Golden Dragon Holdings, Inc. (GDHI-OTCPK)
February 5, 2010 Issue
The Most Powerful Name In Corporate News and Information
With China Now Having The Third Largest Economy And By 2020 Being The Second Largest Food Consumer In The World, Golden Dragon Holdings, Inc. Is In The Right Market At The Right Time To Bringing United States And International Gourmet Foods And Beverages To China
Frank Jose Yglesias/ CEO
Mr. Yglesias has endured the necessary
managerial discipline to co-own and operate the Golden Dragon, as he has
several years of public relations and customer service experience, as well
as a proven history of securing profitable businesses at and above quotas.
Mr. Yglesias has impeccable relationship skills that will enable him to
engage his clients; allowing strong business ties in the community in which
he plans to conduct the business of import foods.
In 1998 Mr. Yglesias obtained
valuable executive knowledge as the Vice President of Information Systems
for ParkStone Medical Information Systems, Inc., where his knowledge of
information systems, procedures, and quality assurance abilities play a
significant role in the business. He was responsible for the growth and
momentum of the company, which was insured by his commitment to oversee all
operations, including marketing, and strategic direction to meet the market
demands. Mr. Yglesias was also very successful in performing accounting and
having inventory responsibilities as well.
Golden Dragon Holdings, Inc. is an international importer, exporter and distributor of staple, organic, specialty, and gourmet foods and beverages, catering to the Asia Pacific Rim. The company offers wholesale food distribution to Hypermarkets, Supermarkets, Gourmet Markets, Convenience Stores, Restaurants and the Hospitality Industry China.
Golden Dragon Holdings, Inc., (PINKSHEETS: GDHI), is a publicly traded company that owns and operates Golden Dragon Food & Beverage Import & Export Company of Hong Kong, Ltd. (GDHK) in central Hong Kong and Beijing Flying Golden Dragon International Trading Co., Ltd in China (BFGD). Golden Dragon Holdings, Inc. has agreements with U.S. food manufacturers. GDHI acts as a buying agent for GDHK, negotiating vendor contracts and services with U.S. food and beverage industry partners. The Hong Kong Company plays a strategic role in the importation of products into the Chinese market by leveraging the Closer Economic Partnership Arrangement (CEPA) with China. Through this arrangement, Beijing Flying Golden Dragon International Trading Co., Ltd distributes some of the most popular U.S. food and beverage brand products directly into the hypermarkets, supermarkets and convenience stores in China. The Company is responsible for order fulfillment for its clients in China, as well as providing advertising and promotion (A&P) services for its U.S. food and beverage products.
Golden Dragon will focus on the distribution of staple foods in the Chinese market. As a result, Golden Dragon will benefit from the growing emerging market that China represents and the forecast of China being the second largest food consumer in the world by 2020.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – February 5, 2010
Mr. Yglesias: The focus of Golden Dragon is to be able to take US staples, US gourmet foods and also international gourmet foods into the Chinese market. Right now, we are concentrating our distribution efforts in Beijing, China with a population of 30 million.
CEOCFO: How do you decide what will be popular in China?
Mr. Yglesias: One of the first processes that we do is we do a lot of hands-on, on-the-street gorilla marketing. We survey a lot of the supermarkets, restaurants and hotels, to see what food items they necessarily need or are lacking. We also study the current imported items to see which ones are selling and we do analysis on the prices to see if we can bring in the same quality or better quality at a much more cost effective price.
CEOCFO: What types of foods are you working with today?
Mr. Yglesias: Right now brand wise we represent Goya Foods, Goya Foods has roughly about 4,000 skews. Our top selling items of from that category are olive oil, tuna with vegetables, tuna with hot peppers, condensed milk, red kidney beans, our olives, our mackerels. We have also introduced wafer cookies, and think this will be a very good selling item. There is an array of different product lines within Goya that are doing very well right now at the supermarkets and some of them do better in the hotel industry. Besides that, we represent Vosges Chocolate, which is a high-end exclusive gourmet chocolatier. Vosges will be placed in high-end hotels. Currently we are in conversations with a couple of organic baby-food products, and we have started to see that a lot of the expats in Beijing and the high-end middle-class Chinese demanding to have better quality baby food for their children.
CEOCFO: Are you also going to be distributing wine?
