Chief talk: While the Global Economy Facing Huge Challenges, How Could the Food Industry Maintain High-Volume Growth? ——plenary | Moderator: Leo Xie, Regional President APAC, DSM Food Specialties; Guest: Aalt Dijkhuizen, President, Dutch Topsector Agri & Food; Former President, Wageningen University Stephen Maher, President, Mondelez China Zhou Li, Secretary of the Board, Ph.D, Nongfu Spring David Wang, CEO, Mercury Holding Co., Ltd

1. Chief talk: While the Global Economy Facing Huge Challenges, How
Could the Food Industry Maintain High-Volume Growth?
——plenary | Moderator: Leo Xie, Regional President APAC, DSM Food
Specialties;
Guest: Aalt Dijkhuizen, President, Dutch Topsector Agri & Food; Former
President, Wageningen University
Stephen Maher, President, Mondelez China
Zhou Li, Secretary of the Board, Ph.D, Nongfu Spring
David Wang, CEO, Mercury Holding Co., Ltd
Leo Xie:
Over the past year, it has revealed an unstable environment. There were
some discussions about whether keeping globalized or turning to be

2. trade protectionism, which can lead to isolationism in the whole world.
Besides, diverse innovations in the field of science and technology,
including Internet plus, genetic engineering, artificial intelligence have
kept emerging. And meanwhile, in the capital market, the competition
among big companies has been even fiercer. From China’s point of view,
last year we had lots of milestones in our country’s history. For example:
the 2016 G20 Hangzhou Summit, and this year President Xi Jinping
delivered a keynote speech in Davos, Switzerland Summit. If we look at
the world from China’s point of view, we can find there are many
complicated feelings, so in this context, let’s start today’s discussion.
Aalt Dijkhuizen, in your opinion, where is the world economy headed?
And what is the influence on our food industry?
Aalt Dijkhuizen: The globalization will continue. Ten years ago, who
predicted that one day China can promote the globalization, and
America shifts its ground to be against globalization? So there is no
doubt that time and politics are variable. Through the various consumers,
we can find an obvious tendency of globalization, and what’s more, the
e-business also increases the speed of it. And now food industry has
already become very global. Like Netherlands, 70 percentage of food is
exported to other countries and it becomes the second-biggest
agricultural exporter, which makes Netherlands more and more global. In

3. the short term, the globalization can meet some sensitive obstacles and
even have to stop steps, but finally people will realize that the cease of
globalization brings about a huge loss, and at that time there is no
winner in any side. Therefore, in the long term, the globalization will
continue even if it’s not a smooth way in a short period. The pace of
globalization may be limited in a short time, but food industry is possible
to push the globalization and gain benefits from it.
Leo Xie: It always seems difficult to resolve conflicts between the
long-term benefits and the short-term pain-suppressing. And what do
them mean for food industry?
Zhou Li: I’d like to talk about another side, consumption upgrade. In the
past three years, the development of upgrade in the consumer market is
fast, and under the influence, some companies might suffer from stress,
and others might gain benefits. For us, however, we still benefit a lot
from consumers.
As a local brand, Nongfu Spring had a high market share in the frontline
market, but the rank of global market share has rushed to the first recent
years. 15 years ago, the sales volume of our bottled water was first one in
Shanghai, but it took us almost 5 years to rank first in the whole country.

4. Due to the new environment, the way of consumers to get information
becomes more and more easy and accessible. So in the long term, we
catch a good time to improve our companies, but in the short term it
may be an extremely painful process. Anyway, we can be beneficiaries
ultimately.
Besides, there are some issues about consumer demand and how to
satisfy it. Now we discuss the Internet plus and when it comes to then
new retail, it is absolutely true that consumers ‘demand becomes
higher and more individual. With the example of a traditional Chinese
medicine, the reason why lots of people are willing to visit old TCM
doctors, who seem more experienced, is that according to the theory of
traditional Chinese medicine, the treatment plan is aimed at personal.
Taking the example to expand we realize that the individual demand also
involves health product and functional beverages. With the development
of Internet and convenient technologies, it helps us acquire more data
about consumer more easily, and thanks to the information, it is not
difficult for us to respond new changes. Well, it also puts forward higher
requirements on performance, flexible manufacture and rapid response
of products.
What’s more, since the production of beverage is a really standardize

