China: opportunity for food industry

China: opportunity for food industry

Underlining the massive potential that exists for food makers and ingredients players in China, new data reveals only about 30 per cent of food in China is processed, compared to 80 per cent in western nations, reports Lindsey Partos.

China, with its 1.3 billion population, is one of the world's largest consumers of food, chomping through 51 per cent of the world's pork, 33 per cent of rice and 19 per cent of ice cream.

And while most consumers still prefer to purchase fresh foods, there is a clear shift towards processed foods, throwing up untold opportunities for western food firms faced with saturated sales in home markets.

Official statistics report that the Chinese food processing industry grew a considerable 16 per cent between 2001-2002 and 23 per cent for 2002-2003.

"These numbers are staggering but many industry insiders feel that it is safer to assume double-digit growth in excess of 10 per cent,"reports the US department of agriculture.

The president of the China Food Industry Association was recently quotedas expecting 10 to 12 per cent annual growth for the food processing sector.

Further, some estimates believe the output of the food industry by the year 2010 may double from that of the year 2000, when it was valued at about 800 billion RMB (€84billion).

Packaged foods, especially baked goods, dairy products, oils and fats, baby food and ice cream have all demonstrated "exceptional growth" in recent years, claims the report.

"In the upcoming years the industry will focus on the development of corn and wheat goods, dairy products, food additives and seasoning essentials," it continues.

Demands for imported poultry, cereals, fish, nuts, soybeans are expected to continue while Western food firms may find new markets in baking ingredients and fruit flavorings.

Good prospects include infant formula, baking ingredients (nuts, whey powder, flours), fruit flavourings, stabilisers as well as a range nuts and fruit, underlines the report.

The market for processed foods is particularly strong in urban areas where higher concentrations of wealth and busier lifestyles have led many to seek out more convenient alternatives to cooking with fresh ingredients.

Demands for healthier choices, convenience, variety and quality are opening the door to high quality imported ingredients.

Recent food poisoning incidents have also increased consumer concern over food safety and many are now looking towards big-name brands that they feel they can trust, says the report.

In many urban areas 40 per cent of food is processed, with much room for growth as demand is slated to increase.

China's population is 1.3 billion and growing by nearly 10 million people, or 0.57 per cent, annually.

China's per capita GDP is approximately $1,100 USD, and the economy, currently the sixth in the world, has been growing at a staggering 9 per cent annually.

In 2003 the value of all exports came in at $436.1 billion and the value of imports hit $397.4 billion. Major agricultural products include rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed, pork, and fish.

Since its beginnings in the late 1970s, the Chinese food-processing sector has grown to become one of the most dynamic and modern segments of the economy, presenting a good opportunity for U.S. food processing ingredient exports, according a recent FAS report. Only 25 percent of China's food production is processed, compared with 80 percent in the more developed countries. The growing prosperity and ensuing changes in lifestyle of urban residents are the biggest factors driving the development of the Chinese industry, notes FAS. And while Western business people often look longingly at the perceived huge Chinese market, exporters should "try to drive the phrase '1.4 billion consumers' out of their heads," as more than half of the Chinese population is too poor to enter the market, says FAS.

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The Impact of the Structure of Debt on Target Gains Foreign invested enterprises comprised 14 percent of the Chinese food-processing sector in 2001, and continue to occupy an increasing percentage of the market, according to the report. These larger scale processors are more likely to use imported ingredients largely because they require more consistent inputs, which the Chinese agriculture system cannot yet provide. Currently, the report notes, Chinese production is not well integrated with the commercial processing sector. Additionally, the accession of China to the WTO ensures that exporters will face lower tariffs and import barriers, and increased access through market and legal reform.

Products that have the best prospects for exports include potatoes and products, specialty flour mixes, nuts and fruit used in industrial baking, and other food and beverage base ingredients. Vegetarian products or labor saving processes or ingredients, however, would not do well in the Chinese market, warns the report.