Research focus helps nutritionals company build its business in Asia

A Dunedin company’s innovative use of R&D has helped it build a following in Asia – and has also seen it nominated for a New Zealand Trade & Enterprise International Business Award.  

Seperex Nutritionals, which makes food and health ingredients from dairy and marine extracts, has been nominated as a finalist in the “Best Use of Research and Development in International Business” category.

The company’s ingredients are used in a range of products including infant formula and nutritional supplements

Director and co-owner Lawrence Alloo said Seperex made a point of helping customers use novel ingredients to differentiate their products “and move them up the value chain” in what was a very competitive market.

“You can buy milk powder from Australia or South America, so being able to wrap innovative science around a product is a point of difference.”

Seperex exports 99 per cent of its products to Asia – South Korea, China, Japan, Taiwan, Singapore and Hong Kong.  

Setting up an office in the region had helped boost the company’s credibility in the region, Alloo said. Six years ago, Seperex opened premises in Hong Kong’s Science Park complex, which offers office space, laboratories and engineering services to more than 300 high-tech companies.

“It’s not just from a marketing perspective,” Alloo said. “We also do research over there with the Hong Kong University and that helps build credibility too. It shows we may be selling to you, but we are also working with you.”

Scandals about contaminated food in China, along with the country’s one-child policy, had pushed up demand for safe food from countries such as New Zealand, particularly for dairy products.

Chinese families with only one child generally had more money to spend on their offspring. Even if parents couldn’t afford high-quality products, grandparents might step in to ensure their grandchildren had the best.

However, concern about food contamination meant China had introduced tougher testing regimes, which could be costly for exporters, Alloo said.

“You have to be very stringent with your selection of raw materials and your final product testing.  If you want to put a novel ingredient into China, you have to work to prove it’s safe to consume and that’s time-consuming. Realistically, it takes two years.”

New Zealand companies also had to be prepared to work to attract Asian customers – and could not rely on the country’s clean, green image to sell their products. “You have to make sure your product is well researched and well supported.”

Intellectual property protection was also vital. “You have to be very careful with what you disclose because it will spread like wildfire. That’s where trade secrets are good – you don’t publish it. We spend a lot on IP, it’s too important not to. And you have to be prepared to defend your IP.”

Alloo also warned that exported needed to work out how they would be paid. “It’s a completely different system there – they have foreign exchange controls.  Their access to foreign exchange is limited, so they will use third parties to pay you. You need to have a letter of credit facility or payment in advance, and that can take time.”

Tempting though it was to launch into the Asian market, Alloo urged companies to be cautious and patient. Asian business practices often involved “loads of meetings”, with long waits before a final decision.

“They work a lot more intensively with you...Clients will often come to New Zealand to see who we are researching and working with to get first-hand knowledge of what we do.”

By Amanda Cropp