic US brand
Baking
15%
13%
71%
Sweet and Sour
Too Sweet
Too Sour
19%
81%
Good Value
Expensive
25%
16%
11%
11%
37%
Good Packaging
Authentic/Imported
Fresh
Wet
Zipper
* These are percentages of comments that mentioned about taste, value or quality
The Market The Consumers The Marketing Source:Tmall / YHD / Womai

16. The Market
of E-Commerce Space
The Consumers
of E-Commerce Space
The Marketing
through E-Commerce
Channels
Aggregate all channels
The Marketing
16
The Market The Consumers The Marketing

17. Marketing Strategy Recommendations
PR
Agencies
Offline
Events
Social
Media
Flagship
Store
Online Retailers
The Market The Consumers The Marketing
17
Modern Retailers
 Connecting online and offline
marketing channels
 Use Tmall flagship store as
the venue
 Build synergy between
channels to amplify the
effects
 Drive online and offline sales
 Collaborate with PR agencies
* For more campaign recommendation details please see
page 27-29 in Appendix
Food
Brands

18. 18
Conclusion
For imported food brands looking for opportunities to enter China without big marketing
budget, Tmall as the dominating online real estate is the most cost effient platform for
current and future growth
Tmall with huge online traffic, is a ideal venue for price normalization, brand messaging and
consumer data collection.
To aggregate both online and offline sales and marketing channels will allow building
synergy across channesl and drive real sales

19. The China Consumer Confidence Level
Chinese consumer confidence remains
higher than US Europe and Global Average
The consumers confidence levels of tier 1
to tier 4 cities are converging
Tier 1
cities
Tier 2
cities
Tier 4
cities
Tier 3
cities
19
Appendix I
The Market The Consumers The Marketing Source: Nielson China

20. China Social Media-Weibo Overview
What is Weibo
• Premier social media in China
• 140-Character-post Micro-blog
• 500 million total users and 46 million daily
active users
• Weibo users are interested in Food and Travel
• Weibo users make online purchases through
Weibo links
2013 Attractive Weibo Picture by Category
Travel
Food
Product
Brand Logo
Comics
Movie Star
Animal
Car
Product Effect
Female and Male
Sports
California Almonds
• Engaging KOLs: Nutritionists / Therapists
/ Fashionistas / Food-bloggers
• 21 Days Health Snacking Campaign
• Use QR Code to connect Weibo to
Wechat
2013 Weibo User Make Online Purchase through
Weibo Because:
Ads meets my needs
There is coupon
It’s a trustworthy brand
Good WoM
Friend recommended
Easy Transfer to eCommerce
Lots of comments and retweet
Seen the ad. many times
Celebrity recommended
48.6% Weibo user says they made online purchases through weibo links
Canada Tourism Committee
• Dynamic interface
• Promotional video clips
• Chinese ambassador
• Information condensed posts
• Hosting Hot Topic (Travel Around
Canada)
• QR Code link to Wechat account
20
Appendix II

21. Other Online Marketing Channels
Weibo
Online
Marketing
Wechat
Online
video
ads.
TV
Health
Program
SEO
Appendix II
To expand the scope of online marketing in China
3 Major Information Source
for Online Purchases
Social Media
21
52%
42%
Search Engine Specialty
Website
Social Network Usage
Weibo
Wechat
36%
60%
50%
40%
30%
20%
10%
0%
The Market The Consumers The Marketing Source: Nielson China / iResearch

22. Food and Drink Online Purchase Data
2013 Food Online Purchase by Category
Imported food
Rice and Oil
Snack
Food related goods
Fresh
Bakery
Local specialty food
Juice
Spice
Instant Drink
Dairy
Instant Food
Liquor
Kitchen Appliance
Pregnancy/baby product
Dry Food
Organic Food
Tea Leaves
Healthy Food
Source: Nielson Online Purchase Behavior Research Report
www.eguan.cn/download/zt.php?tid=1973
Avg. Online Purchase Frequency by Category (per
year)
Maternal and Child Products
Drink/Packaged Foods/
Health Products
Apparel/Shoes/Accessories
Travel/Virtual/Services
Cosmetics/Personal Care
Household Products
Appliances/Mobile Phone
/Digital Products
Book/DVD/Video
22
Appendix III