5. and highly intensive procedure, how to face the new change is still a
great challenge, but our company can give consumers surprise.
Consumers ‘demands are apparent to juice, tea and water, and they like
high quality, healthy and interesting products, rather than catering to the
individual. As an experienced company in food industry, we are capable
to bring surprises to consumers, and that surprise can make people
would love to share. In the Internet era, we want to share with others and
one consumer can share the pleasant feeling the product given with
numerous people, so our business is doing quite well.
Leo Xie: Steven, as a representative of an international brand, do you
think there are some new innovations between the international brand
and the local brand?
Stephen Maher: In the 1990s, the international products were obviously
different from Chinese’s. But in the last 20 years, the difference has
become more and more narrow.
A successful product in Yili Group is Greek yogurt introduced from
Europe, Ambrosial, whose sales increase fastest. Plus, some Chinese
companies have successfully introduced their products overseas. Due to
the global idea, the globalization can continue. And meanwhile, it is true

6. that product innovations will happen and promote the global
development of fast moving consumer goods.
Leo Xie: David, how do you find Chinese local brands go forward to the
world?
David Wang: “Mercury Holding” is our company’s name decided
ultimately in 2015. However, 27 years ago, since 1990 we have started
concentrating on the production of a traditional European food, foie gras.
Quality is a true purpose to an enterprise, and quality is perseverance.
We have persevered with only one European traditional food for 27 years.
In fact it is not easy in China, but we hope that we can make Chinese
brand solve the relationships between brand and well-known brand in
the whole world. I want to tell Chinese companies, especially those
companies making foie gras there is no relationship between quality and
price of product.
Leo Xie: What is the relationship between brand and quality? How can we
balance the quality and the price based on mass production?
Stephen Maher: About 30 years ago, many foreign companies entered
Chinese market, because they believed that European and American

7. products can satisfy Chinese demand for consumer goods and help
them gain China’s market. In this way, the model of Chinese enterprises
going forward to overseas markets is the same as those multinational
corporations entering Chinese market. All the companies should expand
their domestic market and then turn out to the foreign market. So it not
only depends on a mass production with a low price, but also needs the
low price still to make a big profit. Under the globalization, as a fast
moving consumer goods company, we must invest in Latin American and
European markets. Investment needs capital, and actually expanding the
markets in developing countries relies on the capital from domestic,
European and American markets as a subsidy. In the Chinese market,
since the growth of price influences profits apparently, we have to make
profits from mass production with a low price. Besides, there is a great
advantage in the Chinese market that lots of people want to work in
China. Therefore, I suggested some Chinese companies that you‘d
better employ those foreigners who can speak Chinese and come from
the countries you want to enter, and let them join and know your
companies.
Leo Xie: Aalt Dijkhuizen, you mentioned “less input, more output” in
the high-end agriculture and food industry. What is “less input, more
output”? How to achieve it?

8. Aalt Dijkhuizen: On the one hand, the development of the global market
makes the demand for food increase, so the production of food must go
up, which may increase 40% to 70% compared with present production.
Thus, it is necessary to adopt “less input, more output”. In innovation,
we must consider that how to achieve “less input, more output”. The
key to success for a food company is management, which depends on
two points: people and skills. It’s an intelligent and information era that
by employing advanced skills abundant opportunities help us make
“less input, more output” comes true, which can be a quantization of
achievement.
On the other hand, our requirements of food are increasing too. For
some kinds of food or markets, if the production was bigger, elasticity of
price might so flexible that as long as the production rises, the price will
fall. However, if people’s demand for high-quality food was higher, the
price could be up. Therefore, the principle of “less input, more output”
can be achieved in the aspect of quality.
Leo Xie: Is it “less input, more coverage” that Dutch products appear
on the Chinese e-commerce platform?

