Food and beverage to China
Trends and opportunities
With a population of over 1.3 billion, China has emerged as the world’s largest consumer market for food and beverage (F&B), surpassing the United States in 2011. According to a recent study conducted by Euromonitor, China is one of the fastest growing F&B markets in Asia, with an average annual growth rate of 35.4 per cent from 2011 to 2014. In 2016, the overall Chinese consumer expenditure for F&B products is expected to reach a total of US$976 billion. (Source: Euromonitor)
Food consumption patterns in China have changed significantly as living standards have risen and more consumers are exposed to a greater diversity of choice, both locally and through travel abroad. Chinese consumers are becoming increasingly discerning and more are seeking the following qualities when making purchases:
- confidence in food safety and ingredients’ integrity
- higher quality
- better nutritional value
- modern packaging
Increased interest and demand for Australian F&B is being driven by China’s strong economic growth and its rising per capita income. Emerging second tier markets, wealthy coastal cities and not just the hubs of Beijing, Shanghai and Guangzhou, are providing opportunities for Australian companies to access a share of the market.
Australia is recognised by local consumers as having a clean and green environment with good quality products and brands. Many Australian exporters have taken advantage of this competitive edge by establishing a position as suppliers of meat, dairy products, fresh fruits, seafood and other products.
Market feedback has shown interest in Australian suppliers of:
- Milk powders (including infant formula and adult milk powder), UHT and pasteurised milk, cheese and butter
- Seafood (particularly saltwater shell fish such as oysters, crabs and live/frozen lobster and abalone)
- Fresh fruits (e.g. citrus, table grapes, cherries)
- Wheat and barley
- Chilled or frozen meat (limited to red meat, there is currently no protocol in place for white meat and game meat)
- Processed foods
- Baby food
- Wine and beer
- Natural fruit juice
- Convenience and ‘instant’ foods
- Confectionery and snack products
Market access for Australian agribusiness products to the mainland Chinese market remains a significant issue. In general, it is easier for processed foods and wine to access the market.
The China Australia Free Trade Agreement (ChAFTA) came into effect on 20 December 2015, significantly reducing the tariff barriers affecting bilateral trade in goods, including agricultural and F&B products. For more information regarding the staged tariff reductions, visit China MOFCOM website in Chinese or English Version. F&B suppliers are urged to study ChAFTA carefully. For more information, visit the Department of Foreign Affairs and Trade website.
Tariffs, regulations and customs
Following entry into the World Trade Organization, China has reduced its overall average tariff for agricultural products to 15.3 per cent. There are still pockets of high tariff protection, some key agricultural products of interest to Australia are as high as 65 per cent. ChAFTA provides improved market access for most products.
For fresh produce, quarantine and protocol requirements act as hurdles to market entry. Australia has legal market access for citrus, mango, cherries, table grapes and Tasmanian apples and is currently seeking market access for summer fruit.
Exporters are encouraged to confirm the eligibility of their product to enter the Chinese market before engaging in commercial activities with Chinese customers or directly investing in a business opportunity. Exporters can make initial enquiries to their local Australian Quarantine and Inspection Service (AQIS) office or Austrade.
All imported foodstuffs and beverages are subject to inspections by the China Entry-Exit Inspection and Quarantine Bureau (CIQ). This can be a complicated and challenging process, be prepared and do not underestimate the cost, documentation and time required. Accessing up-to-date information on quarantine requirements such as labelling and packaging requirements, Chinese national food standards and allowable ingredient listings can be difficult.
All imported pre-packaged food must be labelled in Chinese (simplified Chinese as used in mainland China). In addition to Chinese characters, English and other foreign languages may also be used; this is useful in differentiating an imported product from local produce. The General Standard for the Labelling of Pre-packaged Food (GB7718-2011) is available from the US Department of Agriculture website (PDF). The following is the example of minimum information to be listed:
- Standard name of foodstuffs
- List of ingredients
- Quantitative labelling of ingredients (percentage of ingredient)
- Net weight and configuration
- Name, address and contact info of manufacturer and local agent or distributor
- Production date, use by date in YY/MM/DD format and guidance for storing
- Generic name of the food additives as used in the national standard
- Quality grade
- Food production license number
- Code of the product standard
- Special contents if there are any (e.g. irradiated food, genetically modified, nutrition list for baby food or diet food).
For details about wine export standards from Australia to China, please visit the Australian Grape and Wine Authority regarding compliance guidance.
