Chinese food market rises – and so are the food prices

Not long ago, the share of imports 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 imports is so big that it has a direct influence on global food prices.

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

Chinese food market

Pork in China

The pork industry is the perfect example of China’s global expansion. Pork plays a central role in Chinese cuisine and is eaten in almost every part of China. The minorities that do not eat pork include the Huis and Uyghurs. Many parts of the pig, in other places treated as waste, are processed and consumed. In September 2013, Chinese group Shuanghui purchased the largest pork producer and processor in the U.S., Smithfield Foods Inc. It was the biggest Chinese takeover of an American company up to date. This transaction helped to secure the pork supplies for China and helped Shuanghui to reinforce its position in the local market as the producer of “foreign” food.

Chocolate in China

Another interesting case is chocolate and imported snack foods market. These were never part of the traditional Chinese diet, but along with the reform and opening up, more and more Chinese started to enjoy new tastes. The chocolate supply chain is already quite developed. The market is shared by five major players: Cadbury (Kraft Foods Inc.), Ferrero SpA, Hershey Co., Mars Inc., and Nestlé SA, but in the coming decade, tens of millions of 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).

Snacks in China

The producers of snack foods can also grasp opportunities that are created by the Chinese market’s fast development. While Chinese consumers traditionally prefer savory snacks over sweet snacks, Western companies have already set their foot on the Chinese market. The important factor that led 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 a long history of scandals related to food safety, such as the milk scandal in 2007. No wonder Chinese institutions emphasize food security and China has a very rigid custom policy. But once we obtain the necessary documents, we can take the opportunity to export products to China.

Read more about the alcoholic beverages market in China.