With the growth of production and development of the economy, the level of income of Chinese urban residents has increased and the food consumption structure has been changed dramatically. Although the global market struggled in the economic downturn, the China food and drink market shows no sign of tapering off. This vast market is still driving demand for non-essential, healthy, high-end food products from suppliers all around the world.

Market overview

In 2003 the Chinese food market was 35 per cent of the size of the US market; by 2020 this will figure will rise to a considerable 82 per cent. China will become the world's second largest food retail market by 2020 behind the US. While growth in dollar terms is set to far exceed this at 128.1% to US$295.3bn in 2012. In the past 10 years, Chinese urban consumers have accepted Western-style food products increasingly. With the rapid growth in demand of healthy, organic and functional food & beverages, new consumer behaviors have developed. Meanwhile, dozens of large contaminated food scandals have severely damaged consumer confidence and many domestic food products are highly questioned. All these facts create tremendous opportunities for international suppliers to improve market share in China. Canadian exporters have gained the great advantage as early movers. Today, small groups of Canadian companies that introduce beef, seafood, wine, and other agricultural products are achieving their preliminary goal of market entry success.

Opportunity for Canadian Business

Most of Canadian food manufacturers, especially, small-medium sized businesses, have still not realized the potential economic impacts caused by the Chinese market capacities and scale. Lack of exporting awareness, marketing information and financial resources, are directly contributing to this result of missed opportunities. Canadian exporting volume and dollar amount are still lagging too far behind. Canadian businesses must understand the unique China market characteristics:

Food Away from Home is Significant - the aggregate demand in convenience food and snacks sharply increased due to higher income and a faster pace of life. Western restaurants are highly preferred like steakhouses, pizza shops etc.

Importance of Safety - Massive domestic food quality scandals drive consumer switch to western brands. Safety is the most important factor in determining purchases (more than price), but safety is determined differently for different products (by brand, appearance, vendor reputation).

Brands are the key - not necessarily because people need the esteem and want to stand out, but because they actually want to fit in with everyone else who buys brand-name products. This has led to a form of anxiety heretofore unknown in China. "It's been called 'consumptive anxiety'".

Complex, multi-tier market - One of the biggest challenges is simply mapping the flow of goods through the distribution networks. In the past, Chinese manufacturers would often send goods to a distributor with no real idea about which customers those goods eventually reached. For a foreign company, understanding where those goods are flowing to is critical because different distribution channels often reach different customer segments.