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Overview of China’s Food and Beverage Market

China accounts for about one fourth of the total world population and hosts one of the most rapidly developing consumer markets in the world, which provide a tremendous boost to the food & beverage industry. In recent years China’s demand for foreign food & beverage products is developing at a brisk pace in tandem with its rapid economic development. According to WTO, China became the largest global food and agriculture product import country in 2011.

In the year of 2017 China imported 53.48 million tons of food & beverage with total value worth 58.28 billion USD, representing 36.5% and 25% year-on-year growth respectively. In the past five years from 2013 to 2017, the average annual growth rate of imported food trade in China remained 5.7%.

China's top 10 food & beverage imports from the world, 2017
CountryImport value (billion USD)Number of import transactions
EU11.97432,000
USA5.2991,000
New Zealand4.8765,000
Indonesia4.5427,000
Canada4.4929,000
Australia3.08124,000
Brazil2.9244,000
Malaysia2.3334,000
Russia2.2917,000
Vietnam2.2421,000
Others14.25544,000

Source: General Administration of Customs, P.R. China

Although the variety of imported food in China is increasing, there are 10 major imported foods that account for 92.5% of total imported value. In the categories such as dairy products, edible oil, meat and aquatic products, imported products have been supplying Chinese market demand considerably.

China’s top 10 import food categories, 2017
Food categoryImport value (billion USD)Number of import transactions
Meat10.21295,000
Edible oil10.1933,000
Dairy products8.5277,000
Aquatic products8.50111,000
Grain products5.19100,000
Alcoholic beverage4.80272,000
Candy2.42102,000
Non-alcoholic Beverage2.08132,000
Dried nuts1.17117,000
Pastry and cookie0.8383,000
Others4.37152,000

Source: General Administration of Customs, P.R. China

Food categoryTop 3 import countriesShare of total market supply
MeatEU, Brazil, USA4.8%
Edible oilIndonesia, Malaysia, Canada12.0%
Dairy productsEU, New Zealand, Australia22.7%
Aquatic productsRussia, USA, Norway5.6%

Source: General Administration of Customs, P.R. China

China’s food & beverage trade with Canada

China is Canada’s second-largest export market. Unlike many of Canada’s trading partners, exports to China have been climbing steadily and did not fall during the global economic crisis. In the year of 2017 China absorbed $4.49 billion of Canadian food & beverage products, which accounted for 7.7% of China’s total food & beverage import value. In the first quarter of 2018, Canada exported total of 106 million USD food and beverage products to China, a 16.6% year-on-year increase. Canada is the 5th largest food & beverage export country to China and the 3rd largest edible oil export country to China.

The export of Canada’s agri-food and aquatic products to China has been soaring since April 2018. Particularly in August 2018 Canada’s export of edible oil, beef and lobster to China reached an astonishing year-on-year increase of 930%, 220% and 87% respectively. In November 2018 during the state visit of Canadian Minister of Agriculture and Agri-Food in China, Canada and China signed 18 agri-food trade deals with a total value of 353 million USD.

For more information on aquatic products market in China, please refer to Fish and Seafood Market Profile - for East China and Hubei Province

Local taste and preferences

While Chinese F&B markets offer great potential for growth, business entering China must take into account the Chinese unique market structure, eating habits and cultural factors that shape the consumer demand. This is the key to the success of F&B brands, especially when China consumer market is constantly evolving. Foreign brands therefore need to be sensitive and responsive to the local environmental, social, and economical factors that impact consumer market developing trends. Companies entering Chinese market must continually invest in research and development to determine local preferences and offer customized products that suit Chinese palate.

