Taking a crack at China, Russia markets with new products

G. K. Nair Kochi | Updated on April 25, 2011

Dr Retheesh, Managing Director, KSCDC

“If we promoted “India Brand” selling directly to super markets in China that will help to get more realisation and a steady market”.

The Cashew Development Corporation, in a bid to promote branded Indian cashews in non-traditional markets such as China and Russia, is exploring avenues to market them through established channels there.

“We are exploring the potentials to enter into tie-ups with established market leaders in China and Russia and discussions are under way to sort out / remove the bottlenecks in terms of tariff in China and issues related to LCs/payments etc in Russia,” Dr K.A. Retheesh, Managing Director, KSCDC, told Business Line.

He said Vietnam is the main supplier of cashew kernels to China and the former is given preferential treatment being the neighbour. “We could also explore the possibilities of getting duty concession being a member of the new group (Brazil, Russia, India, China and South Africa) “BRICS”, he said.

China and Russia are potential markets for value-added cashew products if promoted through proper marketing channels. “If we promoted “India Brand” selling directly to super markets in China that will help to get more realisation and a steady market”. But, being a government company, he said, the KSCDC can take leadership and establish the market with the help of the Central government. The IIFT, which conducted the study sponsored by the Union Commerce Ministry in both the countries, has also given a positive report, he said.

Chinese market

Dr Retheesh said that from the discussions, he and the Chairman, KSCDC, along with Indian Embassy officials had with Chinese businessmen supermarket operators, they had arrived at the conclusion that “the possibility to sell cashew products in China is very high, but the only thing is that there will be competition from Vietnam”.

However, “in so far as quality is concerned our products have got an upper hand, especially in our value added products”, he said.

Since Vietnam has been exporting cashew kernels to China through cross border trade, there is an advantage on transportation cost. Besides, the cost of production in Vietnam is comparatively low due to high productivity a hectare and low wages. But, “we have an edge over them in marketing the value added products at competitive rates,” he said.

Similarly, officials of major super market chains in Russia have shown interest in branded Indian cashew and value-added products indicating that there is tremendous potential for marketing these products.

According to Mr Rajindar Seth (of Indian origin), Chairman, SREI Business group there, “Russia is a very good market for food items because average Russians spend about 50-60 per cent of the income for food”. It is a good idea to develop a brand in Russia but the problem is that the Supermarket chains operate on credit basis. “If one is operating very carefully, Russia is a good market,” he said.

Cashew is a high priced commodity there and the potential is very high, another supermarket manager pointed out. According to Mr Manoj Jagtian of Melson's group, a major distributor for many companies, including MNCs, such as Nestle, he is interested in distributing the KSCDC brand in Russia provided he is given the exclusive distributorship in Russia. He has more than 10,000 outlets in Moscow as his channel partners and normally he operates on credit for about 90 days, Dr Retheesh said.

Quoting the Indian bankers in Russia, he said, the banking system there is not a developed one and the system of Letter of Credit is not operating in Russia and the banking rates are very high.

He said KSCDC is in the process of initiating steps to enter these non-traditional markets with its value-added products as the potential appears to be good.

Main bottlenecks

However, the two main bottlenecks which have to be tackled are supply on credit and setting up of warehouses, he said. The corporation would be able to meet the demand as it would be processing around 60,000 tonnes of raw nuts, making available 15,000 tonnes of exportable cashew kernels, providing employment for 287 days this year. Besides, it is slowly entering into trading activities so as to enhance its annual income.

Published on April 25, 2011

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