The Chinese Food Market. Opportunities for Swiss Companies. May 2012 osec.ch
The Chinese Food Market. Title.
The Chinese Food Market
Language.
English
Number of pages.
80 pages
Author.
Peach International, Mr Peter Troesch
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Table of Contents. 1.
Foreword........................................................................................................ 6
2.
Executive Summary....................................................................................... 7
3.
China Introduction ......................................................................................... 8
4.
3.1
Geography ...................................................................................................................... 8
3.2
Climate ............................................................................................................................ 9
3.3
Economy ....................................................................................................................... 10
3.4
Politics – 12th 5 Year Plan (2011 -2015)........................................................................ 12
Food Market Overview ................................................................................ 13 4.1 The Chinese Demographics .......................................................................................... 13 4.1.1 Aged Population ................................................................................................... 13 4.1.2 Wealthy Chinese................................................................................................... 14 4.1.3 Urbanization Trend ............................................................................................... 15 4.1.4 Household Changes ............................................................................................. 15 4.2 Food Consumption & Expenditures ............................................................................... 16 4.2.1 Chinese Diet ......................................................................................................... 16 4.2.2 Consumption Trends ............................................................................................. 17 4.2.3 Consumer Expenditure ......................................................................................... 18 4.3 Consumer Behavior ...................................................................................................... 18 4.3.1 Regional View ....................................................................................................... 19 4.3.2 Consumer Groups ................................................................................................ 20
5.
Chinese Food Market .................................................................................. 22 5.1
Market Entry.................................................................................................................. 22
5.2 Route to Market ............................................................................................................ 24 5.2.1 Strategy ................................................................................................................ 25 5.2.2 Golden Rules ........................................................................................................ 25 5.3 Distribution .................................................................................................................... 26 5.3.1 Hong Kong Distributor .......................................................................................... 27 5.3.2 Integrated service providers .................................................................................. 28 5.3.3 Full service distributors ......................................................................................... 28 5.3.4 Importing agents and logistics firms ...................................................................... 28 5.3.5 Setting up your own presence in China ................................................................ 29 5.4 Market Environment ...................................................................................................... 30 5.4.1 Hotels, Restaurants, Cafes and Bars .................................................................... 30 5.4.2 Gifts ...................................................................................................................... 30
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5. Chinese Food Market. Due to the complexity of the market and its sheer size, any involvement in China needs to be a companyâ€&#x;s top management decision and task. Any successful China market entry requires substantial investment and most importantly a long term vision and commitment. No other than the top management of a company should oversee the China activities. It is very easy to make wrong decisions all along the way which may result in considerable financial, corporate identity and time losses for the company. A solid market research and local familiarity is key before entering China. Peach International will be glad to support any interested company in this regard. What is needed to be successful in China is a step by step approach with strong local partner and a true long-term commitment from top management.
5.1 Market Entry. 1.
Know the market China is a very different and diverse market. Whatever you read and learn about it from outside might be only half the truth. It is very important to get familiar with tastes, customs, culture, business practices and government regulations as they vary from place to place. You cannot know all about whole China before market entry. Rely on local expertise in guiding you to the right location(s) in China corresponding to your product range you intend to bring to China. It is best to target a specific place, a single city or a whole region to learn more about. Travel to China is highly recommended to evaluate partnerships, build your network, and identify new opportunities and potential obstacles.
2.
Know the customers Chinese tastes, preferences and brand loyalty can be very different to the Western world. Products received poorly in Switzerland may prove successful in China, while products targeted to one market niche may end up finding their greatest success in a completely different one. A successful product in Switzerland or any other part of the world does not guarantee success in China automatically. To avoid unpleasant surprises and find new opportunities, exporters with a long-term interest in China are advised to commit to a thorough market research and to test new products directly in China before committing to a full blown market entry.
3.
Develop your Guanxi The Chinese legal system is developing, but is far from being developed and dependable. It is difficult to enforce contracts as there is a very close interconnection between government, private business and legal system. Business in China relies heavily on personal contacts and influence. Guanxi describes the basic dynamic in personalized networks of influence, and is a central idea in Chinese society. At its most basic, guanxi describes a personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon. The two people need not be of equal social status. (Definition by Wikipedia) For companies with a serious interest in China, no investment will be more important to
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7. Food Categories. 7.1 Food Categories Overview. As the readers of this report might come from any food related industry, it is impossible to cover all food categories in detail. According to the food export figures in the table below from OSEC, three categories have been selected – dairy products, confectionary and chocolates, biscuits. These categories show the most potential in the Chinese market. 7.1.1 Swiss Food Products in China Swiss food products are perceived as high quality, safe and mostly luxury products. The most popular brands are in the three categories mentioned above, whereas Nestle stands out in volume and product range. Switzerland is a leader in baby and infant food in China, for example, especially in regards to milk powder. Swiss food exports to foreign countries: Ranking in terms of % Export Baby- and Infant food
68
21%
250
79%
318
Sweet products*
100
30%
229
70%
329
Coffee (instant/coffein-free)
127
35%
237
65%
364
Chocolate
898
52%
845
48%
1743
75
54%
63
46%
138
Soft cheese/fondue Long-life bakery products
333
69%
147
31%
480
Dairy products
2727
86%
461
14%
3188
Pasta/Noodle
126
91%
12
9%
138
Ice cream
328
92%
27
8%
355
Convenience Food
1940
94%
130
6%
2070
Fresh Meat / Meat products
3998
98%
92
2%
4090
482
100%
1
0%
483
898
52%
845
48%
1743
2727
86%
461
14%
3188
68
21%
250
79%
318
Coffee (instant/coffein-free)
127
35%
237
65%
364
Sweet products*
100
30%
229
70%
329
Long-life bakery products
333
69%
147
31%
480
Convenience Food
1940
94%
130
6%
2070
Fresh Meat / Meat products
3998
98%
92
2%
4090
75
54%
63
46%
138
Ice cream
328
92%
27
8%
355
Pasta/Noodle
126
91%
12
9%
138
Products of soft & durum wheat
482
100%
1
0%
483
Products of soft & durum wheat Ranking in terms of Export Volume Chocolate Dairy products Baby- and Infant food
Soft cheese/fondue
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