Australia
Export insights:  China’s food and beverage market
20 September 2021 | Minutes to read: 4

Export insights: China’s food and beverage market

By Yawen Zheng and Spring Wu

China’s burgeoning middle-class, together with the China-Australia Free Trade Agreement has created a wealth of opportunities for Australian businesses looking to export to China – particularly in the food and beverage sector.

The world has witnessed the astonishing growth of China over the last four decades of economic reforms set in motion by Deng Xiaoping in 1978. After years of rapid growth, the Chinese economy has entered a period of slower, more sustainable, consumption-led growth that officials have described as the ‘New Normal’.

Data from the National Development and Reform Commission shows that China’s consumer spending accounted for 54.3 percent of the country’s 2020 GDP.  Urban consumer spending per capita on food and beverage increased by 38.8% in the eight years to 2020 according to the Chinese National Bureau of Statistics.

Concurrently, Australia’s export of value-added products has grown sharply over the past five years, partly due to the China-Australia Free Trade Agreement and the emergence of cross-border e-commerce.

Opportunities for Australian Food and Beverage players

With their reputation for quality, Australian products have long been favoured by Chinese consumers who will most often pay a premium.

Additionally, the China-Australia Free Trade Agreement (FTA) provides significant advantages for Australian businesses. More than 96% of Australia’s goods exports to China are now eligible to enter duty-free or with preferential access.

Processed food products

For the manufacturers and distributors of processed food products (such as breakfast cereals) the FTA eliminates the tariff (which may be as high as 25% for countries without a free trade agreement) on exports.

Fresh Foods

The high demand in China for fresh produce from Australia has led to increased investment in cold chain logistics by e-commence businesses making it easier to get fresh food such as fruit, meat and milk products into the country.

Australian fruit in particular is a highly sought-after commodity. Chinese people place great importance on cultural festivals centred around the lunar calendar. These festivals are often occasions for gift-giving and fruit is a traditional gift – especially in parcels and hampers.

Horticultural products

China is a rapidly growing market for Australian horticultural products. In 2019, Australia exported 9,348 tonnes of horticultural products to mainland China, accounting for 41% of the country’s total horticultural exports according to the Australian Horticultural Exporters and importers association.

Challenges

While there are great opportunities in this sector, there are also several challenges.

Chinese consumer demographics and their food buying decisions

China’s consumer base is far more geographically dispersed than that of Australia. It extends beyond the eastern seaboard to include high-income residents in several inland cities. The range of geographic and socioeconomic populations each have marked differences in consumer buying power and preferences.

Selling Channels

In comparison with other markets, the separation between retail and e-commerce is becoming less apparent in China. An increased number of consumers feel comfortable buying items such as fresh produce online (a market that is comparably sluggish in Western countries). In addition, distribution channels in China can be long and complex.

Market brands  

A ‘famous foods’ tradition creates opportunities for products with a strong brand or provenance story.  However, managing intellectual property protection in China is still challenging and can be costly.

Competition

While Australia was a key supplier of agrifood products to China in 2017, it was fourth in line. Brazil, US and Canada were the top three exporters to China in the same year. And competition for this lucrative market is very high.

For example, Australia currently faces competition from New Zealand in the cherry market with the New Zealand fruit being comparatively high in quality but lower in price. Additionally, Chinese consumers have limited access to Australian avocadoes with Brazil, Chile and Mexico being the preferred origin in Chinese supermarkets.

Competition from within China is also rising. As blueberries become popular among young people, China has begun growing its own blueberries from March to October each year. The nation is now forecast to produce the most blueberries worldwide by 2026.

Services, Resources and Support

Organisations

Austrade

The Australian Trade and Investment Commission is the Australian Government’s international trade promotion and investment attraction agency.

AFGC

The Australian Food & Grocery Council is an industry association which represents the manufacturers and suppliers behind Australia’s food, beverage, and grocery brands.

Dairy Australia

Dairy Australia is the national service body for the Australian dairy industry.

Hort Innovation Australia

Hort Innovation works to improve productivity, farm gate profitability and global competitiveness of Australian horticultural industries.

Meat & Livestock Australia

Meat & Livestock Australia’s purpose is to foster the long-term prosperity of the Australian red meat and livestock industry by investing in research and marketing activities.

Wine Australia

Wine Australia supports a competitive wine sector by investing in research, development and extension, growing domestic and international markets, protecting the reputation of Australian wine and administering the Export and Regional Wine Support Package.

Export Finance Australia

Export Finance Australia are the Australian Government export credit agency. They help businesses export by providing advice, loans and other financial solutions.

For more information click here.

Business Enterprise Centres

Business enterprise centres provide mentoring, business analysis, training, grants and networking advice.

For more information click here. 

Australian government finance assistance

Export Market Development Grants

The Export Market Development Grants (EMDG) scheme is a key Australian Government financial assistance program for aspiring and current exporters.

To find our more about the EMDG please read our recent article here.

Other Grants

There is a wide range of other government grants and financial assistance. For more information click here.

Export Council of Australia provide online training in exporting.

For advice on your exporting strategy please contact your local William buck advisor.

Export insights:  China’s food and beverage market

Yawen Zheng

Yawen Zheng is a Supervisor in our Business Advisor Division. Yawen combine’s hard work with an attention to detail to assist both inbound and outbound business in the Asia pacific region to meet their compliance obligations and maximise new opportunities.

Export insights:  China’s food and beverage market

Spring Wu

Spring works closely with her clients to provide comprehensive business advice on tax and business compliance. As a bilingual accountant, Spring uses her knowledge in finance and tax to help businesses achieve their goals and maximise the opportunities available to them.

Read more >
Related Insights

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Be Informed

Be Informed is William Buck's regular newsletter, filled with up to date news and relevant advice for individuals and businesses.

Get in touch!