The surge in demand for imported food products is prompted by several factors. In the first place, China’s middle class has been significantly growing in past decades. These consumers have high purchasing power and are increasingly exposed to international trends, resulting in a demand for imported food. The increase is also due to the surge of e-commerce or on-line food purchases.
Likewise, considerable improvements in storage and in the distribution chain, in particular in smaller cities – the so-called second and third tier cities, are generating the need to satisfy this new demand. Providing access to the vast market of consumers in Middle and Western China – and not only in the big coastal cities such as Shanghai, Beijing and Guangzhou, presents an attractive opportunity for global food exporters. For instance, in Chengdu, the capital of Sichuan province, 68% of its 14 million citizens have purchased food products from abroad.
Another factor that has gained importance in recent years, contributing to the increase of food imports, refers to food safety.
In recent years, China’s imported food source has become increasingly international. In 2016, China’s imported food products came from 192 countries and regions. The top 10 importing sources in terms of import value were:
The top 5 EU countries exporting to China (prepared foodstuffs, beverages, spirits and vinegar, tobacco - Source: China MOFCOM) were France, The Netherlands, Germany, Ireland, and Italy, with total amount of EUR 1,237 million, 756 million, 441 million, 316 million and 298 million, respectively.
Products with high demand: products profiting most in the Chinese market are meat, dairy product, fresh and processed fruits, oil, fish preserves, sugars and liquors. The market grew from US$ 77 million to over US$ 1 billion dollars in the past decade, in other words, 13 times.
Proper packaging: packaging adapted to Chinese taste is the key to success in the food sector. By way of example, Chinese consumers like to see what is inside the package. In China it is common to give food as a gift, reason for which products such as wine and olive oil are sold in special gift boxes.
Adjust products to suit the Chinese palate: it may be necessary to adapt products to the taste of consumers, although this factor will depend on the province where they are marketed. For example in the North they like strong-flavored, spicy food; in the Zhejiang province, sweeter; and in the South they prefer softer flavors. It is essential to keep in mind that in addition to marketing traditional products, the brands that have been more successful are those producing varieties specifically targeting the Chinese palate.
Sinowei is offering our members guidance to E-Commerce in China for our client companies looking to sell to Chinese consumers via online channels. We offer an overview of the E-Commerce market landscape, major Chinese E-Commerce platforms and cross-border options. It is important that Sinowei has a team on the ground in China and that we understand consumer preferences among different demographic groups, providing specific advice on different potential business models for the Chinese market.
Spending online is highest in China’s Tier 1 cities and the provinces of the wealthy east coast, such as Shanghai, Beijing, Guangdong, Jiangsu and Zhejiang. Data from payment system Alipay shows that online spending is growing fastest in China’s less affluent but rapidly expanding interior provinces and Tier 3 and 4 cities. Growing income levels, increased smartphone penetration and a lack of bricks-and-mortar stores have helped to accelerate the growth of e-commerce in these areas.
China’s Singles’ Day, which takes place on 11th November (“11/11”) each year, has now established itself as the most important date in the Business to Consumer (B2C) e-commerce calendar. All e-commerce platforms now take part in the event, which was initiated by Alibaba and entails discounts of up to 50%. In 2017 Alibaba achieved over USD 25.3 billion (£19.5 billion) in sales in the course of 24 hours, making it the biggest single day in the world of e-commerce.
The Sinowei team are experienced international food & beverage traders, with a strong focus of selling into China. The team are based in China, Malaysia, UK, Ireland and USA.