9. Aalt Dijkhuizen: New consumers are very international, and they can buy
various products from the entire world. Chinese e-commerce platforms
like Alibaba and others are good enough, and they really do something
to improve the world that by e-commerce platform global goods can
serve consumers, and Chinese products can also enter European and
American markets. It is “global procurement, global consumption”.
Leo Xie: What change can be brought by new normal, new retail and
other new ways?
Zhou Li: The new way can bring about greater opportunities to the food
industry. There were distinct differences respectively between the 3rd and
the 4th tier markets, and between the 2nd and the 3rd tier markets, which
made serious barriers. However, since the way becomes more and more
accessible, the spread of products will be offered a bigger opportunity.
Likewise, through Internet and WeChat, the spread of information also
becomes extremely easy. In addition, globalization is also interesting. 20
years ago, globalization was the purchase of equipment, which was the
best from German and Japan. Now, globalization is utilizing the best
resource in the world, like buying cherry from Brazil, and buying all kinds
of fruit from the world. Then globalization is also a tendency of talents
globalization, which allows us to employ the best designer in the world.

10. Plus, globalization establishes global standard. It means that there isn’t
a domestic advanced level or the first one of China, but an international
advanced level or the first one in the world.
Sure, by the way of these new ideas, limited by varieties of food there are
still many barriers in the process of Chinese products ‘going out.
Fortunately, our domestic market has its own advantages that are able to
cultivate lots of local brands, which can rely on the large domestic market
to establish their brands and accumulate experience about the whole
field. Therefore, in some aspects, China’s local brands have already
arrived at international advanced level. Taking the manufacture of water
bottles as an example, our technological level is higher than many
countries, and the export of our water bottle is an important approach to
going forward the world.
Leo Xie: Either being a global leader or nobody. “New” is basement of
innovation, something new exists every time. So how can we consider
the rising middle class market or millennial generation?
David Wang: In China, the generation after 60s is a linkage people
between the preceding and the following, who experienced the hard
time, knows what to do and plans the feature. But when it comes to

11. quality of product, there is no distinction among people born in different
periods. Regardless of the various groups of age, the quality of products
is in the first place in China’s food industry, but every generation has
doubts on food consumption, and I hope this phenomenon can get less
and less.
Stephen Maher: The biggest problem is that our decisions are based on
the field where we have invested money. As managers in 20th century,
they hope that both old and young generations can buy their products.
We still stay in the old offline channels to do business, but now we enter
the digital age, which refers to not only the digital but also the moving. If
there is no mobile platform, we cannot communicate with consumers. So
if we want a fixed position in the emerging economies, we will have to
achieve the mobile sales.
In the last 40 years, two generations leading FMCG sector and
multinational corporations were Americans and Europeans, but the next
generation is Chinese people and that is a really great opportunity. There
is no doubt that China will export more and more fast moving consumer
goods. For China, globalization is not only the export of product, but also
the export of consumption, product and creativity. Now in China these
new changes are emerging. In our country, the character of Tencent and

12. Alibaba is the same as the internationally well-known Facebook and Link.
But Tencent and Alibaba put social media and e-commerce together
successfully, which two models are relatively isolated in foreign
companies. Because of the combination, which is arranged to be an
ecosystem it is possible for Alibabab to become the third or fourth
largest economy in the world. As long as we achieve the globalization,
there will be two billion online shoppers in Alibaba’s e-commerce
platform. Nowadays, the challenge in multinational corporations is that
we didn’t understand the millennial generation completely.
Aalt Dijkhuizen: There is a big chance in China. In food industry, China
has a rapid development. I appreciate the millennial generation and
treasure them and new skills. I want to make sure that I will do my best to
establish a new relationship with the millennial generation, since we
need each other. And I also believe that with them we can be more
successful in the food industry in the future.
Leo Xie: Please every guest sends a message about innovation.
Zhou Li: Recently, it seems that Chinese consumer market meets some
temporary difficulties, but we should always be with confidence that
China’s market is potential, and don’t be worried.

13. David Wang: Quality is a benchmark for all kinds of consumption. The
continuous improvement of quality is a real innovation, which means to
change and adapt to market, but the most important is that form can be
changed while the demand for quality never change.