Department of Internal Affairs Conference Opening Doors to China • China will soon be NZ’s biggest trading partner. • China has an insatiable demand for NZ Dairy products. • Infant Formula, Milk commodities and ingredients are critical for NZ exports. • Yogurt demand is growing rapidly 23% YOY (off a relatively small base). • Yakult success has fueled probiotic demand. • Drinking yogurt outsells spoonable yogurt 2 : 1. • Local yogurt is generally low quality (runny/sweet). • Little or no imported yogurt due to weight / cost / expiry. • Demand for probiotics, protein, calcium and taste is high. • Easiyo has been selling in china for 4-5 years. • There are 450 illegal Easiyo web sites now! • Initially Easiyo had an “exclusivity” model. • One Distributor for one country – exclusive. • But for China, it is too big and complex. • Sales were slow, although easy to manage. • Milestones were either not set or not met. • The Exclusivity model was adopted to; • Several non exclusive distributors for China/ SE Asia. • However infighting rampant over pricing + territory. • Web specials are too transparent, lots of grief! • Supervision and admin costs increased to referee fights. • This model was further adapted in 2011/12. • The new model we call the OEM matrix. • Early days so far but we are happy with progress. • Sales have increased 2-3 x with less supervision. • Distributors are happy as rules are clear. • Cash in advance, NZ $, FOB, TT or L/C, we manage export documents. • Minimum 20ft FCL. • So what is the OEM matrix? OEM China Matrix City Province Shanghai Lushen Beijing Guangzhou Tricom Shanzen Henan Lushen Foods So Chuan Zhengjiang Liao Ning Baby Supermarket Internet TV Home Shopping Pharmacy HFS Cookware Independent s Other Rules we have insisted on; • One square at a time e.g.: Shenzen/ Grocery. • RRP’s encouraged at similar price e.g.: “RMB 60/sachet. • Currently One Easiyo Branded Distributor although…. • Exclusivity contract expires in 2013. • All other squares are OEM. • OEM is unbranded Easiyo sachets and maker. • Square “owner” does own branding / design in China. • Design approved by Easiyo before stock made. • Square owner investing in their brand not ours. • Easiyo gets cash up front, milk volume, capacity. • Also helps with make at home awareness in China. • If square owner is troublesome we can stop supply. • Easiyo control the IP as Westland Milk key specs. • So far 4-5 squares occupied with 4.5 WIP. • We only allow one owner per square. • Most popular squares will go first. Summary • Easiyo has found this matrix works. • It is not the long term goal as not brand focused. • However in china for next 2-3 years is working as we build a war chest for Easiyo brand investment. • Other companies could adopt part of this model for themselves? • Thanks for listening, Good Luck with your Door to China!