Chinese food market rises – and so are the food prices

Not long ago, the share of import in the Chinese food market was very low (4% in 2007). But the situation changes very fast. The purchasing power of the Chinese people rises along with the appetite for imported food and beverage. The volume of import is so big that it has the direct influence on global food prices

Agriculture remains to be the vital industry of China, but its production output cannot meet the rising demand. Local agriculture was heavily affected by the development of industry – vast spaces of agricultural area were polluted, the shortage of water also results in the abandonment of more fields that slowly turn into desert. Meanwhile, the annual growth rate for the food industry is 15%, the consumption of meat has risen and furthermore, the rich Chinese are even more fond of foreign products, including wines, salmon or chocolate.

Food in China

Pork industry is the fine example of the China’s global expansion. Pork plays the central role in Chinese cuisine and is eaten in virtually every part of China (excluding the lands of two distinctive Muslim minorities: Huis and Uyghurs), and many parts of the pig, in other places treated as waste, are processed and consumed. In September 2013, Chinese group Shuanghui has purchased the largest pork producer and processor in the U.S., Smithfield Foods Inc in the biggest Chinese takeover of the American company up to date. This transaction helped to secure the pork supplies for China and helped Shuanghui to reinforce its position on the local market as the producer of “foreign” food.

Another interesting case is chocolate and imported snack foods market. These were never the part of traditional Chinese diet, but along with the reform and opening up, more and more Chinese started to enjoy new tastes. Chocolate supply chain is already quite developed and the market is divided by five major players: Cadbury (Kraft Foods Inc.), Ferrero SpA, the Hershey Co., Mars Inc. and Nestlé SA, but in the coming decade tens of millions new consumers will emerge, especially in the second-tier cities. The rising consumption of chocolate in China is predicted to drive up world prices (due to the deficit of cocoa, caused by climate change). The producers of snack foods can also grasp that opportunities which are created by the Chinese market fast development. While Chinese consumers traditionally prefer savoury snacks over sweet snacks, the determined Western companies have already set their foot on the Chinese market. Important factor that lead to their success is the foreign brand appeal. Chinese consumers usually do not trust their own companies, especially when premium food is concerned.

The Chinese food industry has the long history of scandals related with food safety, such as the tainted milk scandal in 2007. No wonder that Chinese institutions emphasize food security and China has very rigid custom policy. But once we obtain the necessary documents, we can take the opportunity to import our food products to China – and it may be the beginning of a very profitable enterprise.

Read more about the alcoholic beverages market in China on our blog below:

Wines in China

 

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