Page 278 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
of the world’s pork. Chinese per-capita consumption is Nevertheless, the market is rich with opportunities for
39.4 kilograms a year. Domestic hog farms can’t keep up the right products. International travel is changing the
with demand. U.S. pork exports to China and Hong Kong food market in many ways. About 80 percent say they
totaled 545,000 metric tons in 2016, a 61 percent increase not only enjoy eating foreign food but also buy imported
from 2015. As a result, Smithfield is considered a premium products for their everyday life. The Chinese are curious
brand in China, with prices at least 20 percent higher and willing to try different culinary experiences. About 53
than WH Group’s Chinese labels. Smithfield can’t export percent say they enjoy trying new products and activities.
sausage, ham and bacon from its U.S. factories because The health craze in China has taken many shapes in both
China prohibits imports of processed meat. So WH Group consumption and habit. Roughly 35 percent of Chinese
opened an 800 million-yuan factory in Zhengzhou that urban consumers in large market include exercise in their
will produce 30,000 metric tons of those meats when it daily lives. Sports drinks are becoming popular in China.
reaches full capacity in 2018 (Niu). Over half of those surveyed by Gentleman Marketing
say they drink sports drink and 67 percent say they do
Much of China’s economic openness is born out of so in order to quickly regain strength and energy. This
necessity rather than a love for equality. Its foreign trade could also be the reason why Chinese consumers show
policies are still protectionist and aimed at keeping greater interest in eating healthy food. There is a huge
the trade imbalance in their favor. Entry into the infant untapped potential in several segments of healthy food.
formula market requires registration of formulations, Consumers are now more interested in healthy food with
limits to three product lines, and inconveniences such organic ingredients, low calories, and no food additives.
as onsite inspections. Food products for special medical Over 30 percent of consumers in tier 1 and 2 cities often
purposes require clinical trials and prescriptions. Health buy organic food, and are willing to pay more for it.
foods with functional efficacy claims require exhaustive Almost 90 percent of consumers will pay attention to
scientific substantiation involving clinical trial data, production date and expiry dates, and 67 percent look
animal testing, and toxicology. Positive lists and stricter at the ingredients for nutritional information. As well as
administrative requirements will eventually limit cross- health benefits, Chinese consumers want attractive and
border e-commerce (O’Brien). A consumer preference fun packaging. More than ever, consumers expect a food
for foreign goods that are perceived to be safer, however, that expresses their mood with 80 percent responding
shows no sign of abating, with 71 percent of Chinese to foods that reflect their personality and 72 percent
people considering food safety a concern in 2015, and the are willing to pay more for a food brand. With all that
country increasingly has the means to purchase foreign being said, Chinese consumers still like their munchies.
products. Thus, Dezan Shira & Associates claims the Grocery and convenient stores still devote a great deal
China’s food and beverage industry has more potential of real estate to bagged snacks, candies, and cookies
for foreign investment than ever before, but counterfeit (Gentlemen, New Foods).
goods and an underdeveloped infrastructure continue
to threaten the industry’s growth. As demand increases, Soft Drinks
the physical infrastructure in place is struggling to keep
up. A lack of proper cold storage warehouses, inefficient China defines the term “soft drink” as beverages with
distribution channels, and growing demand threaten to alcohol content lower than 0.5 percent. The consumption
strain an underdeveloped infrastructure. Even though the of soft drink per capita in China is lower than that in
regulatory environment has been easier to understand developed countries, lowest in the rural areas. This perfect
and simpler for foreign businesses to navigate since competition scenario has attracted a large number
China’s 2015 Food Safety Law trimmed back a number of of international soft drink giants into Chinese market
regulations, foreign business needs to understand that (Gupta). Carbonated soft drinks comprise the third-largest
they will face a steady increase in competition as new beverage sector by output volume within the overall soft
regulations go into effect once China becomes more drink product segment, drinking water and fruit juice
heavy-handed with its food industry. If China is able to being the two largest. However, the share of carbonated
increase the quality of its domestic food products, and drinks within the segment has been declining, from 29.8
convince its population that local food standards can be percent in 2002 to 20.4 percent in 2007 and 11.5 percent
trusted, some Chinese consumers may no longer find it in 2017. Colas are the largest product segment in the soda
necessary to buy foreign food products (China Briefing). production industry and are projected to account for 53.5
percent of industry revenue in 2017. Colas will continue
278
of the world’s pork. Chinese per-capita consumption is Nevertheless, the market is rich with opportunities for
39.4 kilograms a year. Domestic hog farms can’t keep up the right products. International travel is changing the
with demand. U.S. pork exports to China and Hong Kong food market in many ways. About 80 percent say they
totaled 545,000 metric tons in 2016, a 61 percent increase not only enjoy eating foreign food but also buy imported
from 2015. As a result, Smithfield is considered a premium products for their everyday life. The Chinese are curious
brand in China, with prices at least 20 percent higher and willing to try different culinary experiences. About 53
than WH Group’s Chinese labels. Smithfield can’t export percent say they enjoy trying new products and activities.
