Urbanisation is set to continue at pace in China, with its new urbanised citizens readily seeking out a wide range of imported food products.
This is according to Alan O’Brien of Bord Bia’s Shanghai Office. He said: “In the 1970s Chinese authorities embarked on an ambitious strategy of urbanisation and development; the world’s largest migration in history with 500 million people moving to China’s key urban centres. Today 54% of the population live in urban areas with a target of 70% by 2030, which would leave 1 billion people living in cities.”
O’Brien noted: “The catalyst of this ambitious development strategy will rest in social reform as current policy prevents China’s citizens from freely migrating from their birth provinces to major urban centres.”
This has led to a huge level of inequality between registered (who receive state benefits) and unregistered citizens Another cusp of urbanisation in China will rest in addressing issues of urban sprawl, deteriorating air quality and developing infrastructure and transport links; by 2020 China’s high speed rail network will grow by over 60% (7,000km) and connect almost every city with a population of over half a million.”
What does this mean for Irish Food and Beverage Companies?
O’Brien said: “According to McKinsey (2013) by 2022 over 75% of China’s urban consumers will earn between €6,900 – €26,400 per annum and total urban private consumption will rise to €3 trillion up from €1.1 trillion in 2013. China is currently the world’s second largest retail market and in increasingly westernized cities these consumers are now readily seeking out a wide range of imported food products.”
He noted: “The western influence in China is most readily visible at foodservice; on example includes outlets such as McDonalds and Pizza Hut which have developed the market for processed cheese currently the leading category (total cheese imports to China reached 47,000t in 2013).”
O’Brien outlined that recent articles “Fonterra riding mozzarella wave” and “Fonterra ramps up China strategy” highlights the aggressive strategy of investment being utilised by Fonterra in China.
He said: “In considering this it is important to highlight the strong challenges of operating and developing a presence in the Chinese market; any route to China requires product adaption to local tastes, selecting the right channels and pricing strategy and for many companies fundamental to success in China is patience in selecting the right local partner.”