Demand for safe and healthy food

With health awareness on the rise and in view of rising number of domestic food scandals, food safety and health are the two most important criteria for most of the Chinese consuming foreign products in tier one and tier two cities, as suggested by IPSOS market survey. More Chinese consumers have shown to be willing to shell out extra cash for health foods and foreign imports. This has created new investment opportunities for foreign investors in food business in China, especially those involved with organic and health food products. According to a 2016 study by the Hong Kong Trade Development Council (HKTDC), China’s health foods market is worth more than US$144.2 billion. As of June 2016, the China Food and Drug Administration (CFDA) had approved a total of 16,573 health food products, of which 15,822 were domestic and 751 were imported. Of particular interest among food imports are organic food items. Once seen as a luxury food item, imported organic foods are an increasingly accessible option for a Chinese consumer base with a growing disposable income. The organic food market in China has tripled since 2007 to currently account for 1.01 percent of total food consumption, which is still lower than the 5 to 8 percent of the market in areas like Europe and the U.S. Current rough estimates for the market value of organic imports are around US$20 million, with consumers typically middle- and upper-class Chinese with children. In a consumer study carried out on 204 Chinese organic consumers in Beijing and Shanghai, 71 percent were ready to pay a premium of 20 to 50 percent for organic products.

China’s regulatory environment

Regulations on import vary across types of food and may not be consistently applied and enforced by different ports, bureaus, and individual officers. Therefore, companies are advised to allow for additional time and money to resolve unexpected issues and work closely with reliable partners.

mmon laws and regulations that companies must comply with are:

Health food certification

In China, food products can be labelled as “health food” if it applies to one of the following two categories:

For more information on nutritional supplements market in China, please refer to China’s Dietary Supplement Industry Report

Implemented on July 1, 2016, the new Administrative Measure on Health Food Registration and Filing released by CFDA stipulates the registration and filing procedures and requirements for all health foods produced or marketed in China.

Manufacturers who plan to sell health foods in China must either have an official office in China or appoint an authorized agent to obtain the certificate for them. If the product ingredients are not listed in the Catalogue of Health Food Ingredients, or if the product has been imported and does not contain vitamin or mineral supplements, then the registration procedure will require additional steps and scrutiny.

E-commerce retail

E-commerce has become a more popular option for retail sales in China in recent years. Market studies suggest that 82% of consumers from China upper tier cities prefer to buy foods and beverages through online channels. Major players on China’s e-commerce marketplaces are Taobao.com, Tmall.com, JD.com. There are also a number of third-party e-commerce platforms that are specialized in certain product categories. The best-known social media App WeChat is turning into an emerging competitive third-party e-commerce platform as well. Note that Taobao.com is based on Customer-to-Customer (C2C) business model that allows individual person to advertise products or services and trade with each other. TMall and JD are marketplaces combined with B2B2C and B2C and only allow business entities to open stores on the platforms.

Along with the booming of e-commerce retail, China’s cross border e-commerce (CBEC) market continue to thrive and is poised to maintain its strong growth in 2018. China’s CBEC transactions grew by 19 percent in 2017 to reach USD 1.18trillion, among which retail sales hit the USD100 million market.

BEC allows foreign business to sell in China without a physical presence – which necessitates incorporation and licensing – overseas business can access millions of Chinese consumers at a relatively low cost. CBEC therefore allows business to test the Chinese market. Further, foreign business can benefit from preferential policies that promote the sector, such as expedited customs clearances, preferential tax rates and clustering of e-commerce logistics services, among other benefits.

Currently there are several different models for foreign companies to sell their products via CBEC to Chinese customers, such as via the company’s standalone web shops, or via 3rd party platforms (online marketplaces). Selling through company’s own e-commerce website may seem to be the most attractive and convenient entry option, but practically not efficient as Chinese e-consumers almost exclusively shop on third-party online marketplaces to buy their goods rather than on standalone websites (either domestic or foreign based). Many e-commerce platforms have their cross-border arms for imported products. The most famous examples of online CBEC malls in China are TMall Global and JD Worldwide.

As China’s e-commerce market grows at a staggering rate, so does the need for stricter oversight and market regulation. China implemented a new e-commerce law on January 1, 2019. The new e-commerce law strengthens IP protections, reinforces consumer rights and regulates unfair competition in e-commerce retail.  The new polices also expand the qualified CBEC retail import system, adjust tax policies and enhance the CBEC import supervision system.

For more information on e-commerce in China, please refer to An Introduction to E-Commerce in China

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