Mr. Yglesias: Yes. We also developed a brand called Endless Wine, which is our own personal private label. We bring our wines from the La Rioja and La Mancha region in Spain. It is something that we do directly, but we do not sell them in the supermarket; we place them directly inside the restaurants. The focus is to be able to give the Chinese consumer in the restaurant a way to drink good quality wine at a cost effective price. Typically in a restaurants throughout Beijing the average price of a bottle of wine is 260RMB which is about $38USD, our wine will sells for the consumer at 100RMB, which averages out to about $15.00 per bottle inside a restaurant. It is Spanish red wine and the price is very good. The Chinese restaurants and the international restaurants are very excited especially because of the price range.
CEOCFO: Let me go back to Goya for a minute, are the Chinese people looking at these because they are Hispanic products?
Mr. Yglesias: No. Even though I am Hispanic and very proud of it, we do not market the products as Hispanic products. We market them as international products. Yes Goya has a specialty section of items that are unique to different regions of Latin America, but there core products, like olive oil, garbanzo beans, kidney beans, condensed milk, and cookies just to mention a few, are in reality global staple products. If you take garbanzo beans, from Europe to America to the Middle East we all eat them, but with our own unique and cultural twist. No different than in China.
CEOCFO: What is the competitive landscape for products from outside of China, and how do you get shelf space?
Mr. Yglesias: There are competitive products on the shelves. What we try to do, is to make our niche unique, we do this by not take on products that compete with the products that we already have. By doing this, it allows us two things; first, it gives us better relationships with the manufacturer, because we understand the product more. We have a bigger commitment and a bigger bond with the product. Second, it also helps us because in the market once it is in China, we do not have to worry about somebody else bringing the same product and competing with us, we can concentrate in marketing, promoting and ultimately selling the product. In China, the average Chinese distributors come to the United States or Europe and they buy whatever they can buy, usually in some type of fire sale, wholesale, special pricing, or liquidation. They bring it in and sell it, but then they do not consistently continue to bring the same brand. So one thing that we did notice in our surveys when talking to many convenience store owners is that they felt that many of the distributors did not have consistency with the brands they represented. Therefore, they would have one item today, and then six months later they could not get it anymore or they would get it at a higher price.
CEOCFO: What is it like doing business in China? What are the special skills you and Golden Dragon have that allow you to compete in that market?
Mr. Yglesias: It is a very exciting market and culture. One of the first key elements in doing business in China is really being street smart, having a sense to read people quickly and accurately in an ever-changing business environment. Also very important is to, always be inquisitive, the more knowledgeable you are the greater chance of success. You have to be very frugal with your money; you have to ask many questions and do not take things for granted. There is a lot of investigating to do, a lot of knocking on doors, because usually the answers that we would get are not accurate answers. Part of the phenomenon is because China is constantly, changing and evolving, the regulation of today, tomorrow will change. Therefore, the biggest challenge we face is we constantly have to be asking questions and making sure that every decision that we make is the correct decision and we are being frugal with spending our money. You can go to China and spend a lot of money and not really accomplish much, we have seen many future 1000 companies do this in China. In essence it of like the University of Hard Knocks.
CEOCFO: Are there any new products you would like to add to the mix?
Mr. Yglesias: Yes, of the new markets we are developing in which Mr. Cuenca will spearhead will be the fresh peel garlic for the USA market. We have seen that there is a big influx of peeled fresh garlic and 70% of the peeled fresh garlic in the United States comes from China. We have presently contacted a lot of farmers and some industries in the Shandong Province of China where ninety percent of all the peeled garlic comes from. We are going to start private labeling our own garlic called Chef Garlic, for the US market.
CEOCFO: Where will you package the garlic?
Mr. Yglesias: It will be coming package and peeled directly from China. Mr. Cuenca is currently talking with major produce distributors to offer this product to them.
CEOCFO: Is this going to be in the produce section?
Mr. Yglesias: Yes, if you currently go to your local supermarket right now you should be able to see in your fresh produce section, peeled garlic. It is beautiful, it usually comes in a 12-ounce or pound and a half or five-pound jars. They are nicely peeled, fresh, and all you have to do is chop it up, blend it, do what ever you do with garlic and you do not have to go through the hassles of peeling it. The garlic market worldwide percentage wise has outperformed gold and crude oil.
CEOCFO: So you work both ends there!
Mr. Yglesias: Yes, I we will be focused on the Chinese side of the business and Mr. Cuenca, will be focused on the US side of the business.
CEOCFO: What is the financial picture like for Golden Dragon Holdings?
