Seperex Nutritionals

Seperex develops and produces high value dairy and marine-derived bioactive food and nutritional health ingredients and specialty products for export.

The company is based in the Centre for Innovation at the University of Otago and works closely with the university’s Pharmacology, Food Sciences, Biochemistry, Human Nutrition, Microbiology and Immunology departments and Massey University’s Bone Health and Nutrition unit.

Mr Lam says these relationships enable it to work with international customers to develop new product applications, ranging from specialty functional foods for the consumer goods market to large scale applications for food and nutritional manufacturers.

Hong Kong subsidiary

Just months after it was established in 2004, Seperex registered a subsidiary office in Hong Kong as its regional headquarters for the entire Asian region, responsible for sales, marketing and after-sales technical support.

“It is very easy to travel from Hong Kong to markets throughout Asia, in particular China,” explains Mr Lam, who spends up to half his time traveling, visiting customers and developing new business.

“It is also simple to set up an office in Hong Kong and very easy to do business here. There are no complicated procedures or requirements, no GST or foreign exchange controls, low corporate tax and only a handful of tariffs. It has an efficient banking system, favourable government polices and good infrastructure – the Hong Kong Government is spending almost US$13 billion on infrastructure to improve transport connections with the mainland.”

Exciting development

In an exciting new development for this biotechnology company, Seperex has gained approval to move into the Hong Kong Science and Technology Park. Subsidised by the Hong Kong Government, the park houses a cluster of high-tech firms across a range of sectors.

“This will enable us to take advantage of the science park’s world-class laboratory facilities to undertake R&D and testing for clients,” says Mr Lam.

“When you are selling bioactive products and ingredients, you have got to be able to prove that the product works and that it is safe. Our high-quality specialty functional food ingredients are stringently tested in New Zealand to comply with New Zealand Food Safety export standards. Having a testing facility in Hong Kong will enable us to respond to our customers very quickly.”

Mr Lam says the New Zealand origin of Seperex’s products is a real advantage, with the country enjoying a very good image in the food and nutritional health sectors. When it moves into its new premises, it will leverage off this and organise health seminars at its Hong Kong office for customers throughout Asia.

“This will be an opportunity for our customers from different markets to brainstorm and exchange ideas, and for us to gain an insight into emerging trends and areas we should focus on for future development. It will also strengthen our credibility and positioning as a high value supplier.”

Stepping stone into China

Seperex began exporting to China shortly after opening its Hong Kong office. The business has grown extremely well, says Mr Lam, with sales almost doubling annually since 2006.

“Hong Kong gives companies a foundation from which they can expand into China. The advantage of employing local Hong Kong staff is that while we are Chinese, we are also westernised. We are educated under the English system, have some western ideas and disciplines, but we also understand Chinese thinking.

“China is a very special market. It has its own mind-set and mentality. Hong Kong is like a middleman, we can bridge the Western and Chinese cultures.”

Staff from Seperex’s Hong Kong office travel to China every two weeks, visiting customers, checking out supply chain channels and consumption group trends, and meeting with local professors and officials.

“It is very important that officials who control regulations around the approval of new ingredients understand your product with sufficient scientific data,” says Mr Lam. “Otherwise, companies could have real difficulties getting approval when they go to register a product or ingredient for import into China.”

The ease of travel into China from Hong Kong is a real benefit, says Mr Lam. “Obviously you could travel as frequently from New Zealand but it would be a much bigger drain on time and resources. Working out of Hong Kong I can fly to Northern China in the morning for meetings and be home again in the evening.”

Providing a total solution

To succeed in China, Mr Lam stresses it is critical to understand consumer thinking and government requirements and regulations.

“Hong Kong’s regulatory system runs on common law like New Zealand. In China it runs on a totally different law system. You have got to understand that or you can breach the regulations. You must also focus on guanxi – personal connections. If you can understand rules, regulations and guanxi you will be successful.

“Another challenge is the customer mind-set which is totally different from western people. In developing regions of China, the consumer is still at the very early stage of consumption behaviour where cheap is seen as best and your customer will always ask you for the lowest price.”

Mr Lam says it is vital for a company like Seperex that is targeting the premium end of the market to sell on a marketing concept, not on price.

“That means selling what the customer wants, not what you can produce or make, otherwise they can’t see the benefits. You have got to position your products and differentiate them from competitors.

“We must demonstrate the functionality of our bioactive products – prove that they do improve health.”

He says Seperex focuses on providing a total solution to the customer – from understanding what they want in a product, through research and development, testing and trials, then commercialisation and taking the product to market and after sales support.

“The last step, which is very important, is that we give our customers solutions to help them sell their product successfully in the market. A lot of our customers in China want functionality in a product, but they don’t know how to sell that in a market that thinks cheap is best.

“We show them how to influence the mind-set of the consumer and target a particular group of consumers who can understand the product and are prepared to pay a premium price. We help grow demand for the finished product and in doing so drive up demand for our products.”

It is proving to be a winning formula for Seperex.

www.seperex.co.nz