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The Australian company selling steaks and sausages to China

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Today Elders China is an Australian success story, and hopes to double its business in the next five years. But it took the company 11 years to turn a profit in the competitive Chinese market.

Craig Aldous, the CEO of Elders China, has lived in Shanghai for 10 years, but he grew up on the Sunshine Coast in the northern Australian state of Queensland.

Like most Aussie kids he grew up eating sausages.

"My father was a butcher, and I remember once when he said: 'I'm not greedy, I don't need much, I just want to sell one sausage to every person in China.'

"If you do the numbers that's 1.4 billion people buying one sausage, that's about 84,000 tonnes of meat, $1.1 billion dollars in sales, and around $200 million in profit, so [I thought] my dad was actually pretty smart!"

Craig Aldous, Elders China CEO
Craig Aldous, Elders China CEO.

ABC: Craig Berkman

Even though he was told the Chinese would never eat an Aussie-style beef sausage, Craig now sells them under the Elders brand in China but he concedes his father's dream was an impossible one.

"From my experience in China I can tell you Dad's logic doesn't quite work out, it's not that easy!" he says.

Craig recently warned Australian farmers and food manufacturers visiting Shanghai not to be seduced by the hype about China.

"The reality of doing business in China is it's a tough and competitive environment, and simplistic views of doing business here simply don't work," he told them.

"In order to understand what the reality is on the ground here you first need to spend time in the market, research, investigate, and learn from people who've made the mistakes for you already."

- Craig Aldous

The free trade agreement between Australia and China (ChAFTA) - which has just turned one - has politicians talking up a new era of rural prosperity as markets open and import tariffs fall.

However, Craig warns that while ChAFTA has opened doors it hasn't reduced the complexity of doing business.

He says it takes longer and costs more than people think, and he's seen many companies lose money trying to crack China.

"Some of the reasons for people's excitement about China is statistics can often be mind-blowing due to the pace of economic growth, and the sheer size of the population.

"But I'm continually amazed by how many calm and rational business people arrive in China, throw all caution to the wind and devolve into raging bulls."

- Craig Aldous

Elders lost money for 11 years before turning a profit.

The company moved into China early, buying an Australian meat importing business in Shanghai in 2004, but they made costly mistakes.

The first was importing premium Australian seafood, beer, wine, dairy, olive oil, lamb and beef.

Elders Fine Foods failed and was shut down.

"I think it was focus more than anything else," Craig says.

"In such a complex market like China you need to be very good at what you do, and if you do too many products spread across too large a range, I don't think you do any of it very well."

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Elders finally turned a profit in 2015, after deciding to stick with what it knew best, which was beef.

It restyled itself as a distributor of prestige Australian beef brands exclusive to Elders in China and narrowed its market, selling direct to fine dining restaurants, international hotels and steakhouse chains.

At its factory in Shanghai chilled and fresh beef is cut to size for individual customers. It also produces 100 per cent beef and wagyu patties, and sausages.

"We're operating in the top 0.5 per cent of the space in the Chinese market which will pay premium prices."

Willmer Colmenares, Executive chef Char restaurant
Willmer Colmenares, Executive chef of Char restaurant.

ABC: Craig Berkman

In Shanghai's upmarket river precinct the Bund is Char, a five star Shanghai restaurant and steakhouse where the beef menu is exclusively Australian, all supplied by Elders.

Here a 180 gram Blakmores wagyu fillet costs AU$424.

Char's Executive Chef Willmer Colmenares says he buys Australian beef because of its clean, green and quality reputation.

"It's a very safe product... it's the best you can find in the market."

- Willmer Colmenares

He predicts a bright future for Australian producers as the Chinese are fast developing a taste for beef.

"When I came to Shanghai five years ago you barely could find beef in the markets, and there were one or two steakhouses, Char was one of the first in Shanghai... now there are around 50 steakhouses, and you can find beef at all the markets."

Craig Aldous is happy to share Elders' rocky experience in China if it stops Australian companies from making the same mistakes.

"Ultimately we want hundreds of Australian companies coming to China, and we want all of them to be successful, and that's really my message if you are coming to China and you think you're going to be successful immediately you're going to be disappointed.

"Take your time, do your homework, commit for the long haul and there'll be hundreds more of us doing business in ten years' time."

- Craig Aldous

If you missed Landline's Window on China special on Australia Plus TV see the stories on their website.

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