Interview 1: Wheat Flour Business

Interview 1: Wheat Flour Business

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It is hard to summarize the work of comprehensive trading companies. It is not only because of its wide range of industries but also its worldwide career variety. It is involved in a variety of work from worldwide business such as international trade of natural resources to the supply of daily necessities. However, being different from the retail and service industry, generally speaking, the name of the comprehensive trading company is rarely known by the ordinary consumers. The comprehensive trading company is the driving force to smooth the world economy, and it makes our lives more prosperous. Therefore, it is the comprehensive trading company that is closely related to a variety of "value chain".

Let's take the food business of Sumitomo for an example and have a look at it. The major commodities in the world market are "Philippine bananas", "U.S. pork" and "Australian grain", etc. And a lot of bananas has been imported to China. Moreover, it combines and expands the business of producer and consumer at home. It is the work of integrated trading company to make the commodities smoothly flow from the producer (upstream) to retail and dining table (downstream) as well as stably providing quality goods at the right price.

In order to deepen our understanding, we'd like to trace from the flour from Sumitomo Qingdao Co., Ltd. (later referred to as Sumitomo Qingdao) to the "upstream".

1.Reaction from stores

Reaction from storesTESCO Guangxin store in Shanghai (later referred to as Tesco). There is a private-brand product put in the food corner named as "TESCO special first-class wheat flour"(hereinafter referred to as PB products). And this is a new TESCO PB product, which has drawn people's spotlight and expectations.

According to Miss Wang,who is in charge of purchasing department of Shanghai Tesco logistics co., LTD., "what we care about most is the quality of the goods. They have stable quality, and are from a flour factory invested by a Japanese company, laying a good impression as "safety and reliability" on consumers. It is TESCO provision that given the same goods, those produced by the joint venture should be given priority to be selected. Although it is not highly popular as a new product, it sells quite well. According to some of the consumers, "the quality of the goods is very stable, as well as the color and taste. We are assured of the goods from a joint venture corporation."

On the front right of the back of the product is written "Supervised by TESCO," "Manufacturer: Qingdao Xinghua Cereal Oil & Foodstuff Co. Ltd(hereinafter referred to as Qingdao Xinghua) ", but the name of Sumitomo can not be found. It might suggest that it has no relationship with Sumitomo, but this product is actually closely related to Sumitomo. The foodstuff branch as well as its employees is engaged in maintaining the relationship.

2.Cooperation with business partners

Cooperation with business partnersDirector Yongjie Li from North China Food Business Section has been a member of Qingdao Sumitomo since 2003. He is engaged in flour career including the "TESCO special first-class wheat flour" mentioned above. In order to develop the product, Qingdao Xinghua Cereal Oil & Foodstuff CO., LTD (later referred to as Qingdao Xinghua) is an indispensable business partner in the process of conducting flour business.

Set up in 1986, as a joint venture, Qingdao Xinghua is a large company in the industry. With help from its Singapore joint venture partner, the company enjoys high-tech ability. Moreover, the company does run successfully through all kinds of efforts in order to achieve a stable raw material deployment. It is among the most excellent companies in Shandong province, with its high profits entering in the top 10 list in domestic market.

Since 2008, Sumitomo Corporation injected capital to Qingdao Xinghua. Thus the work of Director Li has changed a lot. With greater expectations and responsibility, he is on the way to meet new challenges.

The new challenges are the development, production and sales of high-level commodity to meet the needs of high-end market. The first step is to start the supply of flour for "advanced bakeries". The "advanced bakeries" market is a national market with Shanghai as its center. In recent years, with the diversification of food culture, "advanced bakeries" market enjoys significantly development. The demand of baking businesses is growing when bakers hope for high-quality delicious bread. Equipments and technology have been improved significantly. On the other hand, the decisive factor is "to ensure high-quality bakery materials".

Cooperation with business partnersFor a very long time, Qingdao Xinghua has been committed into this subject and has realized stable supply of quality goods. In Jiaonan city, Qingdao, it owns extremely high market share. The excellent performance is the company's great advantage, but at the same time Director Li sees the disturbing aspect.

Strong competitiveness is good, but once we become satisfied with the existing state, we will response slower to our competition activity and the change in business strategy of large customers. Moreover, it is more easily caught up by newcomer enterprises and involved in price competition. At that time, with good performance, Qingdao Xinghua only waited for customers' orders before delivery. And this kind of situation is compelling as the sale is waiting for the order. Director Li feel a sense of crisis at that time. "Now there is no competition. But seeing the company in good condition, the other companies will learn from us and try to exceeds us rather than doing nothing and being silent all the time." However, it is difficult to make comments on a well-performed company..."

Facing with this problem, Director Li immediately took action to improve performance. Director Li recalled the hard time that leading the cooperation with Qingdao Xinghua to success. "Improvement in performance is the most persuasive reason. As long as Sumitomo Qingdao improves its performance each month, Qingdao Xinghua won't sit by. The nice thing is that they spontaneously put forward questions like "how to do? ". Then, we illustrate the importance of expanding market, customer-centered attitude and the possibility of this company, etc. With the continuous efforts of all the staff, we finally formed an "aggressive sales" mode. In only two years, Director Li along with Sumitomo Qingdao has obtained the sales performance equivalent to 10% of the factory's production capacity, bringing great vitality to production and sales.

Next Page >>
Interview 2: Fertilizer Business
Interview 3: Sulfuric Acid Business
Interview 4: Iron Ore Business
Interview 5: Coil Center Business
Interview 6: Cosmetics Business
Interview 7: Real Estate Development Business