While Chinese foodies find the hit documentary "A Bite of China" a good guide to hunting up local delicacies, CEOs of multinational food companies see immense market potential.
"I love Chinese food and I learnt that there are diverse cuisines across the country," said Ken Powell, CEO of General Mills, a leading multi-national food company known for its Wan Chai Ferry and Haagen-Dazs products which set up its first overseas R&D center in Shanghai on Tuesday.
"China is our largest growth market outside the North America and it represents our future," Powell said during his China visit.
WHERE'S THE PORK?
Last year, China's state-owned food enterprises and those with annual sales over 2 million yuan (320,000 U.S. dollars) raked in 9.28 trillion yuan, up 14.3 percent year-on-year.
Food worth over 95 billion U.S. dollars was imported last year, while the export volume stood close to 58 billion U.S. dollars, suggesting that China has become a major global food consumer, according to data from China National Food Industry Association.
A June World Bank report claimed that demand for calories has probably come close to its peak in China. Demand is shifting to high-protein, and particularly animal based foods. As people become more affluent, they eat more meat.
"Chinese society is undergoing profound changes," said David Brooks, chairman of the Greater China and Korea Business Unit of the Coca-Cola Company. "The opportunities in China are enormous."
GRAB A BIGGER BITE
Multinational food companies who rushed into China following the country's entry to the WTO set up plants, sales dealerships and stores. They have stepped up mergers and acquisitions since 2010. Now, more and more foreign market players are exploring deeper into this food-loving country by establishing research centers focused on developing local products.
Nestle has established its third China R&D center in Dongguan, Guangdong Province following Beijing and Shanghai. Coca-Cola set its largest R&D center outside the United States in Shanghai and Kraft Foods located its largest biscuit R&D center in Asia Pacific in Suzhou.
Most food companies try to locate their own niche market. The General Mills Innovation, Technology and Quality Center mainly targets fresh food freezing techniques, taste studies and food safety, while Nestle's researchers focus on candies and icecream.
"This is a very competitive market with global competitors across all sectors. Food is very much culturally based and the only way to stay relevant is innovation and continuing to turn out tailored products based on insight of emerging consumer trends," said Powell.
SAFETY FIRST
While the market is enticing, health consciousness is growing. Food safety has become a "sword of Damocles" hovering over foreign food companies in China. Previous cases of contaminated milk, drinks and hormone-rich meat have stained several global food heavyweights.
"Chinese consumers are increasingly alert to food safety nowadays, and once there is a food safety issue, there is a crisis of confidence," said Meng Suhe, secretary-general of Chinese Institute of Food Science and Technology.
In late June, Chinese lawmakers considered revisions to China's food safety law. Tougher rules on food production, sales and supervision are on the horizon.
The proposed amendment increases the number of articles by 50 per cent. Manufacturers or operators who add chemicals other than approved additives may have their licenses revoked and face fines of up to 30 times the product value.
"In a global perspective, healthy, nutritional and convenient food is what most customers need and also the standard for food companies' operations," said Gary Chu, president of Greater China, General Mills.
"Food companies will face tougher challenges with the new revision, and it calls for their continued food safety technology advancement and enhanced cooperation with local watchdogs," Meng added.