China Quarantine and Inspection (CIQ) requirements often change and can be complex to interpret. Australian exporters are encouraged to re-confirm labelling requirements and other product certification with their importers in China or relevant departments, prior to dispatch of goods. Tighter and stricter regulations are being seen across F&B categories in response to food safety concerns.
China New Food Safety Law
China's first Food Safety Law was adopted in 2009. The New Food Safety Law was amended and came into effect on 1 October 2015. The new version is much stricter on monitoring and supervision, safety standards, recall of substandard products and includes severe punishment for offenders. The English version translation of China Food Safety Law 2015 is available from the US Department of Agriculture website (PDF). The Food Safety Law also covers all imported food products, which are subject to the national food safety standards of China.
Austrade conducted a webinar on China New Food Safety Law on 11 August 2015:
All foreign food distributors and producers that import food products into China are required to register with the state entry-exit inspection and quarantine authorities. Importers must record the foods imported and distributed in China and must keep these records for at least two years.
For those ingredients or components not registered in China, it is required that the ingredients are registered as new-to-China components. Any food or food ingredient or component that has had an import history prior to the new Food Safety Law should be allowed entry even if there is no Chinese standard.
Foreign food manufacturers are required to register with the General Administration of Quality Supervision Inspection and Quarantine of the People’s Republic of China (AQSIQ).
Manufacturers of dairy products, particularly infant formula, meat and seafood are subject to even stricter accreditation for the registration process. On the spot accreditation by Chinese government officials may be also required. Certification and Accreditation Administration of the People’s Republic of China (CNCA) publishes latest lists of approved foreign manufacturers or facilities of dairy products, infant formula, meat and seafood.
Decree 55 has been issued by China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), as part of the Food Safety Law and came into force in 2012. Decree 55 requires Australian exporters and agents, as well as Chinese importers, to complete an online registration form. Covering a wide range of products under the jurisdiction of the AQSIQ Food Safety Bureau and includes prescribed food commodities such as:
- meat and meat products
- aquatic products
- egg and egg products
- dairy products
- bee products
- other non-prescribed foods such as biscuits and beverages.
Whilst detailed manuals contain detailed step-by-step instructions on how to complete the registration process, they are currently only available in Chinese. Exporters are encouraged to work closely with their importers to provide the required information.
Inspection and Quarantine of Import and Export of Dairy Products
Announcement 53 covers inspection and quarantine for dairy products in China. The decree and announcement set various requirements on governments of exporting countries, manufacturers and importers.
A registration system has been adopted by AQSIQ for overseas food manufacturing enterprises exporting dairy products to China. Unregistered overseas dairy products are not allowed to be imported to China. A list of registered dairy facilities can be found at the Certification and Accreditation Administration of the People’s Republic of China (CNCA).
To register successfully, food manufacturing enterprises exporting dairy products to China should submit comprehensive documents on their capability, as well as test reports on the exported product.
Announcement 53 (PDF) are both available on the United States Department of Agriculture website.
Update on organic food to China
Chinese certification systems and foreign organic certification systems are not mutually recognised. Organic products that have not been certified by China or products that have only been certified by an overseas organic certifying body cannot be labelled as ‘organic’ or ‘in-conversion to organic’ or other labelling terms claiming to be organic.
In order to ensure the quality of imported organic products and to reinforce the regulation on organic produce, Chinese authorities have advised they will verify consignments in accordance with the New Certification Regulations on Domestic Organic Products. For more information, visit Implementation Measures for Inspection, Quarantine and Supervision of Imported and Exported Dairy Products (PDF).
Import procedures for organic products
- If imported products are declared as organic or imported products are found at inspection to be labelled as ‘organic’ on their packages, labels, instructions or promotion materials; import verification shall apply which includes:
- verification of the certificate and logo
- consistency evaluation between the product and its label
- determination of whether the product logo used is within the product scope
- for single and multiple entries, verification of the quantity identified on the certificate
- determination of compliance of any dual logo requirements.
- A Chinese organic certificate can be verified using China’s Food and Agriculture Products Certification Information System.
- From October 2011, Chinese port officials have adopted a ‘case-by-case’ reporting system based on the entry of organic products. In other words, each batch of imported organic products shall be reported to the Certification Supervision department within three days after it has had an inspection and quarantine. Information being reported to this department includes inspection number, product name and quantity (weight), trading value, organic certificate number and the result of the inspection and quarantine. If imported organic products have not received a Chinese organic certificate, but display ‘organic’ on product packages, labels, instructions, or promotion materials; it shall be reported as a ‘major issue’.
