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 82 per cent. China will become the world's second largest food retail market by 2020 behind the US. The growth of the industry in US dollars will increase by 128.1% to US$295.3bn by 2012. In the past 10 years, Chinese urban consumers have learned to accept Western-style food products. With the rapid growth of demand for healthy, organic and functional food & beverages, new consumer behaviours have developed.

Over the last few years, dozens of contaminated food scandals have severely damaged consumer confidence in domestic food products. Chinese consumers are weary of Chinese food manufacturers. The growth in consumer demand and the lack of consumer confidence in local producers has created a tremendous opportunity for international suppliers to enter the market and quickly gain market share. Some Canadian exporters have gained the great advantage as early movers and have introduced beef, seafood, wine, and other agricultural products. They are achieving their goal of market entry and success.

Opportunity for Canadian Business

Most Canadian food manufacturers, especially small-medium sized businesses (SMEs), do not realize the potential economic benefit created by having a Chinese market open for their products. Lack of exporting awareness, marketing information and limited financial resources are directly contributing to missed opportunities. Canadian exporting volume is lagging far behind other countries.

Canadian businesses should understand that access to the Chinese consumer, with the right approach, can be quick, cost effective and methodical. Currently, from researching market characteristics, we believe that there are huge opportunities in the following areas:

Fast Food - the aggregate demand in convenience foods and snacks has sharply increased due to higher income and a faster pace of life. Western restaurants like steakhouses, pizza shops etc. are very profitable.

Safety - Massive domestic food quality scandals have driven consumers to switch to western brands, even where there are extreme cost differentials. Data now suggests that the most important factor in determining purchases (more than price) is how consumers determine a need for "safety" in a product, and the perception of "safety" is tied to the type of product, brand, appearance, vendor reputation and country origin.

Branding The Chinese are buying branded merchandise partly to satisfy individual needs but also to be part of what they perceive to be progressive consumer trend that will be good for their society and culture. This has led to a form of anxiety heretofore unknown in China. It's been called 'consumptive anxiety'.

Complex, multi-tier markets - One of the biggest challenges in selling to consumers is simply mapping the flow of goods through the distribution networks. In the past, Chinese manufacturers would often send goods to distributors with no knowledge of which customers are being targeted by those goods. Understanding the distribution channels is critical as it ensures that you make products available to the right segment of the Chinese consumer, vastly increasing success rates.