Mr. Yglesias: Currently we just announced that we have 300 convenience stores. Our goal for year-end 2010 is to have 1000 stores in our chain distribution. Besides that, we are focusing in closing about 25 major hotels for our brand high-end gourmet products; we should see revenues in excess of a million dollars by the year-end.
CEOCFO: What surprised you most when you started this venture?
Mr. Yglesias: What surprised me most was, the fact that at the begging we our business model was for us to be ordinary food brokers, and maybe that was kind of naïve of us. We just thought we would represent these brands here, go to China and find distributors and make a small percentage and life was good. As we started digging into the marketing and the industry itself, we started to see that one of the biggest challenges was that many distributors did not represent the brands properly. We have a strong loyalty and responsibility with our manufacturers and the brands that we represent, this started to worry us. Here in the United States we are the kings, when it comes to advertising and promotion of food in supermarkets. We know about the psychology of consumers, we know about shelf spacing, we know how and where to place certain products. There is a series of psychological factors, even the fact that if you go into a supermarket hungry you end up spending 15% to 20% more than if you go and eat something first and then walk into the supermarket. So a lot of this Americanism of marketing and consumer psychology was missing with the local distributors. We started to see that to really do this properly we had to take up the role not only as a brokers and as agents, but as distributors. That was one of the biggest challenges because as we started to get involved in this, it basically took us a good eighteen months to get all of our proper license to operate and handle food in China.
CEOCFO: Golden Dragon made some big cost reductions this year; how have you been able to do that?
Mr. Yglesias: Many of the cost reductions that we have accomplished, is because the more knowledgeable and business shrewdness we became the less money it cost us to operate. When you go to a different country especially a country like China, and you start a new project, there is a lot of money that you end up spending basically because of your lack of knowledge, there is also an initial cost of doing business and the experience acquired to starting this business. As you break your teeth into the market, you start getting the experience and you know what things really should cost versus what things were costing you in the beginning, and you start getting more perceptive and more prudent with how you spend your money. At first being foreigners, yes our initial warehouse expenses were much higher than what we are currently are paying now, I would like to say that now I feel more like a Chinese native, especially when it comes to my negotiation power. I have live in and out of China for 5 years now and I feel very confident in what really are the costs versus what they were costing us at the beginning. You could see that reflection in how much we saved over the prior year in operating costs.
CEOCFO: Why should potential investors be interested in Golden Dragon?
Mr. Yglesias: First, let us look at China. China now is the third largest economy or I think it is the second already. By the year 2020, it will be the second largest food consumer in the world, the first one being the United States. The economy of China has been booming. Last week they announced that their GDP was 10.5% and growing. Their economy as a whole is very young and growing exponentially. There is a growth boom in China for the next fifty years in their local economy. The food sector in China is of the upmost importance socially and politically. The food industry is almost recession proof, this is one of the primary reasons I would always say to investors to really look into a company like ours. Secondly, it is the way we run the company; we like to be very transparent in everything that we do. We have placed into operations many methodologies and practices of western standards, these practices will allow us, to be able to fine-tune and streamline our operations. In addition, understand successfully the logistics of the food industry, and how to be able to recycle products into the shelves and collect the money from supermarkets and be able to do the whole fulfillment cycle, efficiently is key to our operations.
CEOCFO: What might people miss that they should know about Golden Dragon Holdings?
Mr. Yglesias: One of the misconceptions that I have seen, and maybe it is because of our name, is that they think that we are a Chinese company and a Chinese-run company. We are a US-based company and our modes-operandi is very westernized, but additional we have learned from many Chinese companies and we have incorporated a hybrid business approach. One of the things that I have heard in the past from shareholders is that they are amazed that we are not Chinese and that it is a US company.
CEOCFO: Final thoughts, what should readers take away when reading about Golden Dragon?
The thing they should take away is that we are a growing company; we are in
our infancy stage. We are now placing a stake in the ground in China to be
able to start importing US product foods into China. This can be seen, in
our strategy to dominate the Beijing market first, before we move to other
cities and provinces in China,
China now is the third largest economy or I think it is the second already. By the year 2020, it will be the second largest food consumer in the world, the first one being the United States. The economy of China has been booming. Last week they announced that their GDP was 10.5% and growing. Their economy as a whole is very young and growing exponentially. There is a growth boom in China for the next fifty years in their local economy. The food sector in China is of the utmost importance socially and politically. The food industry is almost recession proof, this is one of the primary reasons I would always say to investors to really look into a company like ours. - Frank Jose Yglesias
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