Recent
food safety scares in China have provided an opening for Singapore food firms
to enter the market, said a top fund manager with mainland experience.
Entrepreneur-turned-investor John Wu said
Chinese consumers are now discussing which brands they can trust.
"All the domestic food companies in China
right now have a credibility crisis. This brings in opportunities for
international brands," he said yesterday.
Mr Wu is the co-founder and chairman of
F&H Fund Management, a private equity group with a presence in Singapore
and China.
He cited the recent food safety scare
involving Mengniu Dairy Group, China's biggest milk producer. The firm found a
carcinogen - aflatoxin - in its milk last month.
As a result, the prices of foreign milk brands
increased significantly because of a shortage, he said.
"This epitomises... the rise of
consumerism in China. The people's income has grown to a certain level. They
are more concerned about food quality, food hygiene and food safety."
In an interview later in Mandarin, Mr Wu said
Chinese consumers no longer trusted domestic brands of milk powder, and would
instead buy foreign brands or those from Hong Kong.
He was speaking at a luncheon at the SAF Yacht
Club yesterday, organised by local firm JR Group Holdings, which makes
"heat-and-serve" meals.
Mr Wu's F&H Fund Management has a S$15
million (US$11.6 million) minority stake in JR Group Holdings, which plans to
expand into China in the near future.
He said that if a Singaporean company wants to
seize the chance to enter the food market in China, it must be able to
guarantee a high level of food quality.
"Branding is very important. A reliable
brand has a lot of value in China," he said.
While firms may fear imitation by competitors,
he said that "if your branding is at such a level that people want to
imitate it, then you're successful".
He added that Singapore firms also could not
completely hand over the reins of their China operations to Chinese business
partners, but need to be "cautious, humble, active and diligent".
Melissa Tan
The Straits Times
Business & Investment Opportunities
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