Imported Food Product Market in China

 Along with our country national economy sustained growth, per capita income increases ceaselessly, the city changes a course accelerate, ordinary people are increasingly the pursuit of high quality life. Various kinds of imported food with its special exotic flavor, advanced production technology, exquisite packaging, to the masses of rich taste and more choice of gifts.

In the imported food, lack of health and nutrition, has a long history of the old brand food, for example: the United States of America snapp juice drinks, Canada will beauty honey, Italy San Bei Lu mineral water, Denmark Jacobsen cookies, pure Jamaica Blue Mountain coffee, Belgian Chocolate Galaxy air, etc. the world famous food.

Nowadays food imports in China one or two city is very popular, there are a lot of three line the town, even villages and towns have appeared in the imported food stores (than 100 best).According to the state quality inspection administration before this report shows, Chinese food imports from Europe and the United States, South Korea, Japan, Southeast Asia more than 140 countries and Hong Kong and Macao regions, about 10 major series more than twenty thousand varieties, after customs inspection Strict, people can enjoy more beautiful and safer food.

Now people's consumption level is gradually improving and upgrading, food grade already from in the past's gradually to nutrition, health, leisure, flavor and experience change, imported food has entered the city life. More and more people in China will be delicious and healthy food imports as a daily part of consumption, whether students, office workers, or in older people, imports of food has been more and more different age groups favor.

According to the estimation from Association of Food product Industries, China’s imported food product market will keep a surprising increase from 2005 to 2015. The fast increase will help China be the biggest importer of food products in the world by 2018. The market value will total at 480 billion RMB by that time. The report from National Bureau of Statistics of China also shows that the new generations born in China, especially those after family control policy will not only accept more foreign culture but also pay more for imported food products. 

The annual growth of both China candy market and biscuit market in 2011 has reached 22%;

Imported food product market has grown over 15% for the past five years.

China has already become the No.1 importer of US pistachio, 10% of the pistachios in the world are consumed by the Chinese. (Source: AC Nielsen, China Import)

More and more foreign food product producers are now shifting their focus to this huge and still growing market. As Shawn Warren, the president of the world’s second largest food company industry, Kraft China states, “China market is now the engine for Kraft business.”

The support of China Imported Food product market

The average profit of imported food product ranges from 40% to 50%. Compared with the average margins of other sectors: 20% in manufacturing sector; 30% in catering, margin in imported food industry is really high. The support for the high margin comes from both the market and the government.

1. Decreasing tariff

China has suffered severe inflation pressure since 2008. To release the pressure, one solution that Chinese government adopted is to decrease the price of food. As a result, the tariff for imported food products has been gradually decreased over the years. Starting in 2008, China Customs has cut off the tariff of some major food products such as frozen pork, pistachios, cod cans and baby milk by at least 50%.

The gradual decreasing tariff makes some tariff such as baby milk even lower than most favored nation tariff.

2. Increasing customers of imported food product

With the increase of income and demand for quality of life, more and more Chinese people are joining the group of high class consumers. It deeply impacts the imported food product market of China and from leisure food market and candy market, we can see the trend clearly. China leisure food market has reached a size of 40 billion RMB in 2009 and it still is developing at an annual rate of more than 10%. Reports also shows that China candy market, including chocolate, candy, gum markets, has increased by over 63% from 2005 to 2010. (Source: National Bureau of Statistics of China)

To dig deeper in the market, we can see that customer market of imported food product doesn’t increase only in quantity but also in quality. For imported food product which is regarded as higher class consumption goods, middle and high class people are the target people. Most of them are so called white collar class. Compared with others, they are sensitive to fashion and new products and they have higher demand for quality life. Good news is this group of people is increasing rapidly now in China.

What needs noticing is that young people are playing a more and more important role in this market. In China, young people, especially those born after the “family control policy”, are famous for their spoiled life and their parents are generous enough to them that they just buy what they want, needless to care about price. These characters make them perfect consumers for imported food.

The greater diversity of distribution channels such as online sales removes another barrier for the development of imported food products: geographical limit. Because of the transportation, information spread limit, big cities like Beijing and Shanghai in China consumed most imported food products in China. However, the situation is changing; those middle and small cities far away from the coast also provide a number of opportunities for imported food sellers.

Now many people from those places have already bought and tasted imported food products. In such a typical second-tier city in China like Chengdu, 68% citizens have bought imported food products. (Source: Wccdaily)

3. Reputation

Imported food products enjoy a good reputation for its taste, package as well as safety. Based on its good reputation, imported food products can sell much better even labeled with higher price.

Many imported food products are created or planted in foreign countries, but Chinese seem to adapt to their tastes very well. As a result, China has become the major market for them such as nuts and wine. China now consumes 10% pistachios in the world and most of them are imported. However, China has planted their own pistachio for over 13 centuries while it seems Chinese don’t like the taste of local pistachios but foreign ones. As a total occidental drink, wine also gains a great success in China market. Even during the global crisis, China wine market still keeps growing at an annual growth over 70%. Without good taste, they can hardly sell well in this market. What’s different between pistachios and wine is that pistachios enter China by its natural taste while wine conquers the market by teaching people how to drink and taste.

Food security also contributes to the good reputation of imported food products, especially in milk powder industry. Since the first milk powder scandal in 2008, the food security scandals happened from local dairy makers one after another. As a result, customer confidence on local food products has been greatly undermined and it even becomes a panic for safety. The panic is spreading from dairy to other fields. On the contrary, imported food products are becoming more and more popular. The price of imported baby milk powder has increased by about 20% this year and taken over 80% of the market.

4. Gift with “Mianzi”

Imported food product in China is often used as gift in China.

“Mianzi”, literally “Face”, idiomatically means dignity/prestige. It’s a sub culture in China that strong rooted in people’s mind and deeply influences daily life of Chinese. In China, a decent gift is a must to show how respectful you are to who receive the gift. A bad-quality or cheap looking gift sometimes equals to provocation.

Imported food products in China are better packed with relatively high price which makes it a perfect choice of gift. In some important occasions, imported food products are also widely welcomed.

Credibility problems of Imported Food Products

Although local competitors are suffering the public reputation disaster, foreign companies are also influenced. Food security problems alarm Chinese customers and they become more sensitive to the quality of the food products, originality and also brand.

This requires foreign food producers to shift the focus of their marketing strategy to the security, quality and originality of their products.