- Organic products that have not been issued a Chinese organic certificate can be imported as conventional products after they have been modified and comply with the relevant regulations and standards. If this is not possible, these products shall be destroyed or re-exported.
It typically takes three to six months and over A$10,000 to apply for and obtain a Chinese organic food certificate. An increasing number of Australian companies have chosen to make the investment, as organic products such as infant formula, beef and wine, sell at a premium price in China.
According to CNCA, there are 25 certification agencies in China approved by the Administration to certify organic labelling. Australia's largest internationally recognised certification body, Australian Certified Organic (ACO), and National Association for Sustainable Agriculture Australia Limited (NASSA), have both signed agreements with a Chinese certifier (NASSA media release | ACO media release) to provide Australian certified operators with a more time and cost effective package for the certified organic food certificate application.
Marketing your products and services
There are several marketing tactics which are beneficial to succeed in the China market as follows:
- Have a basic understanding of import regulations and procedures
- Conduct due diligence of your customers
- Develop your company profile and product information in Chinese
- Identify the right partners to ensure your business interests and success in China
- Appoint agents or distributors or have your own marketing staff in China
- Have regular contact with relevant government, industry bodies and customers
- Have presence at local industry trade shows to raise an awareness and get to know industry and business contacts.
With the rapid growth of internet use and penetration in China, particularly in major urban centres, e-commerce is seen to offer considerable potential. Online trading is rapidly expanding and there are a number of e-commerce sites and developers such as JD.com, Alibaba, (including Taobao and Tmall), Amazon and providers who specialise in F&B products, such as Yihaodian.
Online food sales continue to grow in popularity as consumers seek convenience and choice. Improving cold chain logistics, particularly in first tier cities, allows same day delivery of imported beef, milk and fruit. Several dozen online marketplaces currently deliver fresh and ambient Australian food to Chinese homes, including Yihaodian.com, fruitday.com and yiguo.com.
Austrade estimates that between 5 and 10 per cent of retail food is sold online. Popular categories include snack foods, milk, infant nutrition and health foods.
For new exporters, working with an online marketplace or shopfront can be a cost and time effective way to test the market, build a brand profile and gain consumer feedback. Pilot ‘cross-border’ policies in eight ports across China allow many products to be held on consignment in bonded warehouses and sold online directly to consumers without the requirement to comply with regular import standards or pay duties and taxes.
Austrade’s e-commerce in China: A guide for Australian business offers practical advice, facts and insights on how China’s e-commerce marketplaces work and how to access them.
Distribution channels in China are complex and changing constantly. Exports into China can be handled through a number of intermediaries including import agents and distributors, wholesalers and sub-distributors.
Only licensed importers can handle import procedures and have the right to import products, with different product categories requiring different import licences and distribution channels. Traditionally many food distributors or traders do not hold import licences and licensed importers usually do not act as distributors. This situation is changing, with more and more distributors acting as import agents or as wholesalers with a network of sub-distributors they have developed.
Chinese partners are often keen to secure exclusive product rights; however the decision to provide exclusivity should be based on a thorough understanding of the parties’ knowledge in the sector, import capabilities and/or relationships and distribution channels. In the F&B sector, distributors tend to be strong in select areas and rarely possess the extensive distribution networks and national coverage to justify exclusivity. Partner selection and location is critical, with a multi-party approach preferable that is underpinned by both an on and offline strategy.
The Chinese government has taken more measures to curb smuggling into mainland China via Hong Kong or Vietnam. Australian exporters should deal with trading partners who comply with the law and duly pay import duty and undergo and comply with quarantine and quality inspection procedures.
To import products via the so called ‘grey channel’ is illegal and exporters are encouraged to establish a direct relationship with mainland importers and to invest in supporting their importers/distributors with product and marketing to build their brand in China.
Consumers have limited brand loyalty and distribution channels are fragmented and the main competitive differentiation is making products available to a wider selection of customers. While an online platform can help you access a large market much faster, off-line channels still possess the advantage of pushing the products to targeted customers e.g. older customers.
There are huge regional differences in consumption patterns in China and it is important to consider, compare and select the most appropriate channels for different markets and regions. Typically a mix of online and offline presence is recommended, rather than focusing exclusively on one channel.
Links and industry contacts
China Agriculture Science
Government, business and trade resources for China
Australian Department of Agriculture - Manual of Importing Country Requirements
General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China
China Ministry of Agriculture
China Ministry of Commerce
China Dairy Information
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Austrade provides information and advice that can help you reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: firstname.lastname@example.org
A list of Austrade offices (in alphabetical order of country) is also available.