Creating an Appetite for Tortillas in China

Back in 2006, when Gruma opened in China its first-ever plant in Asia, it looked like a bold move considering the low familiarity of the Chinese population with Mexico’s most popular food item. Using the knowledge it acquired while reaching to other major international markets, like the U.S. or Europe, the company then led by the late Roberto Gonzalez Barrera has been able to adapt itself to the particularities of the Chinese market and is now planning to double its production capacity.

The Opportunity

For Gruma, as well as for many other multinational companies, the possibility to serve the Chinese market represented a huge growth opportunity. With a population of 1.3 billion people, a fast-growing economy and rising income per capita, China was a very attractive market itself. Additionally, its cheap labor and strategic geographic position made China a great place to start the efforts to conquer other important Asian markets like Japan, Korea and, eventually, the Middle East..

The Challenge

Most of the Chinese population, back in 2006, did not know too much about Mexico or its culinary traditions. The traditional Mexican tortilla is made of corn and it is mostly used as a base for tacos or quesadillas, dishes only known by a small minority of the population. Moreover, China was a land where rice and noodles were the most favored food items, and Chinese people did not have too much enthusiasm for corn, as it was culturally viewed it as pig’s food.

Gruma’s Approach

At the time, Gruma was already one of the world leaders in manufacturing corn flour and tortillas and had successfully established 88 facilities around the world. The factory opening in Shanghai represented an overall investment of $100 million USD and had a capacity to produce 15,000 tons of wheat tortillas, 7 thousand tons of corn tortillas, and 6 thousand tons of snacks.  Aside from serving the Chinese market, the new factory would use the Mission brand to serve Japan, Korea, Singapore, Hong Kong, Thailand, Philipines and Taiwan, countries which represented 50% of the overall world population and promising long-term economic growth.

Twisting the Recipe

tortillas in chinaDespite having in its corn tortillas and chips a very successful product in more mature markets as the US or Europe, Gruma did not blindly introduce its flagship product into China. By studying its market in advance, Gruma’s management recognized that, while corn tortillas were a huge success in western countries, cultural differences would establish a barrier for its success.

Because of the different customer preferences in China, Gruma’s plant in Shanghai had a bigger capacity for wheat tortillas. Applying this flexible concept to its marketing efforts, when educating its customers to use a product that was exotic to them, Gruma used well known local and international recipes to draw attention into its products. Even now, if you look at the 52 recipes that Mission China publishes in its website, you’ll find recipes like Pork with Peking Sauce Wraps, Stir-Fried Chicken on flour, Margarita Pizza over a wheat tortilla, Caesar Salad with Corn Chips, and only 2 out of the 52 recipes have the word taco or quesadilla.

Conclusions

Gruma has succeeded in its Asian expansion because it understands that its product must adapt to local taste and culture. To do so Gruma uses two different approaches. First, it uses focus groups and specialized market research to understand the psychographics of its customers, the underlying values, attitudes and interests that influence their purchasing decisions. Through psychographic analysis Gruma was able to detect how comfortable was the Chinese market trying new products. Its second approach, is what Jairo Senise, Gruma’s former CEO and president, calls “the chef method”. The chef method allows companies to understand how you can adapt your product to local tastes and preferences. This ideas that have been useful to Gruma can be applied to any company pursuing international expansion.

Rubén Flores
MBA Candidate 2016