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Opportunities in the Chinese Food Business: PART 1

With an annual GDP growth rate of around 7-8 % over the last few years, the increase of income and demand for quality of life, a growing number of Chinese consumers are joining the Chinese middle class. Due to many recent scandals in the food sector in China, Chinese consumers generally consider imported food products to be healthier and of better quality. As a result, the imported food product market has significantly developed in recent years, not only in quantity but also in quality. China’s imported food product market has known a significant increase from 2005 to 2016 and is expected to be valued at 480 billion RMB by 2018, which equals to about 68 billion EUR (Source: National Bureau of Statistics of China).

The key drivers of this impressive growth of imported foods are globalisation, urbanisation, the fast-growing middle class, increased health consciousness, improved convenience and accessibility to foreign food products, growing concerns over food safety and the surge of e-commerce and social media in China.Today, China is already the biggest food market in the world, with the USA and India following in second and third place.

China’s 1st tier cities, such as Shanghai, Beijing, Guangzhou and Shenzhen are the most developed areas and the most logical point of entry due to its coastal accessibility, but rapid progress in transportation and increased awareness in 2nd and 3rd tier cities in inland provinces has also significantly improved the economic potential in those regions.

Young people between 25 and 40 are playing an increasingly important role in this market. Especially those born after the “family planning policy” are known for their privileged lives and endless financial resources. Many of these young people can spend a large portion of their earnings on luxury products and imported products, as their parents and grandparents are generous enough to satisfy their many desires. 

And finally, not to be underestimated, the e-commerce sector has seen an unprecedented growth of an average of 35 to 50 percent in recent years. Thanks to the growing number of internet users in China (more than 720 million by the end of 2016; of which 80% by smartphone) this trend will not stop in the next years. Consumers are also making direct online purchases of fresh food products, such as fresh milk, confectionary, cooking oils and packaged foods on domestic e-commerce platforms and increasingly also on cross-border e-commerce platforms.

In our next blog we will talk about regulatory and other barriers for the export of food products to China.

Horsten International has many years of experience in the food and beverages business in China. Please check our website or contact us in case you have any plans to launch your food products on the Chinese market.

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