Agri-Food Trade Service

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This Web site was created 15 years ago as a source of market information and export support activities for Canadian companies. As the web evolves and our interaction with clients intensifies we've decided to take a more active approach in keeping you informed with what we've published recently and to give a sneak peak at what you can look forward to in the coming months in the hopes of giving you a reason to come back and get more involved with our projects.

Beef: the Perfect Canadian Entrée for China

November 10, 2011

A few weeks back, industry experts from Web Presence in China provided us with a look into China's burgeoning market for Canadian wines. The ATS has once again asked Web Presence in China to provide some insight, only this time on the potential Canadian beef has within China, and what it will take to be successful in this growing marketplace. Web Presence in China is a team of professionals based in Beijing with a Canadian branch which facilitates business opportunities with Chinese customers. Below is their sound take on the Chinese beef market. The ATS also has an in-depth China Consumer Profile that may be helpful if considering this market.

With the long ban on its beef recently lifted, Canada is perfectly positioned to capitalize on China's ever-growing hunger for all cow parts, not just its meat. China has a lucrative market for offal, stemming from high consumer demand for the product. While they are the fourth largest aggregate consumer of beef in the world, they are fiftieth in terms of per capita consumption, at roughly 4 kg (consider that US per capita consumption stood at nearly 40kg in 2010).

This means that just a 1% increase in per capita consumption would lead to an increase in demand of over 63 thousand tons. How likely is such an increase? Assured. Besides macro trends such as increasing incomes and westernization, a telling indicator is the number of McDonald's in China. While it took over twenty years to reach one thousand Chinese franchises, McDonald's expects to double that number by 2013. Skeptics who point to the lack of ovens for broiled beef and backyard barbecues in China are forgetting the proliferation of hot-pot style cooking there, both at home and in restaurants, where cow products, not just sliced beef, but marrow and tripe, are virtually required eating. Thus, this long-term boom in beef demand will have both Chinese and western characteristics.

Meanwhile, China finds itself in a very poor position to meet this demand by increasing domestic output. With 20% of the world to feed on only 7% of the world's arable land, accelerated raising of the most grain-intensive animal is simply not an option. Limits on domestic beef production ramify from this fact. Feed lots are small and inefficient; culling male calves for serum is disproportionately common. Little wonder that the USDA forecast a 2% drop in China's beef production for 2011, with a resultant 20% import increase, to 30 thousand tons.

And let's not forget increasing dairy consumption. “Milk for breakfast” is a shibboleth on the lips of all Chinese parents, who wish to ensure the optimal growth and nourishment of their children. Live cattle imports doubled in 2010 to 90,000 head, with similar growth so far this year, primarily for dairy consumption.

Some nations have already benefitted from China's demand for lower-cost imported beef. Uruguay enjoyed a 317% jump in its beef exports to China in 2010, to over 1500 tons. But Canada is well-advised to stay in the higher-cost niche. True, lower cost beef demand outpaces that of higher, as the majority of new Chinese beef eaters have transitioned from low to middle-class. However, in terms of long-term branding and safety, not to mention its own high costs of beef production, Canada's best bet is in higher-priced segments, which are growing apace.

Then there are China's growing concerns with food quality and safety. The common perspective is that Chinese food products, particularly meat, are not as safely produced as those of foreign nations, and that the companies which manufacture them are far less trustworthy. Witness the explosion of shopping at foreign supermarkets Carrefour and Walmart, where imported meat, including beef, is snapped up along with other premium goodies from around the world. Hypermarket group, Carrefour, opened 79 stores in China in 2010 and has no plans of slowing in 2011.

Therefore, to presume that China's eight-year ban on Canadian beef imports will have few if any lingering effect on its re-entry to the China market is a very safe business bet. After all, along with New Zealand, the first word Chinese surveyed use to describe Canada is “clean”, followed by “developed”. Finding ways to fulfill China's growing demand for quality beef will reward Canada handsomely with an export market conditioned for long-term growth and potential.

Government initiatives, of course, are essential. Serving its best quality beef at the 2010 Shanghai Expo was a public relations coup for Canada. However, other countries are making similar inroads for quality beef import, such as Scotland; its Quality Meat Scotland group was a prominent cohort in an EU Agriculture tour of Beijing, Shanghai, and Hangzou.

Now that Canada can re-enter the China beef market, both private and regional beef concerns are well-advised to make inroads to that market online. Alibaba, China's largest B2B portal, continues to refine its networking, quality assurance, and payment capabilities. Also, building a comprehensive web presence in China continues as the lowest-cost, highest return initiative an organization can take to spread a message, build a network, or sell a product China-wide. Taken together with China's beef supply and demand imbalances, IT presents a path to China markets that any Canada-based group willing to innovate and bridge the language gap can take to sustained growth and profitability.

Web Presence In China, a Canadian firm with headquarters in Beijing, is a one-stop shop for bringing Chinese customers to your business. Canadians working with a Chinese team localize your website and pull customers from the 460 million Chinese online. Web Presence In China can also provide virtual offices in Beijing, while hiring and managing dedicated sales staff for your company.

Until next time,

Joseph Cooke, Director of Global Sales
Web Presence in China, North America Branch
www.web-presence-in-china.com.com
Tel: +1-604-351-4184
Toll-free phone: 1-888-542-9742
Email: joseph.cooke@web-presence-in-china.com
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