sausage, ham and bacon from its U.S. factories because The health craze in China has taken many shapes in both
China prohibits imports of processed meat. So WH Group consumption and habit. Roughly 35 percent of Chinese
opened an 800 million-yuan factory in Zhengzhou that urban consumers in large market include exercise in their
will produce 30,000 metric tons of those meats when it daily lives. Sports drinks are becoming popular in China.
reaches full capacity in 2018 (Niu). Over half of those surveyed by Gentleman Marketing
say they drink sports drink and 67 percent say they do
Much of China’s economic openness is born out of so in order to quickly regain strength and energy. This
necessity rather than a love for equality. Its foreign trade could also be the reason why Chinese consumers show
policies are still protectionist and aimed at keeping greater interest in eating healthy food. There is a huge
the trade imbalance in their favor. Entry into the infant untapped potential in several segments of healthy food.
formula market requires registration of formulations, Consumers are now more interested in healthy food with
limits to three product lines, and inconveniences such organic ingredients, low calories, and no food additives.
as onsite inspections. Food products for special medical Over 30 percent of consumers in tier 1 and 2 cities often
purposes require clinical trials and prescriptions. Health buy organic food, and are willing to pay more for it.
foods with functional efficacy claims require exhaustive Almost 90 percent of consumers will pay attention to
scientific substantiation involving clinical trial data, production date and expiry dates, and 67 percent look
animal testing, and toxicology. Positive lists and stricter at the ingredients for nutritional information. As well as
administrative requirements will eventually limit cross- health benefits, Chinese consumers want attractive and
border e-commerce (O’Brien). A consumer preference fun packaging. More than ever, consumers expect a food
for foreign goods that are perceived to be safer, however, that expresses their mood with 80 percent responding
shows no sign of abating, with 71 percent of Chinese to foods that reflect their personality and 72 percent
people considering food safety a concern in 2015, and the are willing to pay more for a food brand. With all that
country increasingly has the means to purchase foreign being said, Chinese consumers still like their munchies.
products. Thus, Dezan Shira & Associates claims the Grocery and convenient stores still devote a great deal
China’s food and beverage industry has more potential of real estate to bagged snacks, candies, and cookies
for foreign investment than ever before, but counterfeit (Gentlemen, New Foods).
goods and an underdeveloped infrastructure continue
to threaten the industry’s growth. As demand increases, Soft Drinks
the physical infrastructure in place is struggling to keep
up. A lack of proper cold storage warehouses, inefficient China defines the term “soft drink” as beverages with
distribution channels, and growing demand threaten to alcohol content lower than 0.5 percent. The consumption
strain an underdeveloped infrastructure. Even though the of soft drink per capita in China is lower than that in
regulatory environment has been easier to understand developed countries, lowest in the rural areas. This perfect
and simpler for foreign businesses to navigate since competition scenario has attracted a large number
China’s 2015 Food Safety Law trimmed back a number of of international soft drink giants into Chinese market
regulations, foreign business needs to understand that (Gupta). Carbonated soft drinks comprise the third-largest
they will face a steady increase in competition as new beverage sector by output volume within the overall soft
regulations go into effect once China becomes more drink product segment, drinking water and fruit juice
heavy-handed with its food industry. If China is able to being the two largest. However, the share of carbonated
increase the quality of its domestic food products, and drinks within the segment has been declining, from 29.8
convince its population that local food standards can be percent in 2002 to 20.4 percent in 2007 and 11.5 percent
trusted, some Chinese consumers may no longer find it in 2017. Colas are the largest product segment in the soda
necessary to buy foreign food products (China Briefing). production industry and are projected to account for 53.5
percent of industry revenue in 2017. Colas will continue
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