Chinese middle class loved imported food brands, for 20years.
- Very good gift for Chinese new year
- high quality food
- Symbol of good lifestyle that enjoy the middle Class
Imported Food Product Market in China
.According to the estimation from the Association of Food product Industries, China’s imported food product market will keep a surprising increase from 2005 to 2020. The fast increase will help China be the biggest importer of food products in the world by 2018.
480 billion RMB
The market value will total 480 billion RMB by that time. The report from the National Bureau of Statistics of China also shows that the new generations born in China, especially those after the family control policy will not only accept more foreign culture but also pay more for imported food products. (Source: National Bureau of Statistics of China) Data from companies also presents a promising future of China’s imported food product market.
Read as well: Guide to exporting food to China
So how to advertise your food brand in this market?
The annual growth of both the China candy market and the biscuit market in 2011 has reached 22%; The imported food product market has grown over 15% for the past five years.
Lucrative Food niches in China
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).
Mass Market is becoming more and more profitable
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 products ranges from 40% to 50%. Compared with the average margins of other sectors: 20% in the manufacturing sector; 30% in catering, the margin in the 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 the 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, cold cans, and baby milk by at least 50%.
The gradual decreasing tariff makes some tariffs such as baby milk even lower than most favored nation tariffs.
2. Increasing customers of imported food product
With the increase in 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 the leisure food market and candy market, we can see the trend clearly. China’s 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 show 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 into the market, we can see that the customer market of imported food products 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 a higher demand for a quality life. The 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.
Food Distribution in China : the big challenge
The greater diversity of distribution channels such as online sales removes another barrier to 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% of citizens have bought imported food products. (Source: Wccdaily)
3. Reputation : because Chinese buy Brand first then products
Imported food products enjoy a good reputation for their taste, package as well as safety. Based on its good reputation, imported food products can sell much better even labeled at a higher price.
Your eReputation is your Trust Capital in China
Many imported food products are created or planted in foreign countries, but the 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% of 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 great success in China market. Even during the global crisis, China wine market still keeps growing at an annual growth of 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 their 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 the 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 in 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 has taken over 80% of the market.
4. Gift with “Mianzi”
Imported food product in China is often used as a gift in China.
“Mianzi”, literally “Face”, idiomatically means dignity/prestige. It’s a subculture in China that strongly rooted in people’s minds and deeply influences the daily life of the Chinese. In China, a decent gift is a must to show how respectful you are to those who receive the gift. A bad-quality or cheap-looking gift sometimes equals provocation.
Imported food products in China are better packed with a relatively high prices which makes it a perfect choice of gift. On some important occasions, imported food products are also widely welcomed. See wedding candy market in China.
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 the brand.
This requires foreign food producers to shift the focus of their marketing strategy to the security, quality, and originality of their products.
A package of monitoring, precaution, and quick response solution to the food security crisis is very important for a company now.
How to proove the quality of Imported Food products in China
The impressive performance of China’s imported food product market has attracted countless foreign food product companies and also fake foreign food sellers.
Fake originality has been a headache for imported food producers for a long time.
As introduced by Wang who is in charge of food safety in Shao Xing Entry-Exit Inspection and Quarantine Bureau, it has been discovered that many so-called “imported fruits” are only labeled with imported fruit prices. In other fields, imitation also exists.
According to the regulation released by Inspection and Quarantine of the People’s Republic of China in 2006, all imported food has to pass the inspection and put with a CIQ anti-fake label. The little round label in blue can distinguish real imported food from those fakes.
Major Sales Modes of Imported Food Products in China
1. Franchise store
Franchise store mode developed at the early age of imported food products market. It seems that this mode has come to its end. According to the survey by Alibaba, many franchise companies in the imported food products market focus more on developing new franchise stores which makes it seem more like pyramid selling. Only less than 20% of the franchise stores can survive. see more info about Franchise in China
We know the strategy to develop Franchise in China, (contact us)
2. Dealer mode
Dealer mode was once the most popular model in the import market, in not only food but also almost all the other import market.
Now there are tens of thousands of imported food dealers in China. But most of them are quite small. The number of sizeable enterprises is less than 100. A large number of small and mini companies slows down the market maturity. However, those unqualified small companies are wiped off by the market gradually. On the other hand, those big companies will take the blank of those small companies left and grow faster in the following few years.
Cooperating with dealers can save food producers many problems and troubles in the importation, marketing, and sales.
On the other hand, food makers should also notice that dealer mode also has its own risk. In some cities, the same products can have several prices which can confuse the customers and positioning of the brand.
We know the way to develop distributors networks in China, (contact us)
As the major distribution channel, supermarkets don’t sell so many food products as expected. But now they are trying to contact some foreign food producers directly to limit the cost.
Imported Food product in the supermarket[/caption]
And it works, a 281ml frappuccino imported cost ￥26 in Starbucks, ￥16.9 in Century supermarket or only ￥15 if there is a discount. It’s a win-win situation, Century supermarket increases its sales and Starbucks increase its exports.
We know the way to enter big supermarket channels Carrefour, Auchan, Wallmart (contact us)
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4. Online sales : leverage the magic power of e-Commerce in China
In China, online imported food product sale is undergoing a fast development period.
As mentioned before, most consumers of imported food products are from the white-collar class, who are busy with their work and have a higher demand for quality life than others. Online sale caters to their special demand for fashion, convenience, and speed.
What’s more, online sales allow companies to reach consumers from remote areas. Companies can also integrate their positioning and branding strategy.
The online sale also has its shortages. Since customers cannot see the goods they want for themselves, they will worry about the originality and after-service. So CIQ certificate is more important for online imported food sellers because customers trust it.
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